Chapter 2 Practice Quiz Questions

1.

1 point

During inflation, business activity is encouraged.

True

False

2.

1 point

Why are entrepreneurs important in a free enterprise economy?

entrepreneurs pay high wages to their employees

entrepreneurs help define the seven economic and social goals

entrepreneurs start new businesses

entrepreneurs do not pay taxes

3.

1 point

An advantage of a command economy is that basic education and health services are available at little or no cost.

True

False

4.

1 point

How do consumers exercise their power in the American economy?

by working for businesses

by becoming entrepreneurs

by saving their money

by deciding what to purchase

5.

1 point

The main advantage of a command economy is that this system

can change direction drastically

gives people the incentive to produce the best products possible

does not require a huge decision-making bureaucracy

deals with minor day-to-day problems effectively

6.

1 point

Wh is economic security an important goal of the US?

other nationas provide economic security for their citizens, and the US must keep pace with the rest of the world

economic security assures a high rate of pay for people in all professions

Americans desire protection from adverse economic conditioins, such as layoffs and illnesses

economic security prevents jobs from being lost to companies in other parts of the world

7.

1 point

A market economy:

features decentralized decision making

permits extensive government intervention

limits the choices of goods and services available

offers a high degree of certainty for its workers

8.

1 point

Which of the following is a characteristic of a traditional economy?

it discourages new ideas and new ways of doing things

it has a great deal of economic freedom

public services are available at little or no cost

it provides workers with few incentives to work hard

9.

1 point

During inflation, interest rates on loans decrease.

True

False

10.

1 point

An increase in the minimum wage raises the unemployment rate. This is an example of:

the trade-off among social and economic goals

economic equity

price stability

economic efficiency

11.

1 point

The phrase "the customer is always right" does not support the idea of consumer sovereignty.

True

False

12.

1 point

What is another term for a modified free enterprise economy?

mixed economy

traditional economy

command economy

pure capitalism

13.

1 point

Economic goals are important because they:

answer the FOR WHOM to produce question

tell us WHAT and HOW to produce

tell the government what kidns of regulations are needed

help us determine if our economic system is meeting our needs

14.

1 point

In essence, almost all countries have a market economy.

True

False

15.

1 point

Who would you most likely find participating in a market economy?

a government official deciding how much wheat to plant this season

a worker deciding to leave his job early because the production quota has been met

a teenage girl deciding how to spend the extra money she earned working overtime

a hunger deciding where to hunt to provide his family with a meal that night

16.

1 point

Which economic system can change direction quickly and drastically?

mixed

traditional

command

market

17.

1 point

Which of the following societies are examples of traditional economies?

North Korea, Cuba

South Africa, Egypt

United States, Japan, Germany

African Mbuti, Australian Aborigines

18.

1 point

A "Market" does not always have to be a physical location.

True

False

19.

1 point

Traditional economies typically have a low standard of living.

True

False

20.

1 point

Freedom is limited in a command economy.

True

False

21.

1 point

Who plays all of the following roles -- protector, provider, regulator, and consumer -- in the United States?

businesses

workers

entrepreneurs

government

22.

1 point

When entrepreneurs succeed, other firms in the same industry do not succeed.

True

False

23.

1 point

In a communist economy, all resources are government owned while in a market economy, resources are privately owned and operated.

True

False

24.

1 point

Which is an example of economic growth?

an employer is fined for refusing to hire women to fill new job openings

the price of vegetables increases sharply in the spring

when a new ball bearing plant opens, 1500 jos are created

a man decides to quit working as a water and begin a career in marketing

25.

1 point

Which of the following is a disadvantage of a market economy?

consumer satisfaction is low

it limits freedom for producers and consumers

it does not provide for everyone

it limits private property rights

26.

1 point

The major economic and social goals of the US include:

price stability, full employment, and economic interdependence

economic growth, economic interdependence, and price stability

economic freedom, economic equity, and economic growth

economic interdependence, economic growth, and economic equity

27.

1 point

The minimum wage is an example of a federal law that supports:

full employment

economic growth

economic efficiency

economic equity

28.

1 point

The concept of voluntary exchange means

people freely and willingly engage in market transactions

that no money is exchanged

neither buyer nor seller makes a profit

only workers benefit from the exchange

29.

1 point

Which feature of capitalism allows people to own and control their possessions as they wish?

private property rights

incentives

profit motive

competition

30.

1 point

What type of economy was characteritic of the communist country of the former Soviet Union?

a command economy

a traditional economy

a market economy

a free enterprise economy