Econ Chapter 2-3

A political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government.

Communism

How does compedition regulate business's actions

It causes more production and moderates firms desires for higher prices

What are the three economic questions

What goods and serivces should be produced, how should they be produced, and who will consume them

What is a centrally planned economy

an economy that opposes private property, free marker pricing, competition, and consumer choice

An economic system in which the central government makes all decisions on production and consumption of goods and services is a __________________________ .

centrally planned economy

A large Soviet farm leased by the state to groups of peasant farmers.

collective

Power of consumers to decide what gets produced.

consumer sovereignty

a range with no clear divisions

continuum

When people earn income for supplying land, labor, capital, or entrepreneurship, they receive ______________________ .

factor payments

Who decided what the farmers would produce on Soviet collectives? the farmers the military the government the consumers

the government

What is an economic system

the method used by a society to produce and distribute goods and services

Who are the recpients of Medicare

those over 65 and/or disabled

What is the purpose of free enterprise? To allow businesses free rein To give consumers freedom of choice To keep government out of business To influence economic policies

to give consumers freedom of choice

What form of aid is unemployment insurance and who are the recipients

cash and workers who were laid off

What is a safety net

A set of government programs that protects people expieriencing unfavourable economic conditions

If a teacher decides to have her students volunteer at a community nursing home after school, which of the following would be a negative externality? A student would learn a new skill from a nursing hime resident. A student would enjoy himself and volunteer to spend more time with the residents. A student would feel good about herself. A student would be unable to work at her part-time job on that afternoon.

A student would be unable to work her part time jobs that afternoon

What is considered a negative effect of government regulations? -They cut into company profits. -They stifle competition. -They cause higher prices for consumers. -All of the above.

All of the above

What is a traditional economy

An economy that relies on habit, custom, or ritual to decide what to produce, how to produce it, and to whom to distribute it

Requiring strict obedience to an authority, such as a dictator.

Authoritarian

The United States economy is a mixed economy -based on the principles of the traditional economy, but allowing some government intervention. -Based on the principles of the centrally planned economy, but limiting government intervention. -Based on the principles of the free market, allowing no government intervention. -Based on the principles of the free market, but allowing some government intervention.

Based on the principles of the free market, but allowing some government intervention.

What kind of economy does China have

Centrally planned but in transition period to market based

Various federal, state, and local government programs help to raise people's standard of living because --Certain groups of people have fewer opportunities to be productive. --People living in areas of poverty cannot afford to pay their taxes. --People expect to maintain that standard of living. --The standard of living is too low.

Certain groups of people have fewer opportunities to be productive

How does information provided by the government influence consumer decisions? -Consumers prevent companies from selling products revealed to be dangerous. -Consumers do not buy products revealed to be dangerous. -Consumers use the information to test new products for themselves. -Consumers buy products regardless of government information.

Consumers do not buy products revealed to be dangerous

What is government's role in controlling externalities in the American economy? Government tries to encourage all externalities so that the market will be competitive. Government tries to limit all externalities because they represent market failure. Government tries to encourage positive externalities and limit negative externalities. Government tries to limit positive externalities and encourage negative externalities.

Government tries to encourage positive externalities and limit negative externalities

What form of aid is Medicare and Medicaid

Health insurance

Requires a large capital investment and produces items used by others.

Heavy industry

Why might a socialist society have a less rigid command economy than a communist society? In a socialist society, various political systems may be combined with public control of the economy. In a socialist society, all economic and political power rests in the hands of the central government. In a socialist society, an authoritarian government controls the economy. In a socialist society, the centers of economic power are under private control.

In a socialist society, various political systems may be combined with public control of the economy.

Which of the following is NOT a reason for the government to provide a good or service as a public good? It would be inefficient to exclude nonpayers. The good or service should be made available to everyone. Increasing the number of consumers would increase the cost to a private provider. It would be impractical to make consumers pay individually.

Increasing the number of consumers would increase the cost to a private provider.

Why has America been referred to as "the land of opportunity"? It provides anyone from any background the possibility of success through hard work. It provides farmers with the ability to farm without levying taxes on the farmland. It provides jobs for all citizens. It provides paving surfaces made of gold.

It provides anyone from any background the possibility of success through hard work.

Which of the following is NOT a disadvantage of a centrally planned economy? It usually cannot meet consumers' needs and wants. It tries to meet explicitly stated goals. It does not reward innovation. It sacrifices individual freedoms.

It tries to mee explicitly stated goals

All of the following programs provide direct cash transfers EXCEPT --Worker's Compensation. --Social Security. --Medicaid. --Temporary Assistance for Needy Families (TANF)

Medicaid

Health insurance for the elderly, the poor, and the disabled is provided by --Medicare and Medicaid under the Social Security program. --Medicare and Medicaid under the unemployment insurance program. --Worker's Compensation and Medicaid under the Social Security program. --Medicare and Worker's Compensation under the unemployment insurance program.

Medicare and medicaid under the social security program

What kind of economy does Canada have?

More of a free market economy

Why do markets exist?

No one is self-sufficient

Market in which firms purchase the factors of production from households.

Product market

What part of the economy finances public goods? Free riders Public sector Private sector Consumers

Public sector

In what two ways does the Bill of Rights protect and guarantee individuals' freedom to engage in business activities? Recognizes property rights and limits on taxation. Encourages legal equality and provides free contracts. Denies the government the ability to regulate commerce. Provides each industry with a competitive edge.

Recognizes property rights and limits on taxationto give

What is laissez-faire?

