ECONOMICS TOPIC 2

Which economic goal does this exchange at an outdoor food stand BEST represent?

• economic stability

• economic freedom

• economic equity

• economic security

What does this diagram imply about the value of technological innovations?

• Innovations in land use increase the need for mechanical equipment.

• Innovations in agriculture eliminate the need for hand tools.

• Innovations in technology increase economic growth.

• Innovations in education decrease unemployment.

Which mean household income level saw the greatest change relative to the others during this period?

• Highest 20%

• Fourth 20%

• Second 20%

• Lowest 20%

What strategy of modern manufacturing is Adam Smith referring to in this statement?

"To take an example, therefore, from a very trifling manufacture . . . the trade of the pin-maker. . . . One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on is a peculiar business, to whiten the pins is another; . . . the important business of making a pin is, in this manner, divided into about eighteen distinct operations."

—Adam Smith, The Wealth of Nations

• automation

• innovation

• specialization

• industrialization

Which of the following is a function of households in the market economy?

• They supply firms with the factors of production.

• They supply firms with goods and services.

• They send land, labor, and capital to firms through the product market.

• They send money to firms through the factor market.

What two qualities that work together to regulate the marketplace are present in this photo of two cellphone service providers?

• innovation and specialization

• efficiency and underutilization

• competition and self-interest

• opportunity and efficiency

This flowchart shows the process for creating clothing in a centrally planned economy. In a market economy, which of the following would replace "Top Planners" as the primary decision-makers about what to produce?

• consumers

• mid and lower-level workers

• government regulators

• owners of firms

What are two things that a command economy fails to provide consumers?

• variety of goods and responsive prices

• jobs and private property

• equity and consumer choice

• incentives and income

How do socialism and communism differ when it comes to government systems?

• Socialism is authoritarian, while communism can be democratic.

• Socialism has centralized planning, while communism relies on market forces.

• Socialism can be democratic, while communism is authoritarian.

• Socialism allows private property, while communism outlaws it.

According to this diagram, in what way does the government behave like a household in a mixed economy?

• It transfers money to both households and firms.

• It purchases goods and services from firms.

• It sells land, labor, and capital to firms.

• It pays taxes to firms.