Economic Systems Quiz

Which economic system relies primarily on habit and custom to determine economic activity?

• Command economy

• Market economy

• Traditional economy

• Mixed economy

What best characterizes a market economy?

• Central government ownership of resources

• Decisions made by tradition

• Consumer choice and voluntary exchange

• Government control of prices

A mixed economy combines elements of:

• Traditional and market systems

• Command and traditional systems

• Market and command systems

• Traditional and capitalist systems

Which market structure is most likely to include advertising and product differentiation?

• Monopoly

• Oligopoly

• Monopolistic competition

• Perfect competition

What happens to the equilibrium price when demand increases and supply remains constant?

• Price falls

• Price remains unchanged

• Price rises

• Quantity decreases

A shortage occurs when:

• Quantity demanded equals quantity supplied

• Price is above equilibrium

• Quantity demanded exceeds quantity supplied

• Supply exceeds demand

Which of the following is a microeconomic issue?

• National inflation rate

• Unemployment rate

• Consumer purchasing decisions

• Interest rate policies

What typically happens during a contraction in the business cycle?

• Increased economic growth

• Higher employment

• Decline in production and spending

• Rising consumer confidence

Which tool is used in fiscal policy?

• Reserve requirements

• Open market operations

• Government spending

• Interest rate changes by the Federal Reserve

What is the primary goal of monetary policy?

• Increase government debt

• Reduce taxes

• Control inflation and stabilize the economy

• Increase government employment