How is the principle of "There's No Such Thing As A Free Lunch" (TNSTAAFL) illustrated in socialist economies?

Socialist economies offer many government services but have high tax rates

What have some states done to protect workers from adverse economic events such as layoffs and illnesses?

They set up unemployment compensation programs

Division of labor is practiced because...

It increases efficiency by ensuring workers become good at specific tasks

Which of the following statements BEST describes the communist ideal?

A classless society in which everyone works for the common good

Which of the following describes a move away from capitalism?

The nationalization of major industries in Hugo Chavez's Venezuela

What kind of economy offers uniformity in wages regardless of individual productivity?

Command and socialist economies

What conclusion can be drawn about capitalism from South Korea's economic growth in the late 20th century?

Capitalism can restore a damaged economy

How does the government operate in a free enterprise economy?

It establishes laws and rules to maintain competition

Which of the following explains why products made under a command economy are more likely to be of low quality?

The workers who make them have very little incentive to make them well

Inflation causes people to....

Work more to pay for basic necessities

Which of the following is a major advantage of a market economy?

There is a high degree of individual freedom

How are economic transactions shaped in a traditional economy?

Elders and ancestors make certain that things are done in specific ways

Consumers are powerful because...

they drive decisions about what to produce

In its role of "protector" of the American free enterprise system, one of the issues the government must deal with is..

Environmental hazards, Weeding out corruption

Which of these statements describes the disadvantage of a traditional economy?

New ways of doing things are discouraged

Which of the following is a cause of struggle in the process of privatization?

People must adjust to the costs and risks that are part of capitalism

What is one of the benefits related to economic equity?

Receiving equal pay for equal work

Which of these helps explain why mixed economies develop?

People become unhappy with aspects of their current economy

Which statement describes a disadvantage of a command economy?

Nothing stops the government from producing things that people don't need

What is the main difference between Japanese capitalism and capitalism in the United States?

Japan's government is highly involved in day-to-day business management

Which of the following states an advantage of a traditional economy?

Everyone knows exactly what their function is

Which of the following is a disadvantage of a market economy?

It sustains a high degree of uncertainty

Which of the following could raise the cost of production in a command economy?

A large and inefficient bureaucracy

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Mr. Watkins' Economics Unit 1 Review

