Economics Unit 2 Test (3rd Tri 2024-2025) A

Two countries are similar in population size, but one has a free-market economy while the other has a command economy. What is likely the reason for this difference?

• One country owns more factories
• Each country prioritizes different economic goals and answers the three economic questions in different ways
• One country chose its economic system based on the majority vote of the population
• One country used more technology

In Country X, the government makes all major economic decisions, such as what factories produce, how much workers are paid, and how goods are distributed. What type of economic system does Country X most likely have?

• Command
• Market
• Traditional
• Mixed

In Country Z, the government sets the prices for all food, decides how much clothing will be made, and tells factories what to produce. What kind of economic system does this suggest, and what is likely true about it?

• Businesses respond to what customers want
• The government regulates almost all aspects of production and sales
• People freely open businesses and set their own prices
• Competition between companies leads to higher product quality

A company is considering whether to use more automated machines or hire more workers to increase production. What fundamental economic question does this scenario illustrate?

• What to produce?
• How to produce?
• For whom to produce?
• All of the above

In a country where the government decides all job roles and prices, which statement does NOT apply to this command economy?

• It does not prioritize consumer preferences
• Workers lack motivation to excel
• It limits individuals' ability to advance with innovative solutions
• People can freely choose their jobs and how they spend their money.

In Country A, the government provides free healthcare, controls prices on housing and food, and ensures that everyone has a job. Which economic goals is Country A most likely focusing on?

• Stability and growth
• Security and freedom
• Equity and security
• Growth and equity

Which statement is the best example of a mixed economy?

• Honoring tradition is more important than accumulating wealth
• If enough consumers want to buy ugly Christmas sweaters, someone will find a way to produce them
• Banks can take risks to grow their business, and consumers know that the government guarantees the money in their bank accounts is safe
• In Cuba, the hospitals are owned by the government, and the doctors are employees of the government

Rachel opens a coffee shop and sets high prices. Soon, another shop opens next door offering better coffee at lower prices. Rachel lowers her prices and improves service to keep customers. According to Adam Smith, what economic force is helping balance Rachel’s self-interest?

• Competition
• Profit
• Government regulation
• Division of labor

Which of the following best explains why workers in a command economy may lack motivation?

• They have the freedom to choose their jobs.
• They earn profits based on the value of what they produce.
• Their wages are set by the government and do not vary with output.
• They are rewarded with bonuses for productivity.

Country A has a large supply of gold in its treasury, but most people have low-paying jobs, and stores have very few goods. Country B has fewer natural resources but many businesses that produce food, clothes, and technology. Based on Adam Smith’s ideas, which country is wealthier?

• Country A, because it has more gold
• Country B, because it produces more goods and services
• Country A, because it has fewer businesses to regulate
• Country B, because it exports more natural resources