AKS 46 Review

What are the 3 basic economic questions that all economic systems must answer?

• What to produce, how to produce it, and for whom to produce the goods

• When to produce, why to produce, and how long to produce

• To what extent to produce, how much to produce, why to produce

• What to produce, why to produce, and how much to produce

Answer explanation

The correct answer is 'What to produce, how to produce it, and for whom to produce the goods' as these are the fundamental questions every economic system must address to allocate resources effectively.

The economies of Israel, Saudi Arabia, Turkey, and Iran could be best described as

• Traditional

• Pure Market

• Mixed Command

• Mixed Market

Answer explanation

The economies of Israel, Saudi Arabia, Turkey, and Iran are best described as Mixed Market because they combine elements of both market and command economies, allowing for private enterprise alongside government regulation.

In a market economy, who makes the economic decisions?

• subsistence farmers (grow just enough to feed family)

• custom and habit (do what ancestors did)

• government planners (public control)

• people (productions based on supply and demand)

Answer explanation

In a market economy, economic decisions are made by people based on supply and demand. This allows for flexibility and responsiveness to consumer needs, unlike subsistence farming, customs, or government planning.

Which industry does Saudi Arabia's government specialize in?

• Oil

• technology

• agriculture

• textile manufacturing

Answer explanation

Saudi Arabia's government specializes in the oil industry, which is the backbone of its economy. The country is one of the largest oil producers in the world, making 'Oil' the correct answer.

In this economy, the government produces its signature brand of shoe-flavored chips and determines that it will be sold in all stores for $1.25 per bag. Which type of economy is this?

• Traditional Economy

• Market Economy

• Mixed Economy

• Command Economy

Answer explanation

In a command economy, the government controls production and pricing. Here, the government sets the price of shoe-flavored chips at $1.25, indicating it dictates the market rather than allowing supply and demand to determine prices.

In this economy, manufacturers of automobiles control the number of vehicles produced each month in an effort to avoid surpluses that would minimize their profits.

• Big Wheels economy

• Market economy

• Command economy

• Traditional economy

Answer explanation

In a market economy, manufacturers adjust production based on demand to maximize profits, as seen in the automobile industry. This contrasts with command or traditional economies, where production is controlled by the government or customs.

Israel has specialized in the area of technology because:

• It has few natural resources.

• It has a poorly educated population.

• The money earned is used to support the military.

• The country has little in the way of fishing.

Answer explanation

Israel has few natural resources, which has driven the country to specialize in technology to enhance economic growth and self-sufficiency. This need for innovation has led to advancements in various tech sectors.

Which of the following country’s businesses have the least amount of government control?

• Israel

• Saudi Arabia

• Iran

• Syria

Answer explanation

Israel has a more liberal economic system with less government intervention compared to Saudi Arabia, Iran, and Syria, where businesses face significant state control and regulation.

Which of the following would reflect Israel’s mixed economy?

• Prices and wages are regulated by the country’s government.

• Businesses are privately-owned businesses with government regulations.

• The country’s distribution of resources is based on inheritance.

• Economic decisions are based on customs and beliefs of ancestors.

Answer explanation

Israel's mixed economy is characterized by privately-owned businesses that operate under government regulations, balancing free market principles with state intervention.

Which of these natural resources is in extremely short supply in the Middle East?

• Water

• Coal

• Iron

• Oil

Answer explanation

Water is in extremely short supply in the Middle East due to its arid climate and limited freshwater resources, making it a critical issue for the region, unlike coal, iron, and oil which are more abundant.