Question 1

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

Question 2

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. C

Question 3

Which of the following is not a characteristic of capitalism?

Accepted Answer

A)  Private ownership of resources. 
B)  Decentralized decision-making using markets. 
C)  Representative democracy. 
D)  Consumer sovereignty. 
A)  Private ownership of resources. 
B)  Decentralized decision-making using markets. 
C)  Representative democracy. 
D)  Consumer sovereignty. C

Question 4

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 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

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 7

In a traditional economy, innovation is encouraged.

Accepted Answer

A) True 
 B)False

Question 8

A mixed economy cannot exist without a politically free society.

Accepted Answer

A) True 
 B)False

Question 9

Centralized planning agencies are a key feature of command economies.

Accepted Answer

A) True 
 B)False

Question 10

In a market economy:

Accepted Answer

A)  collective decision-making is more important than individual decision-making. 
B)  goods and services are distributed as if by an "invisible hand" to those who can not afford them. 
C)  profit provides an incentive to be productive. 
D)  the distribution of wealth is equitably distributed. 
A)  collective decision-making is more important than individual decision-making. 
B)  goods and services are distributed as if by an "invisible hand" to those who can not afford them. 
C)  profit provides an incentive to be productive. 
D)  the distribution of wealth is equitably distributed.

Question 11

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

Accepted Answer

A) True 
 B)False

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

Which of the following is true in a market economy?

Accepted Answer

A)  Central planners determine answers to the basic economic questions. 
B)  Resources are used efficiently. 
C)  The distribution of wealth is equal. 
D)  Information for production and distribution decisions pass directly to buyers from the government. 
A)  Central planners determine answers to the basic economic questions. 
B)  Resources are used efficiently. 
C)  The distribution of wealth is equal. 
D)  Information for production and distribution decisions pass directly to buyers from the government.

Question 14

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 15

Adam Smith believed that a nation would produce the maximum wealth by relying on government to make public interest economic decisions.

Accepted Answer

A) True 
 B)False

Question 16

Under socialism, no markets can operate at all.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

When the official price for goods and services is below the equilibrium price in a market, prices no longer perform their rationing function efficiently.

Accepted Answer

A) True 
 B)False

Question 19

Adam Smith was an advocate of:

Accepted Answer

A)  mercantilism. 
B)  a nation maximizing its stock of gold. 
C)  unrestricted or free trade. 
D)  the visible hand of public interest. 
A)  mercantilism. 
B)  a nation maximizing its stock of gold. 
C)  unrestricted or free trade. 
D)  the visible hand of public interest.

Question 20

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 and therefore goods and services produced.

Accepted Answer

A) True 
 B)False

Exam 22: Economies in Transition

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

Which of the following is a characteristic of capitalism?

Which of the following is not a characteristic of capitalism?

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:

Which of the following statements is true ?

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

In a traditional economy, innovation is encouraged.

A mixed economy cannot exist without a politically free society.

Centralized planning agencies are a key feature of command economies.

In a market economy:

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

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

Which of the following is true in a market economy?

Which of the following is a characteristic of capitalism?

Adam Smith believed that a nation would produce the maximum wealth by relying on government to make public interest economic decisions.

Under socialism, no markets can operate at all.

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

When the official price for goods and services is below the equilibrium price in a market, prices no longer perform their rationing function efficiently.

Adam Smith was an advocate of:

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 and therefore goods and services produced.

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

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

International Trade and Finance

Growth and the Less-Developed Countries

Filters