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