Question 1

What famous economist said that the market economy seemed to be controlled by an invisible hand?

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 2

In Marx's ideal communist society, the state:

Accepted Answer

A)  actively promotes income incentives. 
B)  follows the doctrine of laissez faire. 
C)  owns resources and conducts planning. 
D)  does not exist. 
A)  actively promotes income incentives. 
B)  follows the doctrine of laissez faire. 
C)  owns resources and conducts planning. 
D)  does not exist.

Question 3

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 4

Adam Smith is the father of modern economics.

Accepted Answer

A) True 
 B)False

Question 5

Adam Smith's basic economic philosophy stated in The Wealth of Nations can be stated as:

Accepted Answer

A)  laissez faire. 
B)  allow to act. 
C)  the least government is best. 
D)  all of the above. 
A)  laissez faire. 
B)  allow to act. 
C)  the least government is best. 
D)  all of the above.

Question 6

Adam Smith, in his book, The Wealth of Nations , advocated:

Accepted Answer

A)  socialism. 
B)  an economy guided by an "invisible hand." 
C)  government control of the "invisible hand." 
D)  the adoption of mercantilism. 
A)  socialism. 
B)  an economy guided by an "invisible hand." 
C)  government control of the "invisible hand." 
D)  the adoption of mercantilism.

Question 7

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 8

A classless society and economic system where all the factors of production are owned by workers and people share production according to their needs describes:

Accepted Answer

A)  capitalism. 
B)  communism. 
C)  the invisible hand. 
D)  a mixed economy. 
A)  capitalism. 
B)  communism. 
C)  the invisible hand. 
D)  a mixed economy.

Question 9

An economic system is the organizations and methods used to determine:

Accepted Answer

A)  what goods and services are produced. 
B)  how goods and services are produced. 
C)  for whom goods and services are produced. 
D)  all of the above. 
A)  what goods and services are produced. 
B)  how goods and services are produced. 
C)  for whom goods and services are produced. 
D)  all of the above.

Question 10

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 11

Which of the following is a criticism of capitalism?

Accepted Answer

A)  Unequal distribution of income. 
B)  Failure to protect the environment. 
C)  Exploitation of workers. 
D)  All of the above. 
A)  Unequal distribution of income. 
B)  Failure to protect the environment. 
C)  Exploitation of workers. 
D)  All of the above.

Question 12

Discuss the three basic types of economic systems.

Accepted Answer

Three basic economic systems are the tra

Question 13

In a command economy, the basic economic questions are answered by:

Accepted Answer

A)  central authority. 
B)  individual buyers and sellers. 
C)  the traditional methods. 
D)  none of the above. 
A)  central authority. 
B)  individual buyers and sellers. 
C)  the traditional methods. 
D)  none of the above.

Question 14

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 15

Which of the following is a characteristic of socialism?

Accepted Answer

A)  Rejection of central planning. 
B)  Government ownership of all factors of production. 
C)  Government ownership of most of the factors of production. 
D)  Private ownership of all factors of production. 
A)  Rejection of central planning. 
B)  Government ownership of all factors of production. 
C)  Government ownership of most of the factors of production. 
D)  Private ownership of all factors of production.

Question 16

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 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

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

Accepted Answer

A)  Businesspersons conspiring to fix prices are a threat to the price system. 
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)  Businesspersons conspiring to fix prices are a threat to the price system. 
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 19

In Karl Marx's view, people under the ideal state of communism would be motivated by the principle "from each according to his ability, to each according to his enterprise."

Accepted Answer

A) True 
 B)False

Question 20

A command system uses a group of planners or central authority to make basic economic decisions.

Accepted Answer

A) True 
 B)False

Exam 22: Economies in Transition

What famous economist said that the market economy seemed to be controlled by an invisible hand?

In Marx's ideal communist society, the state:

According to Adam Smith's invisible hand doctrine:

Adam Smith is the father of modern economics.

Adam Smith's basic economic philosophy stated in The Wealth of Nations can be stated as:

Adam Smith, in his book, The Wealth of Nations , advocated:

A strength of the market economy is that:

A classless society and economic system where all the factors of production are owned by workers and people share production according to their needs describes:

An economic system is the organizations and methods used to determine:

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 is a criticism of capitalism?

Discuss the three basic types of economic systems.

In a command economy, the basic economic questions are answered by:

Socialism is correctly described by which of the following statements?

Which of the following is a characteristic of socialism?

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

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 is not an idea advocated by Adam Smith?

In Karl Marx's view, people under the ideal state of communism would be motivated by the principle "from each according to his ability, to each according to his enterprise."

A command system uses a group of planners or central authority to make basic economic decisions.

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