Question 1

The residual claimant(s) is(are):

Accepted Answer

A) the employees. 
B) the creditors. 
C) the owners. 
D) the government. 
A) the employees. 
B) the creditors. 
C) the owners. 
D) the government.

Question 2

The competitive market system:

Accepted Answer

A) encourages innovation because government provides tax breaks and subsidies to those who develop new products or new productive techniques. 
B) discourages innovation because it is difficult to acquire additional capital in the form of new machinery and equipment. 
C) discourages innovation because firms want to get all the profits possible from existing machinery and equipment. 
D) encourages innovation because successful innovators are rewarded with economic profits. 
A) encourages innovation because government provides tax breaks and subsidies to those who develop new products or new productive techniques. 
B) discourages innovation because it is difficult to acquire additional capital in the form of new machinery and equipment. 
C) discourages innovation because firms want to get all the profits possible from existing machinery and equipment. 
D) encourages innovation because successful innovators are rewarded with economic profits.

Question 3

The term "laissez faire" suggests that:

Accepted Answer

A) land and other natural resources should be privately owned, but capital should be publicly owned. 
B) land and other natural resources should be publicly owned, but capital equipment should be privately owned. 
C) government should not interfere with the operation of the economy. 
D) government action is necessary if the economy is to achieve full employment and full production. 
A) land and other natural resources should be privately owned, but capital should be publicly owned. 
B) land and other natural resources should be publicly owned, but capital equipment should be privately owned. 
C) government should not interfere with the operation of the economy. 
D) government action is necessary if the economy is to achieve full employment and full production.

Question 4

In the circular flow diagram, cost and household income flow:

Accepted Answer

A) in opposite directions. 
B) in the same direction and are on the same side of the diagram. 
C) in either direction as they are not correlated. 
D) on opposite sides of the circular flow model. 
A) in opposite directions. 
B) in the same direction and are on the same side of the diagram. 
C) in either direction as they are not correlated. 
D) on opposite sides of the circular flow model.

Question 5

Which of the following statements best describes a mixed economy?

Accepted Answer

A) In a mixed economy, society determines production and the allocation of goods and services only through the market system. 
B) In a mixed economy, government policies determine the production and the allocation of goods and services, but each individual is free to pursue his or her own self-interest. 
C) In a mixed economy, the government and private sectors interact in determining production and allocation of goods and services. 
D) In a mixed economy, the role of individual self-interest is relatively unimportant because government makes most of the economic decisions. 
A) In a mixed economy, society determines production and the allocation of goods and services only through the market system. 
B) In a mixed economy, government policies determine the production and the allocation of goods and services, but each individual is free to pursue his or her own self-interest. 
C) In a mixed economy, the government and private sectors interact in determining production and allocation of goods and services. 
D) In a mixed economy, the role of individual self-interest is relatively unimportant because government makes most of the economic decisions.

Question 6

Households and businesses are:

Accepted Answer

A) both buyers in the factor market. 
B) both suppliers in the product market. 
C) suppliers in the factor and product markets respectively. 
D) suppliers in the product and factor markets respectively. 
A) both buyers in the factor market. 
B) both suppliers in the product market. 
C) suppliers in the factor and product markets respectively. 
D) suppliers in the product and factor markets respectively.

Question 7

The development of MP3 players that significantly reduce the market for CDs and DVDs would be an example of:

Accepted Answer

A) specialization. 
B) derived demand. 
C) roundabout production. 
D) creative destruction. 
A) specialization. 
B) derived demand. 
C) roundabout production. 
D) creative destruction.

Question 8

Which fundamental question about a competitive market system primarily focuses on the cost of producing the good and services?

Accepted Answer

A) What will be produced? 
B) How will the goods and services be produced? 
C) How will the system accommodate change? 
D) Who is to receive the output? 
A) What will be produced? 
B) How will the goods and services be produced? 
C) How will the system accommodate change? 
D) Who is to receive the output?

Question 9

Which is the main problem with the barter system of exchange? Barter:

Accepted Answer

A) encourages self-interest and selfishness. 
B) fosters specialization and division of labour. 
C) requires a coincidence of wants. 
D) undermines the right to bequeath. 
A) encourages self-interest and selfishness. 
B) fosters specialization and division of labour. 
C) requires a coincidence of wants. 
D) undermines the right to bequeath.

Question 10

As opposed to the market system, in command economies:

Accepted Answer

A) the reward for innovation is extensive. 
B) the reward for innovation does not exist. 
C) meeting the production targets are extremely important. 
D) the profit motives are extremely high. 
A) the reward for innovation is extensive. 
B) the reward for innovation does not exist. 
C) meeting the production targets are extremely important. 
D) the profit motives are extremely high.

