How is the economic system in China today different from the one in Soviet Russia?

The Chinese government allows far more economic freedom.

What does the process of specialization do for an economy?

It makes production more efficient.

What might be hard for citizens of a centrally planned economy moving to a free market economy?

Workers would lose job security and guaranteed incomes

A socialist society has a more flexible command economy than a communist society because

some free market practices can combine with central planning

Each society answers the three basic economic questions based on

its unique combination of values and goals.

Why might the Soviet planners have favored heavy industry over the makers of consumer goods?

Heavy industry provides material for many other industries.

How did heavy industry in the Soviet Union avoid the competition that drives a market economy?

Govt prevented competition: decided prices, wages, products

Which of the following does the U.S. Constitution NOT guarantee?

the protection against monopolies and oligopolies

A person who believed in the doctrine of laissez faire would disapprove of

government funding of education.

What does the expression “the customer is king” mean in a free market economy?

Customers have the power to decide what gets produced.

The product market is one in which

households purchase the goods & services that firms produce

How could the Chinese economy be characterized?

mixed, but more centrally planned

Which of the following is characteristic of a centrally planned economy?

The central government makes all economic decisions

How is the U.S. government involved in the factor market?

It pays wages to government employees.

Which of the following is a critical rule for determining whether something is a public good?

The total benefitsto society are greater than the total cost

What does a circular flow model of a market economy show?

how households&firms exchange money, resources, and products

Which of the following would be part of the flow indicated by the arrow labeled “b”?

smoke alarms for senators’ offices

Government intervention in a modern economy is useful because

govts are more able to meet some needs and wants of society

What does the Temporary Assistance for Needy Families program provide?

cash to the states to help run their welfare programs

The United States economy is a mixed economy

based on a free market, but allowing some govt intervention

What happens in the product market?

Households purchase the goods & services that firms produce.

Traditional economies are usually

small, close communities that avoid change and new tech

The main difference between the economies of China and North Korea is that

China is privatizing state-run businesses

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Duplicate of Econ Topic 2 (Free Enterprise and Other Economic Systems)

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Quiz for preparing for the Topic 2 Quiz

