Economics Chapter 2 Test

United States Economy

1. Market economy 2. Right to own property 3. Own your own business 4. Voluntary exchange

Which choice is not a factor of production? A. natural resources B. energy resources C. human resources D. capital resources

B

Which of the following advantages does NOT belong to a market economy? A. Efficient production B. Less unemployment C. More choices D. Better quality of goods

B

Which of the following is not an example of capital that can be used to produce motorcycles? A. machines B. workers C. tools D. a factory

B

Which of the following characteristics does NOT describe the features of a command economy? A. Scarcity and rationing of goods often occur. B. The market is inefficient C. Individuals can decide what to produce and how much to produce D. There are fewer choices than a market economy

C

Which of the following statements is NOT true about Chinese market reforms? A. They reduced the role of government intervention in China. B. They largely increased China's GDP C. They turned the whole Chinese economy into a market system D. They helped create social unrest in China

C

Which of the following characteristics does NOT belong to a market economy? A. Private ownership B. Voluntary Market Exchange C. Government price setting D. Incentives

C. Government price setting

Mixed economy

Combination of a market and command economy

Incentive

Encouraging or discouraging behavior

True or false: In a market economy, prices of goods and services are kept fixed

False

Which group of people ultimately determines the products that a command economy produces?

Government officials

Characteristics of a command economy

Government steps in and takes over all production, tells entrepreneur what they'll make and tells public what they want

Mercantilism

Only buying from your own nation to not improve others and therefore improving your country.

Example of a mixed economy

Social security and taxes

Command economy

The government decides what you need and want

True or False: The Chinese agricultural reform increased farmers' incentives by allowing them to profit from the surplus production of their leased land. Consequently, farmers began to produce more from their land.

True

True or false: In a command economy, the price of goods and services is determined by the government

True

true or false: people tend to work harder when an employer promises to increase their wages. The hard work is an effect of the incentive provided by the employer.

True

True or false: In US economy, individuals make all the decisions about their properties and businesses

false

An example of a traditional economy

farming

Characteristics of a traditional economy

money reliant, increasingly rare

What is the typical distribution process used with manufactured goods?

producer-wholesaler-stores-customers

Traditional economy

the way its always been done

According to the "invisible hand" theory, how can self-interest benefit society? A. by frequently producing what consumers want B. by trying to intentionally benefit society C. self-interest can never benefit society D. self-interest always benefits society

A

Which of the following choices are the three main processes studied in economics? A. production, distribution, and circulation B. production, distribution, and consumption C. production, consumption, and circulation D. distribution, circulation, and consumption

B

Which of the following combinations include only services? A. a haircut, a cheeseburger, and access to an internet connection B. a computer training course, a concert, and a massage C. a health consult, prescription medication, and kickboxing lessons D. a financial services consultation, books, and computers

B

Which of the following situations is most likely to be a topic in macroeconomics? A. a decrease in wages paid to recent college graduates B. a decrease in the national unemployment rate C. an increase in the price of computers D. the entry of a new software company

B

which of the following choices is NOT one of the 3 basic economic questions? A. what goods and services should be produced? B. how much should be produced? C. when should the goods and services be produced? D. for whom will these goods and services be produced?

C

Example of a command economy

Communist and socialist governments

Capitalism is associated with all of the following characteristics EXCEPT ______. A. personal decision making with regard to investments B. The right to earn a profit based on individual effort C. personal ownership of property D. government intervention in the economy's decision-making process

D

In which of the following situations is private ownership not guaranteed? A. Jane's business was closed because the landlord increased the rent and she could no longer afford to stay open. B. Jane's business was closed because of the recent bad weather. C. Jane's business was closed because of low sales D. Jane's business was closed because the government wanted to reduce competition with a state-owned businesses.

D

Which of the following examples reflects a profit-seeking behavior? A. a worker pursuing better working conditions B. a company seeking ways to increase sales C. customers looking for higher levels of satisfaction D. all of the above

D

Characteristics of a market economy

Entrepreneur fails if consumers reject product, entrepreneur that decides what consumers want gets the greatest reward

Characteristics of a mixed economy

Entrepreneurs are generally free but have government restrictions

Which of the following is NOT an example of a voluntary exchange? A. Your neighbor borrows your bicycle without asking B. You go to buy one pound of beef because you want to cook steak tonight C. You sell your old textbooks because you do not need them anymore D. You exchange a basketball ticket for a concert ticket with your friend.

A

Which of the following is NOT true about the US economy? A. Consumers have limited choices of goods and services B. Access to the internet promotes the exchange of information between producers and consumers C. The US largely promotes property rights D. It is often described as the world's largest and most technologically oriented market economy.

A

In a market economy, the basic economic decisions are driven by_____

Individuals

No one person needs to know how to construct a car in its entirety because of ____.

Specialization

Entrepreneurs are motivated to invest due to___.

The potential for capital gain

Eminent domain

The right of a government or its agent to expropriate private property for public use, with payment of compensation

when parties trade willingly and without coercion, this is referred to as a ______

Voluntary transaction

Voluntary exchange

You're not forced into transactions. No one is forcing you to buy or sell things.

Market economy

consumer decides whats going to be produced