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Answers

1
How is the principle of "There's No Such Thing As A Free Lunch" (TNSTAAFL) illustrated in socialist economies?
Socialist economies offer many government services but have high tax rates
Socialist policies offer advantages to the wealthy at the expense of others
Socialist economies tend to collapse when they become too large
The marketplaces in a socialist economy are free for anyone to enter
2
What have some states done to protect workers from adverse economic events such as layoffs and illnesses?
They gave workers more time off
They set up support groups
They provide every worker with insurance
They set up unemployment compensation programs
3
Who ULTIMATELY determines the success of a product?
The business producing the product
The consumer
The government
The store selling the product
4
Societies embrace various economic systems to deal with the fundamental problems of.....
Demand
Money
Scarcity
Luxury
5
___________________ is a system in which government owns and controls some, but not all, productive resources.
Capitalism
Fascism
Socialism
Communism
6
Which of the factors of production involves taking risks and combining resources to produce a good or a service?
Land
Capital
Entrepreneurs
Labor
7
Division of labor is practiced because...
It prevents specialization
Companies do not want workers to talk to one another.
It increases efficiency by ensuring workers become good at specific tasks
It increases efficiency by ensuring all workers become good at every task
8
The three synonymous terms to describe the US economic system are free enterprise, capitalism, and __________________.
Limited role of government
Competition
Economic freedom
Free market
9
The economic system in the United States is considered a ________________.
Free market capitalist economy
Command economy
Socialist economy
Traditional economy
10
Which of the following statements BEST describes the communist ideal?
A classless society in which workers are motivated by financial incentives
A society in which a small ruling class provides goods for the common good
A classless society in which everyone works for the common good
A society in which the working class is motivated by incentives to produce
11
Who did Karl Marx believe would be the beneficiaries of socialism?
Capitalists
Property owners
The government
Workers
12
Which of the following describes a move away from capitalism?
The transformation of the former Soviet Union to today's Russia
The nationalization of major industries in Hugo Chavez's Venezuela
Economic reforms following the Great Depression in the United States
Sweden's 1980 cutback on social programs
13
The phrase "the customer is always right" is most often associated with what term?
Entrepreneurship
Mixed economy
Consumer sovereignty
Regulatory government
14
What is the name of the federal health insurance program for senior citizens?
Social Security
Medicare
Medicaid
Social Care
15
Consumers are expected to read the full information about a product before making a purchase. This is an example of...
responsibilities
rights
opportunities
habits
16
When deciding how to use resources, you need to evaluate the costs and benefits These decisions are called:
Trade-offs
Priorities
Opportunities
Resource frontiers
17
The amount of output in a specific amount of time with a given amount of resources is referred to as...
efficiency
investment risk
human capital
productivity
18
What kind of economy offers uniformity in wages regardless of individual productivity?
Traditional economies
All economies
Command and socialist economies
Market and free-enterprise economies
19
What conclusion can be drawn about capitalism from South Korea's economic growth in the late 20th century?
There is no real difference between socialism and capitalism
Socialism can revive an economy over a prolonged period of time
A transition from capitalism to a command economy can involve struggle
Capitalism can restore a damaged economy
20
Which of these economic systems have the LEAST in common?
Market economy and capitalism
Command economy and capitalism
Free-enterprise economy and market economy
Command economy and socialism
21
Which of the following would result in a change in the production possibilities frontier?
An influx of immigrants from other countries
All of the above
A long drought
The discovery of an abundant natural resource
22
In which of these systems is the government most likely to provide people with goods and services they could not afford?
A market economy
A free-enterprise economy
A traditional economy
A socialist economy
23
How does the government operate in a free enterprise economy?
It interferes with business only when it is profitable
It tells businesses what to produce and what to sell
It takes a "hands-off' approach to business
It establishes laws and rules to maintain competition
24
Which of the following explains why products made under a command economy are more likely to be of low quality?
The workers who make them are left to manage facilities of their own
The workers who make them have very little incentive to make them well
The workers are forced by tradition to use old fashioned materials
The workers who make them are not given quality-control guidelines
25
Inflation causes people to....
Take more time off work
Spend less for the same amount of goods and services
Work the same hours for the same pay
Work more to pay for basic necessities
26
Consumers waiting in long lines for a new product is an example of....
Consumer Rights
Consumerism
Consumer Responsibilities
Scarcity
27
Which of the following is a major advantage of a market economy?
It can change direction rapidly as needed when markets change
There is efficient government control of production and distribution
People are likely to be offered goods and services they cannot afford
There is a high degree of individual freedom
28
How are economic transactions shaped in a traditional economy?
Elders and ancestors make certain that things are done in specific ways
Each community decides as a group for whom the group will produce
