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Economics Topic 2 Flashcards | StudBud
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Economics Topic 2
Economics Topic 2
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Free Enterprise and Other Economic Systems
Flashcards
35 cards
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Questions
35
Answers
1
What is the main economic benefit of public disclosure laws?
They protect employees from potential dangers in the workplace
They cut into the profits of highly regulated industries
They ensure that consumers can make informed buying decisions
They guarantee that businesses can make legally binding contracts
2
If Johnny volunteers at a food pantry on Fridays after school, which of the following might be a negative externality
The student might decide to volunteer two days a week
The student might make some new friends
The student's parents have to drive him or her to the food pantry
The student might learn a new skill
3
maximizing scarce resources & delivering the right goods in the right quantity to the right people is this economic goal
equity
freedom
efficiency
security
4
How do self-interest and competition affect free markets?
They work together to keep prices high.
help level the playing field between efficient and inefficient producers.
represent the opposing interests of consumers and producers.
They work together to regulate supply, demand, and prices.
5
How do patents act as an incentive to technological innovation?
protecting a business's right to profit from someone else's creativity
protecting unpatented creative works
protecting the government's right to patent creative works
protecting a patent holder's right to profit from his or her creativity
6
The distribution of income received in the form of rent, wages, or interest is the main factor that determines
where goods and services are consumed
how goods and services are produced
who produces goods and services.
who consumes goods and services
7
How were the Soviet Union and communist China similar?
Both states turned away from communism and were able to avoid collapse
Both eventually became free market economies.
Both were more successful in developing big agriculture than industry
Both suffered from severe economic problems as a result of central planning
8
How does innovation promote economic growth?
introducing new goods and services that create new markets
ensuring people's freedom to make their own choices
reinforcing traditional values in a society
rewarding the development of efficient technology
9
Which is an example of why the U.S. government makes transfer payments?
to suppress the factor market
to limit economic freedom
to create a command economy
to support retired people
10
Why would a federal government decision to increase spending be a matter of macroeconomic policy?
Macroeconomics concerns the performance of households
Macroeconomics concerns the overall performance of the government
Macroeconomics concerns the overall performance of the economy
Macroeconomics concerns the performance of small businesses
11
An entrepreneur can BEST be characterized as someone who
takes risks in order to acquire profits
seeks to engage in a voluntary exchange
signals businesses what and how much to produce
tries to persuade officials to pass favorable laws
12
Which explains why a city fireworks display on the Fourth of July (in the USA) is provided as a public good
are a scarce resource
usually take place in a public area
Nonpayers cannot be prevented from seeing the fireworks
Each consumer pays a fee to see the fireworks
13
What is a disadvantage of central planning?
too much individual freedom
no emphasis on economic equity
lack of economic efficiency
overreliance on profit incentive
14
Which of these is an example of restrictions that government places on the use of business property?
regulation of competition
corporate income taxes
providing for security
zoning laws
15
Private property ownership & some government regulation of the economy are basic characteristics of this economic system
mixed economy
traditional economy
free enterprise system
command economy
16
Government involvement in a modern economy is generally defended because
the marketplace always meets the needs and wants of society's members
governments are more able than firms to meet some needs & wants of society
the marketplace has many incentives to create public works such as parks
free market principles do not encourage economic growth
17
A government hiring freeze would directly impact what aspect of the circular flow model of a mixed economy?
transfer payments
factor market
businesses
product market
18
Which of the following BEST illustrates the involvement of the U.S. government in the marketplace today?
The government hires new workers to help deliver services to the public
government requires manufacturers to issue warnings with a new product
The government encourages formation of consumer & business interest groups
The government takes over an industry in order to control production
19
Key advantages of free market economic systems include
rising prices, specialization, negative incentives, and multiple markets
positive incentives, negative incentives, specialized consumers & labor
online markets, producer sovereignty, self-interested consumers & low price
economic efficiency, economic freedom, economic growth, & variety of goods
20
If the economy were in the contracting phase of the business cycle, how might that affect your ability to find work?
easier to find work - businesses would have fewer workers to choose from
more difficult to find work - businesses would be less likely to hire
no effect on finding work
easier to find work because businesses would be more likely to hire new emp
21
Which of the following describes the benefits of specialization in a free market?
leads to higher prices
leads to efficient use of capital, land, and labor
leads to decreased competition among producers
leads to lower overall output
22
What is critical in determining whether something is produced as a public good?
whether the market has the resources to provide it
whether the government needs to use tax money to provide it
whether the benefits are limited to the poor
whether the benefits to society are greater than the total cost
23
Suppose Congress passed a bill funding research into alternative sources of energy. What best describes this action
seeking to prevent sudden, drastic shifts in prices
seeking gains in knowledge about the national economy
monitoring and regulating banks and other financial institutions
promoting innovation and invention to help maintain technological advantage
24
The profit motive drives business owners to
see that the principle of open opportunity applies to all Americans
make sure their firm is operating at its highest level of efficiency
protect the private property rights of those who consume their goods
develop incentives for their employees to work fewer hours each week
25
Market failure occurs whenever
government builds infrastructure
free markets fail to distribute resources efficiently
goods fail to arrive at a market in a timely fashion
voluntary exchange in a market fails to result in a sale
26
What distinguishes an authoritarian government from a democratic one?
It respects individual rights.
It discourages a strong central government.
It pursues capitalist economic policies.
It requires strict obedience from its citizens.
27
Which basic economic goal is most easily achieved in a traditional economy?
equity
efficiency
growth
innovation
28
Which of the following is typical of a centrally planned economy
competition among producers
government control
consumer sovereignty
private property
29
Which of the following represents a difference between socialism and communism
Socialism = central control of all productive resources; communism does not
Socialism may allow some free market practices; communism does not
Socialism emphasizes the equal distribution of wealth; communism does not
Socialism depends on authoritarian government; communism does not
30
The due process clauses of the Constitution
give Congress the right to set direct taxes on incomes
eliminate barriers to women in the workplace
ensure all Americans the opportunity to compete
protect Americans' private property rights
31
consumer sovereignty = consumers have the power to decide through their actions what goods and services get produced
True
False
32
How is gross domestic product used to monitor the business cycle?
indicates whether a business is expanding or contracting
indicates whether a city's economy is expanding or contracting
indicates whether the nation's economy is expanding or contracting
indicates whether the world's economy is expanding or contracting
33
What might be the economic benefit of the government providing a public good rather than the private sector?
decreased prices for the good
decreased cost for the good
greater efficiency in providing the good
increased taxes needed to provide the good
34
Example of what Adam Smith called the "invisible hand" of the marketplace?
Self-interest, competition, and incentives promote smoothly running markets
Government regulations influence the decisions of consumers and producers
Advertising causes consumers to desire stuff they otherwise would not want
Unforeseen events disturb supplies of goods and services and affect prices
35
the three basic economic questions all societies must answer are land, labor, and capital
True
False
