Question 1

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 2

Property rights allowing individuals to own goods, services, and factors of production are most important in:

Accepted Answer

A)  socialistic economies. 
B)  planned economies. 
C)  capitalistic economies. 
D)  command economies. 
A)  socialistic economies. 
B)  planned economies. 
C)  capitalistic economies. 
D)  command economies.

Question 3

A traditional system solves basic economic questions by long-standing customs.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following represents key strengths of the market economy as a system of allocation?

Accepted Answer

A)  Goods and services are allocated based on willingness and ability to pay, rather than based on need. 
B)  Producers have strong incentives to innovate because successful innovators are rewarded with higher profit. 
C)  Since price is freely set based on supply and demand, shortages and surpluses are minimized. 
D)  All of the answers above are correct. 
A)  Goods and services are allocated based on willingness and ability to pay, rather than based on need. 
B)  Producers have strong incentives to innovate because successful innovators are rewarded with higher profit. 
C)  Since price is freely set based on supply and demand, shortages and surpluses are minimized. 
D)  All of the answers above are correct.

Question 5

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 6

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. 
E)  The "invisible hand" refers to government economic control. 
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. 
E)  The "invisible hand" refers to government economic control.

Question 7

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 8

The freedom of consumers to cast their dollar votes to buy, or not to buy, at prices determined in competitive markets describes:

Accepted Answer

A)  socialism. 
B)  communism. 
C)  consumer sovereignty. 
D)  the aspirations of Karl Marx. 
A)  socialism. 
B)  communism. 
C)  consumer sovereignty. 
D)  the aspirations of Karl Marx.

Question 9

A principal feature of a command economy is that ____.

Accepted Answer

A)  production decisions are made by profit-maximizing firms. 
B)  there is a central planning board at the top, which transmits economic decisions down to the various producing and consuming units below. 
C)  consumers are allowed to determine that is produced based on their demand for goods and services. 
D)  regulatory agencies constrain the most egregious forms of market power in a market system of allocation. 
A)  production decisions are made by profit-maximizing firms. 
B)  there is a central planning board at the top, which transmits economic decisions down to the various producing and consuming units below. 
C)  consumers are allowed to determine that is produced based on their demand for goods and services. 
D)  regulatory agencies constrain the most egregious forms of market power in a market system of allocation.

Question 10

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. 
D)  Since price is freely set based on supply and demand, there are few shortages or surpluses. 
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. 
D)  Since price is freely set based on supply and demand, there are few shortages or surpluses.

Question 11

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 12

The economic system that answers the What, How and For Whom questions using prices 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 13

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.

Question 14

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 15

Karl Marx published:

Accepted Answer

A)  Das Kapital. 
B)  General Theory of Communism . 
C)  The Wealth of Nations . 
D)  Capitalist Manifesto . 
A)  Das Kapital. 
B)  General Theory of Communism . 
C)  The Wealth of Nations . 
D)  Capitalist Manifesto .

Question 16

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 17

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

Accepted Answer

A)  market economy. 
B)  command economy. 
C)  traditional economy. 
D)  none of the above. 
A)  market economy. 
B)  command economy. 
C)  traditional economy. 
D)  none of the above.

Question 18

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.

Question 19

An economic system answers the ________, ________, and _________    questions. ​

Accepted Answer

A)  ​when to produce, where to produce, why we should produce 
B)  ​wealth, greed, power 
C)  ​money, markets, the business cycle 
D)  ​what to produce, how to produce, for whom to produce 
A)  ​when to produce, where to produce, why we should produce 
B)  ​wealth, greed, power 
C)  ​money, markets, the business cycle 
D)  ​what to produce, how to produce, for whom to produce

Question 20

In a market economy, the three economic questions are answered by which of the following?

Accepted Answer

A)  Prices determined by the interaction of the forces of supply and demand. 
B)  A cartel of major transnational corporations, government agencies, and consumer advocates. 
C)  A trilateral commission of major corporations, the military, and university professors. 
D)  A central authority such as people's committee, a government agency, or a dictator. 
A)  Prices determined by the interaction of the forces of supply and demand. 
B)  A cartel of major transnational corporations, government agencies, and consumer advocates. 
C)  A trilateral commission of major corporations, the military, and university professors. 
D)  A central authority such as people's committee, a government agency, or a dictator.

Exam 22: Economies in Transition

In the real world, most economic systems are:

Property rights allowing individuals to own goods, services, and factors of production are most important in:

A traditional system solves basic economic questions by long-standing customs.

Which of the following represents key strengths of the market economy as a system of allocation?

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

Which of the following statements is true ?

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

The freedom of consumers to cast their dollar votes to buy, or not to buy, at prices determined in competitive markets describes:

A principal feature of a command economy is that ____.

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

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

The economic system that answers the What, How and For Whom questions using prices is a:

Proponents of a command economy argue that it promotes:

Socialism is an economic system characterized by:

Karl Marx published:

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

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

Karl Marx was a(n):

An economic system answers the ________, ________, and _________ questions. ​

In a market economy, the three economic questions are answered by 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

An economic system answers the , , and _ questions.