Question 1

Karl Marx envisioned communism as an economic system that blends the best elements of capitalism and socialism.

Accepted Answer

A) True 
 B)False

Question 2

In Marx's ideal state of communism there would be no haves and have-nots.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements best describes the role played by prices in a command economy such as the former Soviet Union?

Accepted Answer

A)  Prices were used to allocate resources. 
B)  Prices played the same role as in a market economy. 
C)  Prices were used to ration final goods and services but not to allocate resources. 
D)  None of the above statements is descriptive. 
A)  Prices were used to allocate resources. 
B)  Prices played the same role as in a market economy. 
C)  Prices were used to ration final goods and services but not to allocate resources. 
D)  None of the above statements is descriptive.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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 6

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

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 9

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 10

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 11

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 12

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 13

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 14

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 15

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.

Question 16

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 17

In a command economy,resources are publicly owned by government and economic activity is coordinated through a central government planning authority.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

An economic system characterized by private ownership of the factor of production and economic activity coordinated through a system of markets and prices is called:

Accepted Answer

A)  capitalism. 
B)  socialism. 
C)  communism. 
D)  none of the above. 
A)  capitalism. 
B)  socialism. 
C)  communism. 
D)  none of the above.

Question 20

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.

Exam 22: Economies in Transition

Karl Marx envisioned communism as an economic system that blends the best elements of capitalism and socialism.

In Marx's ideal state of communism there would be no haves and have-nots.

Which of the following statements best describes the role played by prices in a command economy such as the former Soviet Union?

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

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

Socialism is correctly described by which of the following statements?

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

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

Which of the following statements is true?

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

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 is a characteristic of capitalism?

A strength of the market economy is that:

In Marx's ideal communist society,the state:

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

Which of the following statements is true?

In a command economy,resources are publicly owned by government and economic activity is coordinated through a central government planning authority.

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

An economic system characterized by private ownership of the factor of production and economic activity coordinated through a system of markets and prices is called:

Which of the following is true in a market economy?

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: 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

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

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

International Trade and Finance

Growth and the Less-Developed Countries

Filters