Question 1

During the Industrial Revolution:

Accepted Answer

A) feudal lords lost their power to artisans. 
B) mercantilists lost their power to capitalists. 
C) artisans lost their power to mercantilists. 
D) capitalists lost their power to mercantilists. 
A) feudal lords lost their power to artisans. 
B) mercantilists lost their power to capitalists. 
C) artisans lost their power to mercantilists. 
D) capitalists lost their power to mercantilists.

Question 2

For a market to exist:

Accepted Answer

A) private property rights must be allocated and defended by government. 
B) government must guarantee equal treatment for all. 
C) individuals must be concerned with the social good. 
D) everyone must have identical wants and desires. 
A) private property rights must be allocated and defended by government. 
B) government must guarantee equal treatment for all. 
C) individuals must be concerned with the social good. 
D) everyone must have identical wants and desires.

Question 3

The Soviet socialist economy fell apart primarily because:

Accepted Answer

A) it was based on barter rather than monetary exchange. 
B) individuals are not motivated by self-interest. 
C) workers lacked incentives to work and production was inefficient. 
D) markets failed to develop. 
A) it was based on barter rather than monetary exchange. 
B) individuals are not motivated by self-interest. 
C) workers lacked incentives to work and production was inefficient. 
D) markets failed to develop.

Question 4

How do global economic issues differ from national policy issues? How has the international economic community dealt with this difference?

Accepted Answer

Global economic issues differ from natio

Question 5

One advantage of a corporation over a sole proprietorship is:

Accepted Answer

A) greater accountability. 
B) avoidance of double taxation. 
C) ease of formation. 
D) greater ability to obtain funds. 
A) greater accountability. 
B) avoidance of double taxation. 
C) ease of formation. 
D) greater ability to obtain funds.

Question 6

Mercantilism was a system in which all of the following were true except:

Accepted Answer

A) political rather than social forces controlled the central economic decisions. 
B) economic rather than social forces controlled the central economic decisions. 
C) governments encouraged growth by supporting trading activities. 
D) governments limited growth by protecting monopolies. 
A) political rather than social forces controlled the central economic decisions. 
B) economic rather than social forces controlled the central economic decisions. 
C) governments encouraged growth by supporting trading activities. 
D) governments limited growth by protecting monopolies.

Question 7

Waste produced by a power plant that harms local fishing industries is an example of a:

Accepted Answer

A) demerit good. 
B) private good. 
C) limited liability. 
D) negative externality. 
A) demerit good. 
B) private good. 
C) limited liability. 
D) negative externality.

Question 8

List the advantages and disadvantages of the three primary forms of business in the United States.

Accepted Answer

The table summarizes

Question 9

Market economies are based on:

Accepted Answer

A) private property and individual good will toward others. 
B) government planning and individual good will toward others. 
C) government planning and individual self-interest. 
D) private property and individual planning. 
A) private property and individual good will toward others. 
B) government planning and individual good will toward others. 
C) government planning and individual self-interest. 
D) private property and individual planning.

Question 10

Suppose a single firm gains control of an industry by preventing other firms from entering the industry. As a result, the price charged by the single firm is much higher than the price that would be charged by many different firms producing this product in a competitive market. This situation can best be described as:

Accepted Answer

A) a market failure. 
B) a government failure. 
C) an efficient outcome. 
D) a competitive outcome. 
A) a market failure. 
B) a government failure. 
C) an efficient outcome. 
D) a competitive outcome.

Question 11

Healthy food and charitable giving are examples of:

Accepted Answer

A) merit goods or activities. 
B) demerit goods or activities. 
C) negative externalities. 
D) public goods. 
A) merit goods or activities. 
B) demerit goods or activities. 
C) negative externalities. 
D) public goods.

Question 12

Which economic system depends primarily on tradition to answer the "What to produce?" question? Which economic system depends on government planners to make that decision? Which economic system depends on the market to make that decision?

Accepted Answer

Feudalism relied on tradition

Question 13

In socialism:

Accepted Answer

A) economic forces do not operate. 
B) individuals are encouraged to act for their own benefit. 
C) government planning, rather than the market, is relied upon to coordinate economic activity. 
D) distribution is determined by the individual's ability. 
A) economic forces do not operate. 
B) individuals are encouraged to act for their own benefit. 
C) government planning, rather than the market, is relied upon to coordinate economic activity. 
D) distribution is determined by the individual's ability.

