Chapter 2 ~ Economic Systems Test Review

Why does even a free market economy need some government intervention?

• to provide for things that the marketplace does not address

•      to ensure that the government has the freedom to tax as necessary

•     to make sure that the government can fulfill its needs for military personnel

• so that the government has some control over factor resources

Which of the following is NOT a key economic question?         

• What goods and services should be produced?

•      How should these goods and services be produced?

•      Who consumes these goods and services?

• How should it be ensured that goods and services are paid for?

. What does the process of specialization do for an economy?

• It eliminates unemployment.    

• It makes it more efficient

• It fosters competition.

•     It makes it easier to control.

What incentive motivates a manufacturer to sell a product?

• making profits on sales

• putting others out of business

• pleasing the consumer

• popularity of the product

Which of the following was a free market philosopher?

• Karl Marx

• Adam Smith

• Vladimir Lenin

• Friedrich Engels

Which of the following is characteristic of a traditional economy?

•       Communities tend to be fast-growing.

• They are usually based on light industrial production.

• They have a high standard of living.

• Children tend to have the same jobs as their parents did.

What incentive do manufacturers have to sell their products?

• making profits on sales

• pleasing the consumer

• putting others out of business

• popularity of the product

In what kind of an economy does the government make all the decisions?

• socialist

• laissez faire

•   centrally planned

• free enterprise

What is the function of an economic system?

• to make sure all people have equal access to goods

• to produce and distribute goods and services

•     to give all producers the same access to consumers

• to make sure people are paid for their labor

Which of the following is a condition that most people would NOT expect the safety net of the government to provide for?

• injuries

• joblessness

• natural disasters

• low income