Question 1

In a traditional economy, innovation is encouraged.

Accepted Answer

A) True 
 B)False

Question 2

A strength of the market economy is that:

Accepted Answer

A)  it results in an equal distribution of wealth. 
B)  resources are used efficiently. 
C)  planners rather than consumers determine answers to the basic economic questions. 
D)  information for production and distribution decisions passes directly from the government to buyers. 
A)  it results in an equal distribution of wealth. 
B)  resources are used efficiently. 
C)  planners rather than consumers determine answers to the basic economic questions. 
D)  information for production and distribution decisions passes directly from the government to buyers.

Question 3

Under socialism, which of the following industries would probably be owned by the government?

Accepted Answer

A)  Steel. 
B)  Electricity. 
C)  Agriculture. 
D)  All of these. 
A)  Steel. 
B)  Electricity. 
C)  Agriculture. 
D)  All of these.

Question 4

Karl Marx viewed socialism only as a transition to the ideal state of communism.

Accepted Answer

A) True 
 B)False

Question 5

In a market economy, the three economic questions are answered by which of the following?

Accepted Answer

A)  Prices determined by the interaction of the forces of supply and demand. 
B)  A cartel of major transnational corporations, government agencies, and consumer advocates. 
C)  A trilateral commission of major corporations, the military, and elite university professors. 
D)  A central authority such as people's committee, a government agency, or a dictator. 
A)  Prices determined by the interaction of the forces of supply and demand. 
B)  A cartel of major transnational corporations, government agencies, and consumer advocates. 
C)  A trilateral commission of major corporations, the military, and elite university professors. 
D)  A central authority such as people's committee, a government agency, or a dictator.

Question 6

Karl Marx's massive work, titled Das Kapital, was published in 1848.

Accepted Answer

A) True 
 B)False

Question 7

The command system relies on prices set by firms on the basis of consumer demands.

Accepted Answer

A) True 
 B)False

Question 8

Adam Smith wrote that the:

Accepted Answer

A)  economic problems of eighteenth-century England were caused by free markets. 
B)  government should control the economy. 
C)  pursuit of private self interest promotes the public interest in a market economy. 
D)  public or collective interest is not promoted by people pursuing their self interest. 
A)  economic problems of eighteenth-century England were caused by free markets. 
B)  government should control the economy. 
C)  pursuit of private self interest promotes the public interest in a market economy. 
D)  public or collective interest is not promoted by people pursuing their self interest.

Question 9

Which of the following statements is true?

Accepted Answer

A)  The doctrine of laissez-faire advocates an economic system with extensive government intervention and little individual decision-making. 
B)  In capitalism income is distributed on the basis of need. 
C)  Adam Smith was the father of socialism. 
D)  Most real-world economies are mixed economic systems. 
E)  The "invisible hand" refers to government economic control. 
A)  The doctrine of laissez-faire advocates an economic system with extensive government intervention and little individual decision-making. 
B)  In capitalism income is distributed on the basis of need. 
C)  Adam Smith was the father of socialism. 
D)  Most real-world economies are mixed economic systems. 
E)  The "invisible hand" refers to government economic control.

Question 10

A command system uses a group of planners or central authority to make basic economic decisions.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a correct characterization of socialism?

Accepted Answer

A)  Tradition answers the basic economic questions. 
B)  Markets are used exclusively to answer the basic economic questions. 
C)  Central planning is seldom used to answer the basic economic questions. 
D)  Government ownership of many resources and centralized decision-making answers the basic economic questions. 
A)  Tradition answers the basic economic questions. 
B)  Markets are used exclusively to answer the basic economic questions. 
C)  Central planning is seldom used to answer the basic economic questions. 
D)  Government ownership of many resources and centralized decision-making answers the basic economic questions.

Question 12

In Adam Smith's competitive market economy, the question of what goods to produce is determined by the:

Accepted Answer

A)  "invisible hand" of the price system. 
B)  "invisible hand" of government. 
C)  "invisible hand" of public interest. 
D)  "visible hand" of laws and regulations. 
A)  "invisible hand" of the price system. 
B)  "invisible hand" of government. 
C)  "invisible hand" of public interest. 
D)  "visible hand" of laws and regulations.

Question 13

The basic characteristics of a pure capitalist system include the private ownership of the means of production and economic activity being coordinated through a system of markets and prices.

Accepted Answer

A) True 
 B)False

Question 14

Karl Marx envisioned communism as an economic system that blends the best elements of capitalism and socialism.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not a characteristic of capitalism?

Accepted Answer

A)  Private ownership of the factors of production. 
B)  Businesses make their own product and price decisions. 
C)  Public ownership of the factors of production. 
D)  Decentralized decision-making using markets. 
A)  Private ownership of the factors of production. 
B)  Businesses make their own product and price decisions. 
C)  Public ownership of the factors of production. 
D)  Decentralized decision-making using markets.