Question 14

Which of the following statements is correct?

Accepted Answer

A) Neither stocks nor bonds are financial assets. 
B) Stocks are financial assets but bonds are not. 
C) Bonds are financial assets but stocks are not. 
D) Both stocks and bonds are financial assets. 
A) Neither stocks nor bonds are financial assets. 
B) Stocks are financial assets but bonds are not. 
C) Bonds are financial assets but stocks are not. 
D) Both stocks and bonds are financial assets.

Question 15

Governments can make trading easier and more beneficial by:

Accepted Answer

A) establishing externalities. 
B) limiting private restrictions on trade. 
C) setting quotas. 
D) providing merit goods. 
A) establishing externalities. 
B) limiting private restrictions on trade. 
C) setting quotas. 
D) providing merit goods.

Question 16

The difference between an L3C (low profit limited liability company)and other types of businesses is that:

Accepted Answer

A) L3Cs are chartered by the government and all profits are retained by the government. 
B) L3Cs do not pursue profit, but instead seek social goals. 
C) L3Cs explicitly take on a social mission as well as profit-seeking. 
D) L3Cs cannot accept government funding of any kind. 
A) L3Cs are chartered by the government and all profits are retained by the government. 
B) L3Cs do not pursue profit, but instead seek social goals. 
C) L3Cs explicitly take on a social mission as well as profit-seeking. 
D) L3Cs cannot accept government funding of any kind.

Question 17

Some nutritionists consider junk food or eating junk food an example of:

Accepted Answer

A) merit goods or activities. 
B) demerit goods or activities. 
C) positive externalities. 
D) public goods. 
A) merit goods or activities. 
B) demerit goods or activities. 
C) positive externalities. 
D) public goods.

Question 18

Which of the following would most likely generate a negative externality?

Accepted Answer

A) Education 
B) A lighthouse 
C) Cigarette smoke 
D) Employment 
A) Education 
B) A lighthouse 
C) Cigarette smoke 
D) Employment

Question 19

With a sole proprietorship:

Accepted Answer

A) all of one's assets are at risk of loss. 
B) shares are valued by the marketplace. 
C) responsibility is shared. 
D) income is taxed twice. 
A) all of one's assets are at risk of loss. 
B) shares are valued by the marketplace. 
C) responsibility is shared. 
D) income is taxed twice.

Question 20

Some argue that Sweden's generous welfare benefits, which pay people who lose their jobs as much as 80 percent of previous incomes for three years, has resulted in too-high unemployment. This can be seen as an example of:

Accepted Answer

A) market failure due to unfair conditions produced by the labor market. 
B) government not correcting externalities produced by the market. 
C) government failure in fostering a competitive market environment. 
D) globalization causing hardworking youth to emigrate. 
A) market failure due to unfair conditions produced by the labor market. 
B) government not correcting externalities produced by the market. 
C) government failure in fostering a competitive market environment. 
D) globalization causing hardworking youth to emigrate.

Exam 3: Economic Institutions

During the Industrial Revolution:

For a market to exist:

The Soviet socialist economy fell apart primarily because:

How do global economic issues differ from national policy issues? How has the international economic community dealt with this difference?

One advantage of a corporation over a sole proprietorship is:

Mercantilism was a system in which all of the following were true except:

Waste produced by a power plant that harms local fishing industries is an example of a:

List the advantages and disadvantages of the three primary forms of business in the United States.

Market economies are based on:

Healthy food and charitable giving are examples of:

Which economic system depends primarily on tradition to answer the "What to produce?" question? Which economic system depends on government planners to make that decision? Which economic system depends on the market to make that decision?

In socialism:

Which of the following statements is correct?

Governments can make trading easier and more beneficial by:

The difference between an L3C (low profit limited liability company)and other types of businesses is that:

Some nutritionists consider junk food or eating junk food an example of:

Which of the following would most likely generate a negative externality?

With a sole proprietorship:

Some argue that Sweden's generous welfare benefits, which pay people who lose their jobs as much as 80 percent of previous incomes for three years, has resulted in too-high unemployment. This can be seen as an example of:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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