Economics Principles and Practices © 2012

Chapter 2: Economic Systems and Decision Making

Self-Check Quizzes

1
Which of the following correctly describes a traditional economy?
A)Buyers and sellers decide what to produce.
B)The U.S. is an example of a traditional economy.
C)The basic economic questions are answered based on ritual, habit or custom.
D)A central planning authority decides what goods and services to produce and how to produce them.
2
The government has the greatest degree of involvement in which of the following?
A)traditional economy
B)command economy
C)market economy
D)laissez-faire economy
3
The high degree of freedom in a market system is illustrated by the fact that _________.
A)producers may make whatever they think will sell
B)individuals are told when and where to work
C)producers make their products only in tried and true ways
D)consumers buy the goods and services they are told to buy
4
Which of the following is NOT one of the broad economic and social goals of the United States?
A)economic freedom
B)economic efficiency
C)economic equality
D)economic security
5
High rates of inflation tend to ______.
A)decrease prices
B)increase interest rates
C)make budgeting easier
D)stimulate business activity
6
How might a policy that keeps foreign-made shoes out of the United States work against a major economic goal?
A)by preventing full employment of American shoemakers
B)by curtailing economic freedom of American consumers
C)by creating less economic equity among shoemakers
D)by decreasing growth in the American shoemaking industry
7
What argument might a supporter of a higher minimum wage use?
A)A higher minimum wage increases costs of production.
B)A mandatory increase in wages restricts the freedom of employers.
C)To pay higher wages, employers will have to hire fewer workers.
D)Minimum wage earners need an increase to cover basic needs.
8
In free enterprise, the characteristic of voluntary exchange allows __________.
A)workers to accept or reject jobs
B)businesses to sell goods wherever they want
C)people to own and control their possessions
D)buyers and sellers to both benefit from a transaction
9
In economics, profit is defined as the _______.
A)extent to which persons are better off at the end of a period than at the beginning
B)driving force that encourages people to improve their material well-being
C)struggle among sellers to attract customers while lowering costs
D)willingness to risk everything to make dreams come true
10
Which of the following does NOT illustrate the concept of consumer sovereignty?
A)introduction of new gaming systems
B)TV shows cancelled due to low ratings
C)discontinued products such as the Ford Edsel and “New” Coca-Cola
D)All of the above illustrate the concept of consumer sovereignty
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