Economic Systems Quiz

What does the way a society answers the three economic questions determine?

• Its political system

• Its economic system

• Its legal system

• Its educational system

Suppose a country decides to produce more luxury cars instead of basic food items. Which economic question is this country primarily addressing?

• How will the goods and services be produced?

• For whom will the goods and services be produced?

• What goods and services will be produced?

• How will the goods and services be distributed?

Which of the following is NOT one of the three basic economic questions?

• What goods will be produced?

• How will the goods be produced?

• How will the goods be distributed to other planets?

• For whom will the goods be produced?

A country is deciding whether to use existing technology or new technology in its factories. Which economic question is it addressing?

• What goods will be produced?

• How will the goods be produced?

• For whom will the goods be produced?

• Where will the goods be sold?

Compare and contrast free enterprise and socialism in terms of resource ownership and control. Which system allows for more individual control over resources, and why?

• Socialism, because the government encourages private ownership.

• Free enterprise, because individuals own and control most resources.

• Socialism, because resources are distributed equally.

• Free enterprise, because the government owns all resources.

Which of the following is true about how prices are determined in a free enterprise system?

• The government sets all prices

• Prices are fixed and do not change

• Prices are allowed to fluctuate

• Prices are determined by a central authority

Under socialism, what is the purpose of an economic plan created by government decision makers?

• To specify the direction economic activities are to take

• To increase private ownership of businesses

• To eliminate all forms of government intervention

• To promote free market competition

How are government decision makers under socialism likely to use their powers regarding income distribution?

• They are more likely to redistribute income away from society’s high earners

• They are more likely to increase income for high earners

• They are less likely to intervene in income distribution

• They are more likely to eliminate all forms of taxation

Why might advocates of free enterprise oppose government ownership of property?

• They believe government ownership is more expensive

• They believe individual ownership leads to better care of property

• They think government ownership is more profitable

• They prefer renting over owning

According to the socialist view, who should own most of the non-labor property in the economy?

• The government

• Private individuals

• Foreign investors

• Labor unions