Individuals form networks in which they buy, sell, and trade as they will
The basic questions of production do not arise in this type of community
29
What motivates people to work, save, and invest?
Incentives
Economic freedom
A variety of goods
Government regulations
30
_____________________ protect consumers against harm from products on the market.
Private property rights
Government regulations
Profit motives
Franchises
31
Consumers are powerful because...
they help decide a business's opportunity costs
they drive decisions about what to produce
their interests force producers to behave ethically
they have more rights than corporations.
32
The dollar value of all final goods, services, and structures produced in a country in a year is known as _____________.
Franchise
Gross Domestic Product (GDP)
Gross National Product (GNP)
Profit Motive
33
Consumers in a free enterprise economy ultimately determine _________________ to produce.
How
Where
What
When
34
Which of these countries has an economy most similar to that of the former Soviet Union?
Sweden
South Korea
Norway
North Korea
35
Which country is an example of a capitalist country?
Singapore
North Korea
Venezuela
Cuba
36
In its role of "protector" of the American free enterprise system, one of the issues the government must deal with is..
Helping businesses get started
Overseeing communications
Environmental hazards
Weeding out corruption
37
Which of these statements describes the disadvantage of a traditional economy?
Difficult economic decisions are made by the state
New ways of doing things are encouraged
Everyone knows his or her role
New ways of doing things are discouraged
38
Which of the following is a cause of struggle in the process of privatization?
People must adjust to government control of their economy
People must adjust to the costs and risks that are part of capitalism
People must become used to no longer owning their own homes and businesses
People must decide how best to get along without a free market
39
What is one of the benefits related to economic equity?
Unemployment compensation programs
Living on a fixed income
Receiving equal pay for equal work
Conserving resources
40
In a _____________ economy, production questions are answered by the government.
Market
Traditional
Keynesian
Command
41
A can of soup is an example of...
Capital good
Service
Durable good
Nondurable good
42
In a ____ economy, what, how, and for whom to produce are answered by the buying and selling activity of individuals.
Command
Traditional
Market
Communist
43
Which of these helps explain why mixed economies develop?
People become unhappy with aspects of their current economy
People are seldom exposed to the ideas and technologies of other cultures
Government control of an economy leads to diverse economic approaches
Government control of an economy tends to make a nation more prosperous
44
Which statement describes a disadvantage of a command economy?
It cannot "change direction" easily if the need arises to do so
It does little to help the needy obtain the goods and services they need
Nothing stops the government from producing things that people don't need
Items tend to be produced solely for the sake of profit
45
What is the main difference between Japanese capitalism and capitalism in the United States?
Japan has a more dedicated and loyal workforce
Japan does not permit the sale of corporate stock
Japan's government is highly involved in day-to-day business management
Japan's government regulates private firms to keep competition at a minimum
46
The struggle among sellers to attract consumers by offering the best products at the lowest price is known as _________.
Voluntary exchange
Profit motive
Competition
Property rights
47
Which of the following states an advantage of a traditional economy?
Everyone knows exactly what their function is
There is no bureaucracy to interfere with organizing the economy
Creativity and original thought are rewarded
Property rights are based on tradition
48
Which of the following is a disadvantage of a market economy?
It sustains a high degree of uncertainty
It does not allocate resources as efficiently as other types of economies
It restricts personal freedom
It discourages creativity and new ideas for doing things
49
A new technology that makes production twice as efficient has been released How will this affect the production frontier
It would expand the frontier
It would not change the frontier
It would make the frontier smaller
It would change the shape of the frontier
50
Which of the following could raise the cost of production in a command economy?
A free media
A large and inefficient bureaucracy
A newly discovered source of raw materials
A strict quota system
51
Markets in a free enterprise system are seldom regulated by _________________.
Entrepreneurs
Consumers
The government
Businesses
52
"Opportunity cost" refers to...
The cost of labor when production is expanded or exchanged
The cost of not expanding production
The value of the next best alternative
The dollar amount attached to a good or service
53
Protection from layoffs, illnesses, injuries, or disabilities falls under the goal of _______________
Economic growth
Economic security
Economic equity
Economic efficiency
54
A general rise in prices over time is known as....
Voluntary exchange
Inflation
Profit
A catalyst
55
When a nation's total output increases over time, the nation is experiencing...
Economic interdependence
A decrease in gross domestic product
An expansion of the possibilities curve
Economic growth
56
Which nation today is the most striking example of successful privatization?
North Korea
Cuba
The Soviet Union
China
57
The most comprehensive measure of a nation's wealth is provided by its...
capital goods
TINSTAAFL rating
gross domestic product
product possibilities curve
58
Which of these is an accurate statement about mixed economies today?
There are more mixed economies in the world than any other kind
Mixed economies exist mostly in nations with communist governments
Most nations that had a mixed economy have evolved into command economies
Very few economies today can be accurately described as "mixed"
59
