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1 | |
An economic system in which markets are the governing force in day-to-day economic life while government regulates social conditions and provides health care and social programs. |
| | A) | democratic state |
| | B) | communist state |
| | C) | welfare state |
| | D) | steady state |
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2 | |
As economists, we refer to the doctrine that holds that government should leave economic affairs primarily to the market as: |
| | A) | capitalism |
| | B) | laissez-faire |
| | C) | dormez-vous |
| | D) | communism |
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3 | |
A market is: |
| | A) | a mechanism through which buyers and sellers interact to set prices and exchange goods and services. |
| | B) | a place where goods are traded. |
| | C) | both a and b |
| | D) | neither a nor b |
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4 | |
_______ coordinate the decisions of producers and consumers in the market. |
| | A) | Ushers |
| | B) | Directors |
| | C) | Governments |
| | D) | Prices |
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5 | |
______ and ______ provide incentives and disincentives to firms for them to produce the desired goods in an efficient manner. |
| | A) | Profits; losses |
| | B) | Prices; profits |
| | C) | Prices; losses |
| | D) | Profits; government |
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6 | |
Which of the following determine society's point on the production-possibility frontier (PPF)? |
| | A) | profits and losses |
| | B) | prices and profit |
| | C) | tastes and technology |
| | D) | tastes and profits |
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7 | |
_______, in his 1776 work _______, introduced the concept of the invisible hand. |
| | A) | Eli Hecksher; The Wealth of Nations |
| | B) | Adam Smith; The Wealth of Nations |
| | C) | Paul Samuelson; Economics |
| | D) | Karl Marx; The Wealth of Nations |
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8 | |
When different people specialize in the production of different goods, their interactions in the market will lead to _______. |
| | A) | anarchy |
| | B) | a welfare state |
| | C) | capitalism |
| | D) | gains from trade |
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9 | |
The recent growth in the flows of goods and services across national borders is described as: |
| | A) | globalization |
| | B) | capitalism |
| | C) | communism |
| | D) | marketism |
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10 | |
What do economists call the buildings, machinery, and other equipment used in production? |
| | A) | capital |
| | B) | land |
| | C) | money |
| | D) | none of the above |
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11 | |
The three primary factors of production are: |
| | A) | money, land, and labor. |
| | B) | capital, money, and labor. |
| | C) | land, labor, and capital. |
| | D) | capital, land, and capacity. |
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12 | |
_______ is the term that economists use to describe a market in which no firm is large enough to affect the market price. |
| | A) | Monopoly |
| | B) | Monopsony |
| | C) | Oligopoly |
| | D) | Pure competition. |
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13 | |
When market players impose costs or benefits on those outside the market _______ arise. |
| | A) | externalities |
| | B) | internalities |
| | C) | public goods |
| | D) | none of the above |
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14 | |
_______ are those goods for which the cost of extending the service to another person is zero and which it is impossible to exclude individuals from enjoying. |
| | A) | Private goods |
| | B) | Public goods |
| | C) | Free goods |
| | D) | Special goods |
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15 | |
Both fiscal and monetary policies are aimed at macroeconomic stabilization. Fiscal policy involves the use of ______ while monetary policy involves the use of _______. |
| | A) | changes in taxation and government spending; price and profit controls. |
| | B) | price and profit controls; taxation and government spending. |
| | C) | changes in taxation and government spending; changes in the supply of money and interest rates. |
| | D) | changes in the supply of money and interest rates; changes in taxation and government spending. |
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