Question 16

Which of the following statements is true?

Accepted Answer

A)  The United States today comes closer to the socialist form of economic organization than it does capitalism. 
B)  When central planners set prices above equilibrium for goods and services they create shortages. 
C)  According to Karl Marx, under capitalism, workers would be exploited and would revolt against the owners of capital. 
D)  Adam Smith argued that government's role in society would be to do absolutely nothing. 
A)  The United States today comes closer to the socialist form of economic organization than it does capitalism. 
B)  When central planners set prices above equilibrium for goods and services they create shortages. 
C)  According to Karl Marx, under capitalism, workers would be exploited and would revolt against the owners of capital. 
D)  Adam Smith argued that government's role in society would be to do absolutely nothing.

Question 17

Adam Smith's book The Wealth of Nations was published at the time of the:

Accepted Answer

A)  Great Depression. 
B)  U.S. Declaration of Independence. 
C)  U.S. Civil War. 
D)  War of 1812. 
A)  Great Depression. 
B)  U.S. Declaration of Independence. 
C)  U.S. Civil War. 
D)  War of 1812.

Question 18

Which of the following societies is the most likely to have a traditional economy?

Accepted Answer

A)  The United States. 
B)  The Inuit (native people of Northern Canada). 
C)  Cuba under Castro's rule. 
D)  Modern-day Hong Kong. 
A)  The United States. 
B)  The Inuit (native people of Northern Canada). 
C)  Cuba under Castro's rule. 
D)  Modern-day Hong Kong.

Question 19

A mixed economy cannot exist without a politically free society.

Accepted Answer

A) True 
 B)False

Question 20

Socialism is correctly described by which of the following statements?

Accepted Answer

A)  Central planning is used exclusively to answer the basic economic questions. 
B)  Markets are used exclusively to answer the basic economic questions. 
C)  Tradition is used exclusively to answer the basic economic questions. 
D)  Government ownership of many resources and centralized decision-making answers the basic economic questions. 
A)  Central planning is used exclusively to answer the basic economic questions. 
B)  Markets are used exclusively to answer the basic economic questions. 
C)  Tradition is used exclusively to answer the basic economic questions. 
D)  Government ownership of many resources and centralized decision-making answers the basic economic questions.

In a traditional economy, innovation is encouraged.

A strength of the market economy is that:

Under socialism, which of the following industries would probably be owned by the government?

Karl Marx viewed socialism only as a transition to the ideal state of communism.

In a market economy, the three economic questions are answered by which of the following?

Karl Marx's massive work, titled Das Kapital, was published in 1848.

The command system relies on prices set by firms on the basis of consumer demands.

Adam Smith wrote that the:

Which of the following statements is true?

A command system uses a group of planners or central authority to make basic economic decisions.

Which of the following is a correct characterization of socialism?

In Adam Smith's competitive market economy, the question of what goods to produce is determined by the:

The basic characteristics of a pure capitalist system include the private ownership of the means of production and economic activity being coordinated through a system of markets and prices.

Karl Marx envisioned communism as an economic system that blends the best elements of capitalism and socialism.

Which of the following is not a characteristic of capitalism?

Which of the following statements is true?

Adam Smith's book The Wealth of Nations was published at the time of the:

Which of the following societies is the most likely to have a traditional economy?

A mixed economy cannot exist without a politically free society.

Socialism is correctly described by which of the following statements?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Growth and the

Filters

Exam 16: Economies in Transition

In a traditional economy, innovation is encouraged.

A strength of the market economy is that:

Under socialism, which of the following industries would probably be owned by the government?

Karl Marx viewed socialism only as a transition to the ideal state of communism.

In a market economy, the three economic questions are answered by which of the following?

Karl Marx's massive work, titled Das Kapital, was published in 1848.

The command system relies on prices set by firms on the basis of consumer demands.

Adam Smith wrote that the:

Which of the following statements is true?

A command system uses a group of planners or central authority to make basic economic decisions.

Which of the following is a correct characterization of socialism?

In Adam Smith's competitive market economy, the question of what goods to produce is determined by the:

The basic characteristics of a pure capitalist system include the private ownership of the means of production and economic activity being coordinated through a system of markets and prices.

Karl Marx envisioned communism as an economic system that blends the best elements of capitalism and socialism.

Which of the following is not a characteristic of capitalism?

Which of the following statements is true?

Adam Smith's book The Wealth of Nations was published at the time of the:

Which of the following societies is the most likely to have a traditional economy?

A mixed economy cannot exist without a politically free society.

Socialism is correctly described by which of the following statements?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Growth and the

Filters