Question 1

In spite of limited free market reforms, which country remains essentially a communist system?

Accepted Answer

A)  Cuba, as shown by the heavy taxes on the expected earnings, not actual sales, of private enterprises 
B)  Cuba, as shown by the legalization of the U.S. dollar to earn foreign exchange 
C)  Russia, as shown by the allowance of supply and demand to set higher prices for basic consumer goods 
D)  Russia, as shown by the streets choked with foreign cars 
A)  Cuba, as shown by the heavy taxes on the expected earnings, not actual sales, of private enterprises 
B)  Cuba, as shown by the legalization of the U.S. dollar to earn foreign exchange 
C)  Russia, as shown by the allowance of supply and demand to set higher prices for basic consumer goods 
D)  Russia, as shown by the streets choked with foreign cars

Question 2

Which of the following is a common criticism of capitalism?

Accepted Answer

A)  poor product quality and little product diversity 
B)  inefficiency of nationalized industries 
C)  inability to adjust quickly to changing economic conditions 
D)  inadequate environmental protection 
A)  poor product quality and little product diversity 
B)  inefficiency of nationalized industries 
C)  inability to adjust quickly to changing economic conditions 
D)  inadequate environmental protection

Question 3

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 4

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. 
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.

Question 5

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

Accepted Answer

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

Question 6

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 7

Describe the differences between capitalism and socialism.

Accepted Answer

Capitalism is characterized by private o

Question 8

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.

Question 9

In a market economy, buyers and sellers communicate their intentions to one another through:

Accepted Answer

A)  government planners. 
B)  negotiations overseen by government agencies. 
C)  elected officials. 
D)  prices. 
A)  government planners. 
B)  negotiations overseen by government agencies. 
C)  elected officials. 
D)  prices.

Question 10

What type of economic system is commonly described as being controlled by an "invisible hand"?

Accepted Answer

A)  a traditional economy 
B)  a command economy 
C)  a market economy 
D)  a communist economy 
A)  a traditional economy 
B)  a command economy 
C)  a market economy 
D)  a communist economy

Question 11

Which of the following is not an idea advocated by Adam Smith?

Accepted Answer

A)  Producers must compete with one another to win customer's business. 
B)  Pursuit of private self interest with an invisible hand is the best way to promote the public interest. 
C)  Government should control the economy. 
D)  The government should provide for national defense and little else. 
A)  Producers must compete with one another to win customer's business. 
B)  Pursuit of private self interest with an invisible hand is the best way to promote the public interest. 
C)  Government should control the economy. 
D)  The government should provide for national defense and little else.

Question 12

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 13

The economic systems of the former Soviet Union, the People's Republic of China, and Cuba are best classified as:

Accepted Answer

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

Question 14

Which of the following statements correctly characterizes nationalization in the U.S.?

Accepted Answer

A)  The U.S. does not ever follow a policy of nationalization because that would run counter to our capitalist economy. 
B)  The U.S. has a history of nationalization, much of which was temporary. 
C)  The U.S. has mostly nationalized industries, including Amtrak and the United States Postal Service. 
D)  In times of crisis, the U.S. government has nationalized certain industries and those industries have remained permanently nationalized for the protection of the workers and consumers. 
A)  The U.S. does not ever follow a policy of nationalization because that would run counter to our capitalist economy. 
B)  The U.S. has a history of nationalization, much of which was temporary. 
C)  The U.S. has mostly nationalized industries, including Amtrak and the United States Postal Service. 
D)  In times of crisis, the U.S. government has nationalized certain industries and those industries have remained permanently nationalized for the protection of the workers and consumers.

Question 15

According to Adam Smith, what is the primary source of a nation's wealth?

Accepted Answer

A)  the amount of gold and silver in the government's possession 
B)  a spirit of cooperation in which people share according to their means 
C)  strong central planning authorities 
D)  the people's ability to produce products and trade in free markets 
A)  the amount of gold and silver in the government's possession 
B)  a spirit of cooperation in which people share according to their means 
C)  strong central planning authorities 
D)  the people's ability to produce products and trade in free markets

Question 16

The father of modern economics who wrote The Wealth of Nations is:

Accepted Answer

A)  Karl Marx 
B)  John Maynard Keynes 
C)  Adam Smith 
D)  Thorstein Veblen 
A)  Karl Marx 
B)  John Maynard Keynes 
C)  Adam Smith 
D)  Thorstein Veblen

Question 17

Which of the following is a characteristic of capitalism?

Accepted Answer

A)  government ownership of all capital 
B)  government decision-making is preferred to decentralized decision-making 
C)  market determination of prices and quantity 
D)  equality of income 
A)  government ownership of all capital 
B)  government decision-making is preferred to decentralized decision-making 
C)  market determination of prices and quantity 
D)  equality of income

Question 18

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 19

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 20

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.

Exam 29: Economies in Transition

In spite of limited free market reforms, which country remains essentially a communist system?

Which of the following is a common criticism 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?

Which of the following statements is true ?

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

A strength of the market economy is that:

Describe the differences between capitalism and socialism.

Socialism is correctly described by which of the following statements?

In a market economy, buyers and sellers communicate their intentions to one another through:

What type of economic system is commonly described as being controlled by an "invisible hand"?

Which of the following is not an idea advocated by Adam Smith?

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:

The economic systems of the former Soviet Union, the People's Republic of China, and Cuba are best classified as:

Which of the following statements correctly characterizes nationalization in the U.S.?

According to Adam Smith, what is the primary source of a nation's wealth?

The father of modern economics who wrote The Wealth of Nations is:

Which of the following is a characteristic of capitalism?

Which of the following is a correct characterization of socialism?

Which of the following statements is true ?

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

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

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

Understanding Direct and Inverse Relationships between Variables

Filters