Chapter 2- Economics Test Review

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A mixed economy of Sweden has

"cradle to grave" social benefits and private ownership of property

In a communist economy, workers are

always employed by the government or government-controlled groups

With voluntary exchange, a buyer and seller agree to do business together

for the mutual benefit of both

In a communist economy, resources are owned by

government

When a nation's economy privatizes it changes from

government ownership to private ownership

The situation where women tend crops and raise children while men hunt is often found in a

traditional economy

Explain the growth of the global economy

transportation is faster, cheaper, and safe computer linkages have made global financial transactions quick, easy, and inexpensive business operations have been enhanced by cross-border business partenerships

A grocery store shows the influence of competition when

two brands of peanut butter with different prices are on the store shelf

Karl Marx predicted that in time

workers would overthrow the industrial system

An advantage of a pure market economy is that it

allows local communities to set their own economic development

Between 1867 and 1894, Karl Marx published a 3-volume study called

Capital

According to Karl Marx, wage slavery was created by the

Industrial Revolution

Write a summary of Karl Marx's economic theories

Marx believed that all of history was based on class differences and the struggle between them. For example, owners of businesses grew richer as the poor stayed poor or became poorer. Marx also believed that the industrial revolution created a system of wage slavery. Marx's last theory explained his beliefs of worker exploitation. Worker exploitation is the idea of keeping wages low to make greater profits. For example, businesses would sell products at a higher price to make greater profits. Worker exploitation became the basis for the industrial system.

The nation where government plays the most limited role in the economy is

The United States

In the former Soviet Union, the practice of people taking factory light bulbs to use in their homes was the result of

a shortage brought on by poor decisions made by central planners

A circular flow model shows how

all interactions occur in a market economy

Absolute loyalty to the people in power is required by a(n)

authoritarian system

Which statement accurately describes both capitalism and communism

both capitalism and communism undertake investments

Suppliers in a product market are

businesses

In a factor market

businesses are customers and individuals are producers

Which statement best contrasts capitalism and communism

businesses own resources; government owns resources

According to Karl Marx, all of history us a struggle between

classes

The influence of the global economy is shown when a shortage of

coffee in Kenya causes coffee prices to rise in the United States

A society that has public schools and ownership of private property has elements of both

command and market economic systems

Bureaucrats deciding what products should be sold in store fronts is a feature of a

command economy

Government officials deciding the distribution of all resources is a feature of a

command economy

A form of authoritarian socialism is

communism

Global financial transactions have been made quick,, inexpensive, and easy by

computer linkages

In a market economy, the real power in the market place is held by the

consumer

A business taking a survey to find out consumer's wants is an illustration of

consumer sovereignty

In economic terms, property means

everything an individual owns and the labor he/she provides

An individual hiring a waitress is participating in the

factor market

With capitalism, which action might reduce unemployment

increase hiring at private firms

The economic decisions of central planners often are wrong because they have little understanding of

local economic conditions

Producers and consumers drive the economy of a

market economic system

Freedom of economic choice is one of the chief advantages of a

market economy

The disastrous famine in North Korea was the result, in great part, of the government's efforts to develop a

market economy

With capitalism, the allocation of good and resources is determined by

market forces

Elements of traditional, command, and market economies are combined in a

mixed economy

Moving steel mills from private ownership to public ownership is an example of

nationalization

In today's world, there are

no pure market economies

Well-defined and actively-enforced private property rights are necessary to the efficient operation of markets work because they prove that a person

owns what he or she is selling

When a nation's economy nationalizes it changes from

private ownership to public ownership

With capitalism, investment is driven by

private parties seeking profits

Moving railroads from government ownership to ownership by stockholders is an example of

privatization

An individual buying a DVD is participating in the

product market

With capitalism, which of the following do market forces reward

productivity and private ownership of resources

Since 2003, central planners of North Korea have

relaxed restrictions on private ownership somewhat

Which of the following statements about communism is accurate

resources are owned by the government

The government owns some, or all, factors of production in a(n)

socialist system

An example of intellectual property is a(n)

song

In economic terms, laissez faire means that the government

stays out of the market place

The way society uses scarce resources to satisfy its people's unlimited wants is called an economic

system

With capitalism, income distribution is determined by market forces

that reward productivity

A society in which some people practice subsistence farming while others own businesses has elements of both

traditional and socialist economic systems

In the United States, harvest-time customs represent the influence of a

traditional economy

Resistance to the introduction of new farming methods is an attitude often found in a

traditional economy


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