Question 1

The economic system that answers the What , How and For Whom questions using prices determined by the interaction of supply and demand 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.

Question 2

A market system does not operate based on self-interest.

Accepted Answer

A) True 
 B)False

Question 3

In the former Soviet economy, the supreme planning board that transmitted economic decisions down to producing and consuming units was called the:

Accepted Answer

A) Soviet Ministry. 
B) Polit Bureau. 
C) Gosplan. 
D) Soviet Central Committee for Economic Planning. 
A) Soviet Ministry. 
B) Polit Bureau. 
C) Gosplan. 
D) Soviet Central Committee for Economic Planning.

Question 4

One of the strengths of a socialist economy, according to those who advocate such a system, is that government intervention will enable a more equitable distribution of income.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Socialism is an economic system characterized by:

Accepted Answer

A) private ownership of resources and market decision-making. 
B) government ownership of resources and centralized decision-making. 
C) cooperation, sharing, and little central government. 
D) a complex structure of rules and traditions that dictates decision-making. 
A) private ownership of resources and market decision-making. 
B) government ownership of resources and centralized decision-making. 
C) cooperation, sharing, and little central government. 
D) a complex structure of rules and traditions that dictates decision-making.

Question 7

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

Accepted Answer

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

Question 8

Adam Smith believed that the pursuit of the public interest is also the best way to promote the private self interest.

Accepted Answer

A) True 
 B)False

Question 9

The economic system in which the basic economic questions are answered through markets with some government intervention is a:

Accepted Answer

A) command economy. 
B) mixed economy. 
C) market economy. 
D) planned economy. 
A) command economy. 
B) mixed economy. 
C) market economy. 
D) planned economy.

Question 10

What famous economist said, "By pursuing his own interest he (an individual)frequently promotes that of the society more effectually than when he really intends to promote it?"

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 11

In a socialistic system, most economic decisions are made by:

Accepted Answer

A) firms. 
B) consumers. 
C) stockholders. 
D) government planners. 
A) firms. 
B) consumers. 
C) stockholders. 
D) government planners.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Adam Smith argued that government should actively intervene in market to improve economic performance.

Accepted Answer

A) True 
 B)False

Question 14

Government involvement has become so prevalent in the U.S. economy that the U.S. economy is now generally considered to be a socialist economy.

Accepted Answer

A) True 
 B)False

Question 15

According to Adam Smith's invisible hand doctrine:

Accepted Answer

A) self-interest best serves the interests of society. 
B) laissez faire must be improved by government intervention. 
C) producers should serve the best interests of society. 
D) only laissez faire mercantilism best serves the interests of society. 
A) self-interest best serves the interests of society. 
B) laissez faire must be improved by government intervention. 
C) producers should serve the best interests of society. 
D) only laissez faire mercantilism best serves the interests of society.

Question 16

Which of the following is a characteristic of capitalism?

Accepted Answer

A) Equality of income. 
B) Government decision-making is preferred to decentralized decision-making. 
C) Market determination of prices and quantity. 
D) Government ownership of all capital. 
A) Equality of income. 
B) Government decision-making is preferred to decentralized decision-making. 
C) Market determination of prices and quantity. 
D) Government ownership of all capital.

Question 17

What is the difference between socialism and communism? What are some examples of countries that are largely socialistic and some that are communistic?

Accepted Answer

Communism is a socialist economic system

Question 18

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 19

An economic system characterized by private ownership of the factors of production and economic activity coordinated through a system of markets and prices is called:

Accepted Answer

A) capitalism. 
B) socialism. 
C) communism. 
D) none of these. 
A) capitalism. 
B) socialism. 
C) communism. 
D) none of these.

Question 20

Proponents of a command economy argue that it promotes:

Accepted Answer

A) efficiency. 
B) equity. 
C) consumer sovereignty. 
D) economic growth. 
A) efficiency. 
B) equity. 
C) consumer sovereignty. 
D) economic growth.

Exam 19: Economies in Transition

The economic system that answers the What , How and For Whom questions using prices determined by the interaction of supply and demand is a:

A market system does not operate based on self-interest.

In the former Soviet economy, the supreme planning board that transmitted economic decisions down to producing and consuming units was called the:

One of the strengths of a socialist economy, according to those who advocate such a system, is that government intervention will enable a more equitable distribution of income.

Which of the following statements is true ?

Socialism is an economic system characterized by:

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

Adam Smith believed that the pursuit of the public interest is also the best way to promote the private self interest.

The economic system in which the basic economic questions are answered through markets with some government intervention is a:

What famous economist said, "By pursuing his own interest he (an individual)frequently promotes that of the society more effectually than when he really intends to promote it?"

In a socialistic system, most economic decisions are made by:

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

Adam Smith argued that government should actively intervene in market to improve economic performance.

Government involvement has become so prevalent in the U.S. economy that the U.S. economy is now generally considered to be a socialist economy.

According to Adam Smith's invisible hand doctrine:

Which of the following is a characteristic of capitalism?

What is the difference between socialism and communism? What are some examples of countries that are largely socialistic and some that are communistic?

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

An economic system characterized by private ownership of the factors of production and economic activity coordinated through a system of markets and prices is called:

Proponents of a command economy argue that it promotes:

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