Question 11

The economy of the former Soviet Union was best described as:

Accepted Answer

A) authoritarian capitalism. 
B) mixed capitalism. 
C) a command economy. 
D) market socialism. 
A) authoritarian capitalism. 
B) mixed capitalism. 
C) a command economy. 
D) market socialism.

Question 12

Competition means that:

Accepted Answer

A) sellers can cause artificial product scarcities and thereby manipulate market price. 
B) there are large numbers of independently acting buyers and sellers in each market. 
C) a given product can be purchased at a number of different prices. 
D) there is only one seller in a market. 
A) sellers can cause artificial product scarcities and thereby manipulate market price. 
B) there are large numbers of independently acting buyers and sellers in each market. 
C) a given product can be purchased at a number of different prices. 
D) there is only one seller in a market.

Question 13

The simple circular flow model shows that:

Accepted Answer

A) households are on the demand side of both product and factor markets. 
B) businesses are on the supply side of both product and factor markets. 
C) households are on the supply side of the factor market and on the demand side of the product market. 
D) businesses are on the demand side of the product market and on the supply side of the factor market. 
A) households are on the demand side of both product and factor markets. 
B) businesses are on the supply side of both product and factor markets. 
C) households are on the supply side of the factor market and on the demand side of the product market. 
D) businesses are on the demand side of the product market and on the supply side of the factor market.

Question 14

Which is not one of the Five Fundamental Questions?

Accepted Answer

A) How will the goods and services be produced? 
B) How will the system accommodate change? 
C) Who will get the goods and services? 
D) What goods and services should be produced by government? 
A) How will the goods and services be produced? 
B) How will the system accommodate change? 
C) Who will get the goods and services? 
D) What goods and services should be produced by government?

Question 15

The Canadian economy most closely approximates:

Accepted Answer

A) mixed capitalism 
B) a command economy 
C) market socialism 
D) authoritarian capitalism 
A) mixed capitalism 
B) a command economy 
C) market socialism 
D) authoritarian capitalism

Question 16

The "invisible hand" concept suggests that:

Accepted Answer

A) changes in product demands are only randomly reflected in changes in the demands for resources. 
B) profit maximization is inconsistent with an efficient allocation of resources. 
C) government action is necessary to correct for market failures. 
D) when firms maximize their profits, society's domestic output will also be maximized. 
A) changes in product demands are only randomly reflected in changes in the demands for resources. 
B) profit maximization is inconsistent with an efficient allocation of resources. 
C) government action is necessary to correct for market failures. 
D) when firms maximize their profits, society's domestic output will also be maximized.

Question 17

Today, China's economy most closely approximates:

Accepted Answer

A) pure capitalism 
B) a command economy 
C) market socialism 
D) authoritarian capitalism 
A) pure capitalism 
B) a command economy 
C) market socialism 
D) authoritarian capitalism

Question 18

Property rights do not encourage people to cooperate.

Accepted Answer

A) True 
 B)False

Question 19

Refer to the circular flow model of the economy.In the diagram flow (3) represents:

Accepted Answer

A) wage, rent, interest, and profit income. 
B) land, labour, capital, and entrepreneurial ability. 
C) goods and services. 
D) consumer expenditures. 
A) wage, rent, interest, and profit income. 
B) land, labour, capital, and entrepreneurial ability. 
C) goods and services. 
D) consumer expenditures.

Question 20

The use of money for exchange:

Accepted Answer

A) increases the use of barter. 
B) reduces consumer sovereignty. 
C) decreases the coincidence of wants. 
D) encourages more specialization in production. 
A) increases the use of barter. 
B) reduces consumer sovereignty. 
C) decreases the coincidence of wants. 
D) encourages more specialization in production.

Exam 2: B: The Market System and the Circular Flow

The residual claimant(s) is(are):

The competitive market system:

The term "laissez faire" suggests that:

In the circular flow diagram, cost and household income flow:

Which of the following statements best describes a mixed economy?

Households and businesses are:

The development of MP3 players that significantly reduce the market for CDs and DVDs would be an example of:

Which fundamental question about a competitive market system primarily focuses on the cost of producing the good and services?

Which is the main problem with the barter system of exchange? Barter:

As opposed to the market system, in command economies:

The economy of the former Soviet Union was best described as:

Competition means that:

The simple circular flow model shows that:

Which is not one of the Five Fundamental Questions?

The Canadian economy most closely approximates:

The "invisible hand" concept suggests that:

Today, China's economy most closely approximates:

Property rights do not encourage people to cooperate.

Refer to the circular flow model of the economy.In the diagram flow (3) represents:

The use of money for exchange:

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

Filters