Chapter 17 Test Review

In a system of voluntary exchange, people:

• Freely trade for the goods and services they need or want.
• Independently supply goods and services for their own needs.
• Send requests to the government for needed goods and services.
• Agree to pay for all goods and services provided by the government.

People make voluntary exchanges of goods and services in a free market MAINLY because they:

• Anticipate a time when exchanges will be more costly.
• Follow laws of economics that require frequent exchanges.
• Expect to be better off as a result of an exchange.
• View exchanges as a good way to compete with other parties.

Which of the following BEST describes the economic system practiced throughout most of the history of the United States?

• Capitalism
• Socialism
• Communism
• Fascism

The United States’ GDP is the third largest in the world.

• True
• False

Transferring ownership of a good or service does NOT create new production; therefore, the sale is not included into GDP.

• True
• False

Which of the following is NOT a major factor of production?

• Capital
• Labor
• Markets
• Entrepreneurs

GDP only reflects the __________ price/market value of a country:

• Beginning
• Final
• Intermediate
• Recurring

Which of the following items would be included in the MONEY flow of the Circular Flow Model?

• Costs, Revenues, Income, Spending
• Resources, Goods, Services, Factors of Production
• Markets, Sectors
• Businesses, Individuals

Which of the following tend to be the Government’s primary sources of income? 

• Public school tuition
• Taxes and Borrowing money
• Fundraisers and Donations
• Trade and Exchange

Which of the following is NOT a unique feature of Capitalism?

• Competition
• Voluntary exchanges
• Government involvement
• Economic freedom