The doctrine that government generally should not intervene in the marketplace

Why might Soviet economic planners have favored heavy industry over the makers of consumer goods? The products of heavy industry brought in more money. There were more people trained to work in heavy industry. Consumer goods are not good economic investments. The products of heavy industry provide material for many other industries.

The products of heavy industry provide material for many other industries.

How did collectives in the Soviet Union avoid the competition that drives a free market economy? There were no incentives for competition because the government determined prices, wages , and products. The farmers were not able to sell their own products. Heavy industry was not a direct competitor. It was illegal to buy products from a competitor.

There were no incentives for competition because the government determined prices, wages , and products.

How do public goods limit a free market economy? -They allow consumers to make all of the economic decisions. -They do not allow consumers to make any economic decisions. -They allow consumers to make only occasional economic decisions. -They allow government, and not consumers, to make some economic decisions.

They allow government, and not consumers, to make some economic decisions.

What is critical in determining whether something is produced as a public good? Whether the market is willing to provide it Whether the government is willing to provide it Whether the benefits to society are greater than the total cost Whether the benefits to society are equal to the total cost

Whether the benefits to society are greater than the total cost

Who was Adam Smith and what did he say?

a famous economist who said when the free market was left to its own devices it would provide the biggest benefit for consumers and raise the standard of living

an arrangment that allows buyers and sellers to exchange things

a market

Education programs make the economy more productive by --reducing injuries on the job. --providing more jobs for educators. --reducing payments to unemployed people. --adding to human capital and labor productivity.

adding to human capital and labor productivity

What form of aid is social security and who are the recipients

cash and eldery, disabled, and survivors of deceased wage earners

What form of aid is TANF and who are the recipients

cash and needy families or households

What form of aid is workers compensation and who are the recipients

cash and workers injured on the job

socialism still has

democracy

Business cycles occur in free enterprise systems because --the standard of living is very high. --economic decisions about factors such as prices, production, and consumption are determined by the market. --the government creates public policy to create cycles. --the efficiency of workers is not the same from season to season, but fluctuates on a regular basis annually.

economic decisions about factors such as prices, production, and consumption are determined by the market.

An encyclopedia entry illustrating how a hunter-gatherer group collects and shares food resources is describing that society's _______________________ .

economic system

What are the economic goals

efficiencym freedom, security and predictability, equity, and growth and innovation

The most common in-kind benefits are --coupons, food stamps, subsidized housing, and legal aid. --food giveaways, food stamps, subsidized housing, and tuition reimbursements. --food giveaways, food stamps, subsidized housing, and legal aid. --food giveaways, food stamps, housing reimbursements, and legal aid.

food giveaways, food stamps, subsidized housing, and legal aid

An economic system that permits the conduct of business with minimal government intervention

free enterprise

An expectation that encourages people to behave in a certain way.

incentive

The United States governemnt intervenes to provide competition for private firms. impose barriers on foreign trade. keep order, provide vital services, promote the general welfare, and help fix market failures restrict the banking industry.

keep order, provide vital services, and promote the general welfare and to help fix market failures

When voluntary exchanges in the markets determine decisions on production and consumption, the society's economic system is a

market economy

economic decisions made by individuals and are based on exchange or trade -- individuals decide what gets made and who consumes it

market economy

What basic principles are fundamental to American free enterprise? -state-owned property, contracts, voluntary exchange, self-interest, profit motive and competition -economic freedom, private property, contracts, voluntary exchange, business interests, profit motive and protection from competition -open opportunity, private property, contracts, voluntary exchange, profit motive, legal equality and competition. -economic freedom, private property, contracts, mandatory exchange, profit motive, legal equality and competition

open opportunity, private property, contracts, voluntary exchange, profit motive, legal equality and competition

In most mixed economies, the government does NOT purchase land, labor , and capital from households in the factor market. own all the property and confiscate all economic output. purchase goods and services in the product market. redistribute wealth through taxes and other means.

own all the property and confiscate economic output

Who are the recipients of Medicaid

poor unemployed or poor employed but insured

To sell to individuals state-run firms, which are then allowed to compete with on another in the marketplace

privatize

Financial gain made in a transaction.

profit

Sweden's social benefit programs provide many health care and other advantages but involve a very high tax burden for the people. provide many health care and other advantages at no cost to the people. provide many health care and other advantages but cost the people three quarters of their base salary. provide many advantages to businesses, making them highly profitable.

provide many health care and other advantages but involve a very high tax burden for the people.

Improved technology helps create a higher standard of living for future generations by --preventing drastic shifts in general price levels. --creating specialized jobs for workers. --providing additional goods and services. --reducing the number of unemployed workers.

providing additional goods and services.

People who receive disaster relief from the government after a flood are benefiting from an economic system that provides a _______________ .

safety net

A social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society.

socialism

social and political philosophy based on the belief that democratic means should used to distribute wealth evenly

socialism

Concentration of productive efforts of individuals and firms on a limited number of activities.

specialization

Policymakers pursue all of the following goals to stabilize the economy EXCEPT stable productivity high employment stable prices steady growth

stable productivity

What is competition?

struggle among producers for the dollars of consumers

The federal government monitors and regulates American banks and other financial institutions because the government is determined to protect its own money. to keep greater control over the economy. to improve the standard of living. to shield money from the damaging effects of economic downturns.

to shield money from the damaging effects of economic downturns

An economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services is a

traditional economy

Period of change in which an economy moves away from a centrally planned economy toward a market-based system

transition