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Questions 56

Answers

1
How would you label points a and c on the diagram?
taxes
labor
government-owned factors
government purchases
2
Working where we want to is an example of which economic goal?
economic efficiency
economic security
economic equity
economic freedom
3
How is the economic system in China today different from the one in Soviet Russia?
The Chinese government allows far more economic freedom.
The Chinese government owns firms in major industries.
The Chinese government is not authoritarian.
The Chinese government is socialist, rather than communist.
4
What does the process of specialization do for an economy?
It fosters competition.
It makes labor easier to control.
It eliminates unemployment.
It makes production more efficient.
5
A new runway opens at the airport, and the flight path goes over your house.Airplane noise is a
negative externality.
market failure.
positive externality.
free-rider problem.
6
What might be hard for citizens of a centrally planned economy moving to a free market economy?
Farmers would have to grow crops the govt instructed them to
Only poor quality goods would become available to consumers
Workers would lose job security and guaranteed incomes
Entrepreneurs wouldhave fewer opp'ties to start new business
7
Which of the following might a government provide as part of a safety net for the people?
a strong military defense
unemployment compensation
regulation of commerce
general elections every four years
8
A person who consumes a good or service but doesn't pay for it is called
an entrepreneur
a free rider
a private consumer
a volunteer user
9
Which of the following best describes the physical flow from households to firms?
wages and salaries
labor and land
interest and profits
goods and services
10
A socialist society has a more flexible command economy than a communist society because
the central government has all economic and political power
an authoritarian government controls the economy
the centers of economic power are all under private control
some free market practices can combine with central planning
11
People vote to raise taxes to renovate a school in a poor neighborhood. They are pursuing
efficiency
equity
growth
freedom
12
To improve its standard of living, a nation’s economy must
allow the central government to make economic decisions.
grow through innovation.
reach economic equity.
remain stable.
13
A govt distributes posters to inspire workers to increase productivity. It probably has a
traditional economy
centrally planned economy
market economy
weak economy
14
An economy in which all boys become farmers just as their fathers & grandfathers did would be a
centrally planned economy
command economy
traditional economy
free market economy
15
Each society answers the three basic economic questions based on
its degree of economic growth.
the number of factor payments.
the desire to achieve economic freedom.
its unique combination of values and goals.
16
Why might the Soviet planners have favored heavy industry over the makers of consumer goods?
Consumer goods are not good economic investments.
The products of heavy industry brought in more money.
There were more people trained to work in heavy industry.
Heavy industry provides material for many other industries.
17
What is the total value of all final goods and services produced in a particular economy?
open market value
standard of living
net worth
gross domestic product
18
How did heavy industry in the Soviet Union avoid the competition that drives a market economy?
Government used profit as an incentive to entrepreneurs
Govt prevented competition: decided prices, wages, products
The government banned the production of consumer goods.
Farms were not in direct competition with heavy industry
19
How does a society determine who will get what is produced?
by its needs and wants
by factor payment amounts
by its distribution of income
by economic equity
20
Which of the following does the U.S. Constitution NOT guarantee?
the protection against monopolies and oligopolies
a limitation on the kinds of taxes that Congress can impose
the right to make binding contracts
the recognition and protection of private property rights
21
A person who believed in the doctrine of laissez faire would disapprove of
self-interest as the motivating force in the free market.
consumer sovereignty.
the invisible hand of the marketplace.
government funding of education.
22
When the government provides a safety net, which economic goal is it meeting?
economic efficiency
economic security
economic freedom
economic equity
23
What does the expression “the customer is king” mean in a free market economy?
In a service economy, the customer is always right.
People with the most money are treated like royalty.
Customers have the power to decide what gets produced.
Producers of goods are also customers.
24
Why do people need to buy and sell products or services?
People need to provide the market with goods and services.
People need to buy and sell products to make a profit.
No one is self-sufficient.
We need to maintain a competitive society.
25
The product market is one in which
governments collect taxes from firms and consumers
households purchase the goods & services that firms produce
income is received for supplying land, labor, or capital
firms purchase the factors of production from households
26
How could the Chinese economy be characterized?
mixed, but more like a free market
free market
centrally planned
mixed, but more centrally planned
27
Which of the following is characteristic of a centrally planned economy?
The central government makes all economic decisions
The central government lets factories set their own goals
The central government enforces laissez-faire policies
The central govt allows the market to set wages for jobs
28
The United States government intervenes in the economy in order to
protect laissez-faire
provide competition for private firms
promote the general welfare
impose barriers on foreign trade
29
Which of the following is part of communism but not socialism?
central planning
authoritarian government
government controlled services
government controlled resources
30
Which of the following is the main incentive for a manufacturer to sell a product?
making profits on sales
putting others out of business
helping the economy grow
pleasing the consumer
31
How is the U.S. government involved in the factor market?
It tells businesses and firms what to purchase.
It pays wages to government employees.
It buys paper from firms.
It purchases telephones and computers.
32
On which arrow(s) would weekly grocery shopping fall?
a
a and b
a and d
c
33
Which of the following is a critical rule for determining whether something is a public good?
The total benefitsto society are greater than the total cost
The total cost is small for each individual taxpayer
The benefit to each individual is greater than the cost.
Benefits are greater for society than for indivs using it.
34
What does a circular flow model of a market economy show?
how households&firms exchange money, resources, and products
how households&firms need the same resources at same time
how households choose the goods and services they buy
how firms control employee wages and salaries
35
Which of these economic goals is concerned with using resources wisely and reducing waste?
economic security
economic equity
economic efficiency
economic freedom
36
What is one of the most important advantages of a free market?
It protects the less fortunate.
It distributes goods equally.
It encourages growth.
It is easy to regulate.
37
The ways factors of production are combined determines the answer to which economic question?
How will goods be produced?
How can we provide a safety net?
What will be produced?
Who will consume goods?
38
What goods&services should be produced, how, and who consumes are basic questions addressed by
command economies.
mixed economies.
all economies.
market economies.
39
Which of the following is NOT an example of a public good?
highways
shopping malls
municipal libraries
national parks
40
Which of the following would be part of the flow indicated by the arrow labeled “b”?
Social Security checks
Secret Service salaries
import taxes paid by foreign firms
smoke alarms for senators’ offices
41
A major characteristic of a pure market economy is
an oversupply of labor.
strong government planning.
regulated prices.
unrestricted competition.
42
To stabilize economy, govts try to achieve three outcomes: high employment, steady growth, and
technological advancement.
consumer confidence.
competition.
stable prices.
43
Government intervention in a modern economy is useful because
free market principles do not encourage growth
the needs and wants of modern society are met by the market
the market has incentives to create public works, likeparks
govts are more able to meet some needs and wants of society
44
What do people supply in return for factor payments?
innovation, profit, or goods
innovation, labor, or trade
services, goods, or traditions
land, labor, or capital
45
What does the Temporary Assistance for Needy Families program provide?
compensation to all who lose jobs
cash to workers injured on the job
retirement income for the elderly
cash to the states to help run their welfare programs
46
The United States economy is a mixed economy
based on centrally planned but limiting govt intervention.
based on a free market, allowing no government intervention
based on traditional but allowing some govt intervention.
based on a free market, but allowing some govt intervention
47
What happens in the product market?
Income is received for supplying land, labor, or capital.
Firms purchase the factors of production from households.
Households purchase the goods & services that firms produce.
Governments collect taxes from firms and consumers.
48
Innovation often leads to which economic goal?
economic security
economic growth
economic equity
full employment
49
Traditional economies are usually
small, close communities that welcome change & new tech
Lrg communities able to deal well w/ environmental disaster
large, widespread communities that welcome change & new tech
small, close communities that avoid change and new tech
50
People who believe wealth should be evenly distributed throughout society through democracy are
entrepreneurs
socialists
capitalists
communists
51
The main difference between the economies of China and North Korea is that
North Korea does not have a centrally-planned economy
North Korea has begun to introduce free market practices
China is privatizing state-run businesses
China does not allow ownership of private property
52
What “invisible hand” regulates the free market economy?
competition between firms
competition and self-interest
specialization
incentive and efficiency
53
Why are free market economies able to attain economic growth?
Firms produce incentives, encouraging households to buy more
Consumers purchase all they need, so firms produce more.
Competition encourages innovation, which causes growth.
Everyone acts in own self-interest, leading to market growth
54
What is the most effective way for consumers to make their desires known to businesses?
by the purchases they make
through mail and phone surveys
by hiring lobbyists and joining consumer groups
by protesting and boycotting products
55
Why does the government protect inventors and authors by offering them patents and copyrights?
to strengthen American culture
to encourage free trade
to regulate the business cycle
to promote innovation
56
Which of the following is handled by individuals instead of govt in a free market economy?
public education
national defense
mass transit
investment options

Duplicate of Econ Topic 2 (Free Enterprise and Other Economic Systems) Flashcards | StudBud