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1. If the price of a product were to go down, which of the following will most likely happen?

The quantity demanded will increase.

The quantity demanded and supplied will stay the same.

The quantity demanded will decrease.

The quantity supplied will decrease.

 

2. When supply and demand meet at the equilibrium point, prices in the market will

stay put.

trend toward that price.

change demand.

change supply.

trend away from that price.

3. Gabby is motivated to work hard in a capitalistic society, because

the government tells her to do so.

she wants to do well for herself.

she is greedy.

she has no choice.

she wants to pay lots of taxes.

4. How does the government get the money to buy and own these major industries?

Borrowing it from other countries

Physical coercion

Through taxes

Charitable gifts from its citizens

Borrowing it from its citizens

5. What kind of economic system does the United States operate within?

Communism

A mixed economy

Socialism

Mix of socialism and communism

Pure capitalism

6. Opportunity International helps people earn their way out of poverty through

bond financing.

stock certificates.

microfinancing.

mortgages.

debt capitalization.

 

7.

 

Adam Smith believed that although businesspeople work to improve their own prosperity and not necessarily that of others, their efforts eventually provide social and economic benefits for all. He called this process

the invisible hand.

bureaucracy.

a command economy.

economic rejuvenation.

socialism.

 

 

8.

The video tells the story of a woman who decided to start a new type of business rather than a business similar to othe7. rs in her community. Her success as a mushroom producer benefited her family, her community, the other mushroom farmers she eventually trained and many others. This is an example of

socialism.

a command economy.

the invisible hand.

bureaucracy.

Economic rejuvenation.

 

 

9.

The video tells the story of a woman who decided to start a mushroom farm, which is a different type of business than others in her community. Under the foundations of capitalism, she used the basic right of

eminent domain.

freedom of choice.

habeas corpus.

econometrics.

patent protection.

10. In global markets today, most economies are

mixed.

capitalist.

communist.

free markets.

socialist.

11. The video identifies three economic indicators. However, almost every discussion about a nation's economy is based on its

unemployment rate.

distribution index.

consumer price index.

stagflation index.

GDP.

* 1. The branch of economics that examines the economy as a whole is called

general economics.

microeconomics.

metroeconomics.

macroeconomics.

* 2. The study of how to increase resources and to create the conditions that will make better use of those resources is called

resource development.

economics.

capitalism.

the invisible hand.

 3. The first economist to describe the process that turns self-directed gain into social and economic benefits for all was

Adam Smith.

Thomas Malthus.

John Maynard Keynes.

Karl Marx.

* 4. The _______ is another name for the theory that peoples' efforts to improve their own situations in life also help the economy grow and prosper.

helping hand

invisible hand

relative hand

innovative hand

* 5. Which of the following created the name “dismal science” to refer to economics?

Thomas Carlyle

Thomas Malthus

Adam Smith

John Maynard Keynes

1. The economic system that has led to the prosperity of most developed economies is

communism.

capitalism.

imperialism.

socialism.

* 2. Wayne owns a manufacturing company headquartered in the U.S. He is considering building a manufacturing plant in an Eastern European country to better serve customers in that market. He is carefully analyzing the laws in that country to ensure that the government cannot seize his plant without notice or reason. This best demonstrates his understanding of which basic right of capitalism?

The right to freedom of competition

The right to freedom of choice

The right to own a business and keep its profits

The right to own private property

3. In free markets, prices are determined by

buyers, who decide what and how much to buy, and how much they are willing to pay.

the negotiation between buyers and sellers that takes place in the marketplace.

sellers, unless the government intervenes and sets ceilings on prices.

sellers, who alone determine what they will charge for their goods and services.

* 4. The economic concept of supply maintains that, generally speaking, the quantity of products or services offered by sellers _______ as the price _______.

remains the same; decreases

decreases; increases

increases; increases

increases; decreases

5. The market structure in which there are a large number of sellers that provide similar—but not identical—products is called

a monopoly.

monopolistic competition.

an oligopoly.

perfect completion.

1. The major benefit of socialism is

greater potential profits for entrepreneurs.

lower taxes than in capitalist countries.

greater social equality.

the creation of wealth.

* 2. Johanna, an Austrian citizen, is graduating from a U.S. medical school. She knows she will have to pay a much higher percentage of her income in taxes if she practices medicine in Austria, so she decides to remain in the U.S. after graduation and become a U.S. citizen. This is an example of ________ in Austria

worker innovation

social equality

brain drain

culture shock

* 3. As a result of brain drain and less competition, socialist countries

invest heavily in wealth creation.

have a much higher standard of living.

have surpassed the U.S. in terms of job creation.

trail capitalist countries in terms of inventions and innovation.

4. The socioeconomic structure in which all factors of production, both human and non-human, are owned by the government, and the government establishes rules for production and consumption is known as

communism.

socialism.

capitalism.

a mixed economy.

* 5. Who is known for putting forth communism as a political ideology?

Adam Smith

Thomas Malthus

Karl Marx

Thomas Carlyle

 1. The trend of most countries today is toward a(n) _______ economy

free-market

mixed

alternative

command

* 2. A _______ economy corresponds to capitalism, whereas a _______ economy corresponds to socialism or communism.

command; mixed

free-reign; command

free-market; mixed

free-market; command

* 3. Economic systems in which some allocation of resources is made by the market and some by the government are called

hybrid economies.

mixed economies.

free-market economies.

capital economies.

* 4. Which of the following is NOT a benefit of a mixed economy?

private ownership of land

a social safety net

public ownership of business

government intervention when necessary

1. The total value of final goods and services produced in a country in a given year is called

the producer price index.

the consumer price index.

gross output.

gross domestic product.

* 2. Price indexes such as the consumer price index (CPI) measure

the unemployment rate.

the overall health of the economy.

the total value of goods and services produced in a year.

the total sales volume at all stages of production.

* 3. A situation when the economy is slowing but prices are going up anyway is called

inflation.

deflation.

stagflation.

disinflation.

 

4. The terms "boom," "recession," "depression," and "recovery" refer to the four long-term phases of the

financial cycle.

business cycle.

yearly cycle.

economic cycle.

* 5. As an economist, Julia watches the evolution of the gross domestic product. She observes that the GDP has decreased over the past few quarters. She believes this means that the economy is experiencing a

recession.

recovery.

depression.

boom.

1. During the latest economic downturn, the government decided to increase government spending, hoping this would create jobs and jumpstart the economy. This was an example of _______ policy

deficit

social

monetary

fiscal

* 2. Mr. Hansen wanted to update his motel's washers and dryers with greener, more energy-efficient ones, but the cost seemed too high. However, when he learned that the government was trying to stimulate the economy by offering tax cuts for "greener investments," he purchased the equipment. These tax cuts are part of the government's

monetary policy.

fiscal policy.

surplus spending.

deficit spending.

* 3. Monetary policy is one of the tools used to stabilize the economy. Monetary policy is implemented by

the Department of the Treasury.

Congress.

the Federal Reserve Bank.

executive order of the president.

* 4. Monetary policy is based on the management of the money supply and

taxes.

interest rates.

government spending.

the national debt.

* 5. The two primary tools that the government can use to stabilize the economy are

monetary and fiscal policy.

inflationary and deflationary policy.

international borrowing and investing.

federal and state monetary strategy.