Question 1

Economic efficiency and economic freedom are commonly cited as two major benefits of socialism.

Accepted Answer

A) True 
 B)False

Question 2

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 3

In the real world, countries use a mixture of the three basic types of economic systems.

Accepted Answer

A) True 
 B)False

Question 4

The economic system that is generally considered to be the most efficient at answering the What to produce and the How to produce questions is 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 are weaknesses of a command-based economic system? ​

Accepted Answer

A)  ​It is not possible for goods to be allocated based on need rather than based on willingness and ability to pay. 
B)  ​Producers have incentives to innovate because successful innovators are not rewarded with higher profit. 
C)  ​Since price is set by central planners, price cannot freely adjust to resolve shortages or surpluses based on current supply and demand conditions. 
D)  ​Answers b. and c. above are correct. 
A)  ​It is not possible for goods to be allocated based on need rather than based on willingness and ability to pay. 
B)  ​Producers have incentives to innovate because successful innovators are not rewarded with higher profit. 
C)  ​Since price is set by central planners, price cannot freely adjust to resolve shortages or surpluses based on current supply and demand conditions. 
D)  ​Answers b. and c. above are correct.

Question 6

Which of the following economic systems answers the basic economic questions by copying the previous generation?

Accepted Answer

A)  Traditional economy. 
B)  Command economy. 
C)  Market economy. 
D)  Capitalism. 
A)  Traditional economy. 
B)  Command economy. 
C)  Market economy. 
D)  Capitalism.

Question 7

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 8

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

Accepted Answer

A) True 
 B)False

Question 9

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.

Question 10

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 11

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 12

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 13

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

Accepted Answer

A) True 
 B)False

Question 14

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 the above. 
A)  Steel. 
B)  Electricity. 
C)  Agriculture. 
D)  All of the above.

Question 15

Which nation achieved the ideal communist society as described by Marx?

Accepted Answer

A)  Castro's Cuba. 
B)  Mao's China. 
C)  Stalin's Soviet Union. 
D)  No nation has achieved Marx's vision of a communist society. 
A)  Castro's Cuba. 
B)  Mao's China. 
C)  Stalin's Soviet Union. 
D)  No nation has achieved Marx's vision of a communist society.

Question 16

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 17

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 18

Most real world economies are mixed economies.

Accepted Answer

A) True 
 B)False

Question 19

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 20

The term "socialism" refers to which of the following?

Accepted Answer

A)  A religion centered on community interaction. 
B)  An economic system characterized by private ownership of resources, and decentralized market allocation. 
C)  An economic system characterized by government ownership of resources and centralized allocation. 
D)  None of the above. 
A)  A religion centered on community interaction. 
B)  An economic system characterized by private ownership of resources, and decentralized market allocation. 
C)  An economic system characterized by government ownership of resources and centralized allocation. 
D)  None of the above.

Exam 22: Economies in Transition

Economic efficiency and economic freedom are commonly cited as two major benefits of socialism.

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

In the real world, countries use a mixture of the three basic types of economic systems.

The economic system that is generally considered to be the most efficient at answering the What to produce and the How to produce questions is the:

Which of the following are weaknesses of a command-based economic system? ​

Which of the following economic systems answers the basic economic questions by copying the previous generation?

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

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

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

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

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?"

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

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

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

Which nation achieved the ideal communist society as described by Marx?

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

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

Most real world economies are mixed economies.

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

The term "socialism" refers to which of the following?

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

Which of the following are weaknesses of a command-based economic system?