Question 1

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. D

Question 2

The economic system that answers the What , How and For Whom questions by central authority is a:

Accepted Answer

A) market economy. 
B) command economy 
C) traditional economy. 
D) any of these 
A) market economy. 
B) command economy 
C) traditional economy. 
D) any of these B

Question 3

The economic system that answers the What , How and For Whom questions the way they have always been answered is a:

Accepted Answer

A) market economy. 
B) command economy 
C) soviet economy. 
D) traditional economy. 
A) market economy. 
B) command economy 
C) soviet economy. 
D) traditional economy. D

Question 4

Which of the following is a characteristic of socialism?

Accepted Answer

A) Rejection of central planning. 
B) Government ownership of all factors of production. 
C) Government ownership of most of the factors of production. 
D) Private ownership of all factors of production. 
A) Rejection of central planning. 
B) Government ownership of all factors of production. 
C) Government ownership of most of the factors of production. 
D) Private ownership of all factors of production.

Question 5

In the real world, most economic systems are:

Accepted Answer

A) market economies. 
B) command economies 
C) mixed economies. 
D) traditional economies. 
A) market economies. 
B) command economies 
C) mixed economies. 
D) traditional economies.

Question 6

Who was one of the first proponents of employing market economies instead of command economies?

Accepted Answer

A) Robert Heilbroner. 
B) Karl Marx. 
C) Jeffrey Sachs. 
D) Adam Smith. 
A) Robert Heilbroner. 
B) Karl Marx. 
C) Jeffrey Sachs. 
D) Adam Smith.

Question 7

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 8

In traditional economies, people base economic decisions on the precedents established by previous generations.

Accepted Answer

A) True 
 B)False

Question 9

A mixed economy cannot exist without a politically free society.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following applies to a real-world socialistic economy?

Accepted Answer

A) Private ownership of all factors of production. 
B) Government ownership of all factors of production. 
C) Government ownership of most of the factors of production. 
D) Lack of central planning. 
A) Private ownership of all factors of production. 
B) Government ownership of all factors of production. 
C) Government ownership of most of the factors of production. 
D) Lack of central planning.

Question 11

Most of the world's economies are mixed economies because _________.

Accepted Answer

A) a cartel of powerful transnational firms demands it. 
B) the market system of allocation is always best. 
C) the command system of allocation is always best. 
D) government intervention in an overall market system exists because markets fail when there is market power, a great deal of inequality, pollution externalities, or public goods. 
A) a cartel of powerful transnational firms demands it. 
B) the market system of allocation is always best. 
C) the command system of allocation is always best. 
D) government intervention in an overall market system exists because markets fail when there is market power, a great deal of inequality, pollution externalities, or public goods.

Question 12

Which of the following is a key criticism of the market economy as a system of allocation?

Accepted Answer

A) Goods and services are allocated unequally based on ability to pay. 
B) Producers have strong incentives to innovate because successful innovators are rewarded with higher profit. 
C) Consumers can transmit their preference for product quality and variety by way of their "dollar votes" cast in the marketplace. Since price is freely set based on supply and demand, there are few shortages or surpluses. 
D) None of the above. 
A) Goods and services are allocated unequally based on ability to pay. 
B) Producers have strong incentives to innovate because successful innovators are rewarded with higher profit. 
C) Consumers can transmit their preference for product quality and variety by way of their "dollar votes" cast in the marketplace. Since price is freely set based on supply and demand, there are few shortages or surpluses. 
D) None of the above.

Question 13

Under socialism, factories, farms, mines, and natural resources are owned by:

Accepted Answer

A) laborers. 
B) government. 
C) private stockholders. 
D) no one. 
A) laborers. 
B) government. 
C) private stockholders. 
D) no one.

Question 14

According to Adam Smith, the "invisible hand" refers to which of the following?

Accepted Answer

A) The "best interests of society (public interest)will occur as an outcome of the market process coordinating the self-interested interactions of buyers and sellers (private interest). 
B) Government interference is the invisible hand of inefficiency. 
C) Bribes and graft is the invisible hand of inefficiency. 
D) The "best interests of society" will occur as an outcome of careful guidance by government authorities in allocating scarce goods and services. 
A) The "best interests of society (public interest)will occur as an outcome of the market process coordinating the self-interested interactions of buyers and sellers (private interest). 
B) Government interference is the invisible hand of inefficiency. 
C) Bribes and graft is the invisible hand of inefficiency. 
D) The "best interests of society" will occur as an outcome of careful guidance by government authorities in allocating scarce goods and services.

Question 15

Adam Smith's basic economic philosophy stated in The Wealth of Nations can be stated as:

Accepted Answer

A) laissez faire. 
B) allow to act. 
C) the least government is best. 
D) all of these. 
A) laissez faire. 
B) allow to act. 
C) the least government is best. 
D) all of these.

Question 16

The economic system that has the benefit of cooperation among individuals but suffers from a lack of individual initiative that leads to greater production describes the:

Accepted Answer

A) market economy. 
B) command economy 
C) soviet economy. 
D) traditional economy. 
A) market economy. 
B) command economy 
C) soviet economy. 
D) traditional economy.

Question 17

What famous economist said that the market economy seemed to be controlled by an invisible hand?

Accepted Answer

A) Alfred Marshall. 
B) Adam Smith. 
C) Karl Marx. 
D) Robert L. Heilbroner. 
A) Alfred Marshall. 
B) Adam Smith. 
C) Karl Marx. 
D) Robert L. Heilbroner.

Question 18

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 19

Which of the following economies is an example of a mixed system?

Accepted Answer

A) The United States. 
B) The United Kingdom. 
C) Sweden. 
D) All of these. 
A) The United States. 
B) The United Kingdom. 
C) Sweden. 
D) All of these.

Question 20

Karl Marx was a(n):

Accepted Answer

A) 19th century German philosopher. 
B) 18th century Russian economist. 
C) 14th century Polish banker. 
D) 19th century Russian journalist. 
A) 19th century German philosopher. 
B) 18th century Russian economist. 
C) 14th century Polish banker. 
D) 19th century Russian journalist.

Exam 19: Economies in Transition

Which of the following is a correct characterization of socialism?

The economic system that answers the What , How and For Whom questions by central authority is a:

The economic system that answers the What , How and For Whom questions the way they have always been answered is a:

Which of the following is a characteristic of socialism?

In the real world, most economic systems are:

Who was one of the first proponents of employing market economies instead of command economies?

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

In traditional economies, people base economic decisions on the precedents established by previous generations.

A mixed economy cannot exist without a politically free society.

Which of the following applies to a real-world socialistic economy?

Most of the world's economies are mixed economies because _________.

Which of the following is a key criticism of the market economy as a system of allocation?

Under socialism, factories, farms, mines, and natural resources are owned by:

According to Adam Smith, the "invisible hand" refers to which of the following?

Adam Smith's basic economic philosophy stated in The Wealth of Nations can be stated as:

The economic system that has the benefit of cooperation among individuals but suffers from a lack of individual initiative that leads to greater production describes the:

What famous economist said that the market economy seemed to be controlled by an invisible hand?

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

Which of the following economies is an example of a mixed system?

Karl Marx was a(n):

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Growth and the Less-Developed Countries

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

Filters