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Unit 7 Practice Questions
Unit 7 Practice Questions
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1
Which of the following do free market economists believe is most essential for a healthy and prosperous economy?
B. Competition
A. Government-imposed price controls
D. Public ownership of major resources
C. Protection against foreign competitors
2
In a free market economy, how are decisions reached about what gets made and how much goods sell for?
C. By the forces of supply and demand
A. By community tradition
D. By the stock market
B. By the government
3
Which of the following terms best describes the United States economy today?
D. cooperative
A. traditional
B. mixed
C. command
4
What type of economic system is based on private ownership of property and the profit motive?
A. traditional
D. subsistence
C. free market
B. command
5
Which of the following phrases best characterizes a command economy?
D. supply and demand
A. consumer choice
B. economic freedom
C. government control
6
Scarcity leads individuals and businesses to –
B. make choices as to how to use limited resources.
A. choose between supply and demand.
C. give up their opportunity cost.
D. produce goods without the factors of production.
7
“Buy one – get one free!” is an example of which principle of the American economic system in action?
A. opportunity cost
B. scarcity
C. incentives
D. monopolies
8
Who is the head of the executive branch of the Virginia government?
C. the Governor
B. the Chief Justice
D. the Attorney General
A. the President
9
Scarcity is –
B. the inability to satisfy all wants at the same time
C. selecting an item from a set of alternatives
D. what is given up when a choice is made
A. the interaction of supply and demand
10
The government decides how much money workers should receive at a car dealership. What type of economic system is that?
D. Free market
C. Traditional
B. Mixed
A. Command
11
“I take risks in business to try to make a profit.” Which term would best describe that individual?
D. Attorney
A. Entrepreneur
B. Corporation
C. Bureaucrat
12
Which statement best describes how the forces of supply and demand work?
A. The more demand there is for an item, the more its price will fall.
C. When the forces of supply and demand are in balance, prices fall.
B. When an item in demand is in short supply, its price rises.
D. When the supply of an item increases, demand for it also increases
13
“The using of goods and services.” This is a definition of –
B. supply and demand
C. production
A. incentives
D. consumption
14
The way that resources, products, and money flow among households and businesses is called –
A. entrepreneurship
B. circular economic flow
C. a corporation
D. partnership
15
The Virginia legislature is called the—
C. General Assembly
D. General Congress
B. State Assembly
A. State Congress
16
Select three factors that could cause a decrease in demand for a product if its price remained the same.
C. Better substitutes have become available at lower prices
B. The product is the only available one of its kind
A. Income levels have changed so the product is no longer affordable
D. The product is not as desired as it once was
17
Due process of law is –
A. protection against unfair laws and unfair government actions
B. the principle of the consent of the governed
D. treating all groups equally
C. the Supreme Court’s right to decide a law's constitutionality
18
Identify the characteristics of a free market economy:
C. Individual choice
B. Profit motive
D. Centrally-planned economy
A. Private ownership of property
19
A corporation is owned by –
C. its stockholders
B. consumers
A. the government
D. its board of directors
20
What is the most important difference between a market economy and a command economy?
A. The difference in the quality and quantity of available services
B. The importance of national defense
D. The skill level of the labor force
C. The government role in decision making
21
Which amendment to the Constitution of the United States defines citizenship?
B. Fourteenth
C. Fifteenth
D. Twentieth
A. Tenth
22
Select the three basic questions of economics.
C. How will it be produced?
A. What will be produced?
D. Who will produce it?
B. Why will it be produced?
23
What kind of resource is oil?
B. A labor resource
A. A capital resource
C. An entrepreneurship resource
D. A natural resource
24
The government's income last year was $2019bn and its expenditures were $1835bn. What does that suggest?
C. It had to raise social security payments
B. It had to borrow money to cover costs
A. It had a surplus
D. It had less income from taxes than it spent on defense
25
Individual consumers, not the government, make decisions about what will be produced in –
A. a communist system
C. a command economy
B. a free market economy
D. a federal economy
26
Which elected or appointed body oversees the daily operation of Orange County Public Schools K – 12?
D. Sanitation Board
B. VA General Assembly
C. School Board
A. Town Council
27
“Combining human, natural, capital, and entrepreneurship resources to make goods or services.” This is a definition of –
B. supply and demand
C. production
D. consumption
A. incentives
28
Which of the following is least likely to exist in a command economy?
C. Government regulation
A. Consumer sovereignty
D. High priority for military
B. A good system of education
29
How does scarcity of resources affect consumers?
C. Imported goods become more costly than goods made in the United States.
A. Consumers need to be prepared for large price swings.
D. Scarcity has no effect on the consumers.
B. Consumers need to decide what to buy and what to do without.
30
Pam decides to invest money in the stock market instead of building a new home. What is her opportunity cost?
A. The interest she earns on the money
B. The time she could spend surfing
C. The cost of the new home
D. The cost of the lottery ticket
31
What do the FCC, SEC, and FTC all have in common?
B. These agencies only oversee the way individuals do business.
C. These agencies oversee the way individuals and firms do business.
A. These agencies only oversee the way firms do business.
D. These agencies do not oversee the way individuals and firms do business.
32
In what type of economy are governments, businesses, and individuals all decision makers?
A. free market
C. command
B. mixed
D. traditional
33
A person born in any U.S. state or territory automatically becomes a(n)--
D. permanent resident
B. native-born citizen
A. alien
C. naturalized citizen
34
An important function of banks is to –
D. use money deposited by individuals to make loans to businesses
B. sell and buy stocks and bonds for their clients
A. safeguard the income taxes paid to the Treasury Department
C. sell postage stamps
35
The type of business organization that limits the owners' risk to the amount of money invested is –
C. a proprietorship.
B. an entrepreneurship.
A. a corporation.
D. a partnership.
