Chapter 2 Learn Smart

Which of the following describe the concept of laissez-faire?

- A market system in which the role of government is limited to protecting private property - A market system in which firms are free to purse maximum profits

Which of the following does competition require?

- Freedom of sellers and buyers to enter or leave markets - Two or more buyers and two or more sellers acting independently in a particular market

Describe the role of a central planning board appointed by a command system government.

- Organizes production - Makes all decisions concerning the use of resources. - Makes decisions on the composition and distribution of output

Which of these countries or areas have transformed from a pure command economy to a market-oriented economy?

-China -The former Soviet Union

Which of the following describe the role of government in the United States' form of capitalism?

-Promotes economic stability and growth -Provides certain goods and services that would otherwise be under-produced or not produced at all -Modifies the distribution of income -Provides the rules for economic activity

Human specialization or division of labor contributes to a society's output in which of the following ways?

-Specialization makes use of differences in ability -Specialization saves time -Specialization fosters learning by doing

With _________, government has total control over all economic activity whereas with _______ the markets and prices direct nearly all economic activity.

A command system; laissez-faire

_________ is a particular set of institutional arrangements and coordinating mechanism that responds to the economizing problem.

A economic system

The ________ system is also known as socialism or communism.

Command

Freedom of entry and exit of producers enables the economy to adjust to changes in which of the following areas?

Consumer tastes, technology, resource availability

Which of the following best illustrates exchange through barter?

Farmer John trades his corn for some of his neighbor's oranges

In a market system, private property refers to the right of private firms and individuals, not the ________, to own most property resources such as land and capital.

Government

Private individuals and firms, not the government, own most of the property resources such as land and capital in free _______ system.

Market

Money performs several functions, but first and foremost it is a:

Medium of exchange

The goods and services produced by an economic unit through _________ can be exchanged for a full range of desired products produced by other economic units.

Specialization

True or False: A central of the (pure) market system is the ability to reap monetary rewards from the innovation and creation of new products and processes.

True

True or False: A economic system must determine what goods are produced, how they are produced, and who gets them.

True

True or false: In a command system, the government or state decides how a county's resources will best be utilized.

True

A ____________ is an institution or mechanism that brings buyer and sellers into contact.

market

In a _____________ system, people act in their own self interest.

market

The millions of decisions made by households and businesses are highly coordinated with one another by ___________ and ________.

markets; prices

The right of __________ property, coupled with the freedom to negotiate binding legal contracts, enables individuals and businesses to obtain, use and dispose of property resources as they see sit.

private

Laissez-faire capitalism is also known as ______ capitalism.

pure