Which of the following is largely responsible for the growth of a free enterprise system?
Market efficiency
Government
Gross Domestic Product (GDP)
Profit motive
60
Which type of economy is the most prevalent in the world today?
Market
Traditional
Command
Mixed
61
Which of the following statements best describes the purpose of the production possibilities curve?
It identifies trends in production
It predicts the future production of a nation
It identifies the combinations of goods and services an economy can make
It shows which products are most profitable
62
Societies are faced with which three basic questions about production of goods?
WHAT, WHERE, and WHEN?
WHAT, HOW, and FOR WHOM?
WHAT, HOW, and WHY?
WHEN, WHERE, and FOR WHOM?
63
In a transitioning economy, why would privatization tend to raise a nation's overall standard of living?
It places a nation's ruling class in a position to control the economy
People are more likely to be productive when it benefits them personally
It places the means of production in the hands of the government
People are less likely to assume the risk of entrepreneurship
64
The efficient use of scarce resources leads to an increase in...
Capital
Investment
Productivity
Scarcity
65
A nation's wealth is determined by its...
accumulation of all tangible products
accumulation of all tangible and intangible resources
accumulation of all intangible products
natural resources
66
Which of the following descriptions best explains the meaning of opportunity cost?
The cost of business failure
The initial cost of starting a new business
The risk associated with producing a new item
The cost of choosing one alternative over another
67
A car is an example of a...
Nondurable good
Capital good
Service
Durable good
68
When a business needs to decide whether a certain action is worth the cost, the most helpful analysis tool would be a...
Economic model
Needs assessment
Cost-benefit analysis
Production possibility comparision
69
Consumers can influence the production and sale of goods by....
Saving their money
"Voting" with their dollars
Paying off their debts
Reducing their spending habits
70
Dave gets a job at a grocery store, which pays him an hourly wage in exchange for his labor. Dave is participating in...
The product market
The factor market
Entrepreneurship
Human capital
71
The four factors of production are land, labor, capital, and ___________________.
The government
Franchises
Inflation
Entrepreneurs
72
Which of the following is currently considered one of the seven major economic and social goals in the United States?
Price stability
Preserving endangered species
Clean environment
Conservation
73
Which statement describes why people in a nation with a command economy might resist a shift to a free market economy
business owners are reluctant to place their capital under worker authority
Workers are reluctant to give up their participation in a classless society
Workers are reluctant to accept complete government control of the economy
People who had political power are threatened by fundamental changes
74
The study of economics involves....
Studying how things are made, bought, sold, and used
Explaining how incomes are earned and how jobs are created
Explaining how people deal with scarcity
All of the above
75
"Paradox of value" refers to the...
Contradiction of what consumers want and what they need
Contradiction between gross domestic product and market value
High value of a nonessential item and the low value of an essential item
High value of an essential item and the low value of a nonessential item
76
Which of the following lists economic systems in order from LEAST to MOST flexible?
Socialism, command, free market
Command, socialism, free market
Free market, socialism, command
Free market, command, socialism
77
A nation's wealth is made up of...
All tangible items
All goods and services
All tangible and intangible items
All intangible items
78
What gives people and businesses the opportunity to make their own decisions?
Free enterprise
Command economy
Profit motive
Economic freedom
79
Economic equity means that it is illegal to discriminate on the basis of age, sex, race, religion, or _________________.
Status
Political views
Disability
Income
80
Which of these statements is descriptive of a market economy?
Major economic decisions are made by individuals, not for them
Major economic decisions are made for individuals, not by them
Most media is state-owned and operated
The government determines what is produced and by whom
81
Which of these statements apply to present-day Sweden?
Its GDP per capita and welfare payout rates are both relatively low
Its unemployment rate and GDP per capita are relatively high
Its taxation and unemployment rates are relatively low
Its unemployment rate and GDP per capita are relatively low
82
Which of the following is the most striking example of costs and risks of pure capitalism?
The Great Depression
The Five-Year Plan
The Great Leap Forward
The Gosplan
83
The way the 19th-century Native Americans divided the "spoils of the hunt" amongst themselves demonstrates a ___economy.
Traditional
Communist
Market
Command
84
Which of the following is a feature of a command economy that distinguishes it from a socialist economy?
Some degree of private ownership and activity is allowed
All economic decisions are made by the free market
All economic decisions are based on custom and habit
All production is managed by the government
85
One of the characteristics of a capitalist free enterprise economy is ______________.
Voluntary exchange
The minimum wage
Consumerism
Central planning
86
What bellow represents a place where the transition to capitalism is nearly complete but far from fully effective?
Western Europe
North Korea
Eastern Europe
South Korea
87
Which of the following is the best description of the economic system of Cuba?
It is a traditional economy with a strong, central authority
It is a mixed economy in transition to a command economy
It is a command economy in transition to a mixed economic system
It is a command economy with a strong, central authority

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