The free enterprise system of the United States is best described as a

mixed economy with limited gov't intervention and freedom.

people have trouble supplying goods at current prices.

The purpose of a production possibilities curve is to

show alternative ways to use an economy's resources.

Economics is the study of how people

choose from limited resources to meet their needs.

The former Soviet Union was an example of a communist country where

most economic and political power was controlled by gov't

Thinking at the margin means deciding about

adding or subtracting one additional unit of a resource.

Which of these is a key economic question faced by countries?

What goods and services should be produced?

exchange the things we have for the things we need.

Entrepreneurs are people who

put together land, labor, and capital to create new firms.

Which is true of the government in a centrally planned economy?

It makes all important economic decisions.

Socialists believe that economic equality is only possible if

everyone makes the same amount of money.

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Economics Review

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Questions 20

Answers

1
A country's production possibilities will grow if it
produces more guns than butter.
increases its resources.
lowers its opportunity cost.
makes more trade-offs.
2
The free enterprise system of the United States is best described as a
free market economy.
mixed economy with equal amounts of freedom and gov't help.
mixed economy with limited gov't intervention and freedom.
traditional economy.
3
Shortages occur when
many people are unemployed.
interest rates go up.
the U.S. imports more than it exports.
people have trouble supplying goods at current prices.
4
The purpose of a production possibilities curve is to
tell farmers how many watermelons to plant.
show how a factory can use its workers in different ways.
give engineers a new way of deciding how to build plants.
show alternative ways to use an economy's resources.
5
Which of the following countries has the most extreme example of a centrally planned economy?
China
Hong Kong
North Korea
Great Britain
6
Economics is the study of how people
Calculate their income tax.
choose from limited resources to meet their needs.
gain knowledge and skills from study and experience.
respond to war and drought.
7
The former Soviet Union was an example of a communist country where
free enterprise was encouraged.
most economic and political power was controlled by gov't
consumers had many choices.
individual freedom was allowed.
8
Thinking at the margin means deciding about
increasing or decreasing technological know-how.
investing with borrowed money.
adding or subtracting one additional unit of a resource.
maximizing goods and services.
9
Competition and self interest are two important forces in
free market economies.
centrally planned economies.
traditional economies.
communist economies.
10
Which economic goals are best promoted by the free market?
Innovation and security.
Freedom and security.
Efficiency and freedom.
Efficiency and equity.
11
Which of these is a key economic question faced by countries?
What goods and services should be produced?
Hoe much money should be raised in taxes?
How big should the army be?
How many schools should be built?
12
Markets allow us to
get the lowest prices for what we buy.
sell the most goods we possibly can.
exchange the things we have for the things we need.
get the highest prices for what we sell.
13
Entrepreneurs are people who
work on the floor of the stock exchange.
put together land, labor, and capital to create new firms.
help settle labor disputes.
produce all of a country's guns and butter.
14
Countries often have to choose between producing military or consumer goods, a trade-off called
export or import.
a free market economy.
farm goods or factory goods.
guns or butter.
15
Which is true of the government in a centrally planned economy?
It makes all important economic decisions.
It encourages workers to innovate.
It builds every house in every village.
It places much emphasis on the production of consumer goods.
16
In a traditional economy, economic decisions are based largely on
science.
socialism.
technology.
custom.
17
Using resources in such a way as to maximize the production of goods and services is called
thinking at the margins.
efficiency.
underutilization.
growth.
18
The resources used to make goods and services are called
opportunity cost.
factors of production.
production possibilities frontier.
gross national product.
19
Giving up one alternative for another is called
underutilization.
a trade-off.
efficiency.
human capital.
20
Socialists believe that economic equality is only possible if
no one has to pay taxes.
everyone makes the same amount of money.
the public controls the economy.
medical care is free.

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