Chapter 3

Question 1

John Locke’s argument for free markets is based on which theory?

-Utilitarian
-Human nature
-Moral rights
-Values

Answer 1

Moral rights

Question 2

Which of the following best describes property that consists of nonphysical objects, such as music or information?

-Private property
-Copyright
-Patents
-Intellectual property

Answer 2

Intellectual property

Question 3

There are several views on property rights, but those different views all have the same assumption, that private property is

-best controlled by the government.
-a positive right.
-best controlled by international rules.
-a bundle of rights.

Answer 3

a bundle of rights

Question 4

According to John Locke, ________ is the right to depose of possessions and persons as one sees fit.

-a negative right
-a state of perfect freedom
-a community right
-the invisible hand of market competition

Answer 4

a state of perfect freedom

Question 5

Which of the following did Karl Marx claim created inequality and worker exploitation?

-Capitalism
-Free trade
-Comparative advantage
-Alienation

Answer 5

Capitalism

Question 6

According to Adam Smith, differences in things such as labor costs, skills, climate, and natural resources create

-comparative advantage.
-opportunity costs.
-free trade.
-absolute advantage.

Answer 6

absolute advantage

Question 7

According to Karl Marx, which of the following best describes the way a society organizes itself so that it can produce goods?

-Social superstructures
-Historical materialism
-Principles of justice
-Relations of production

Answer 7

Relations of production

Question 8

Which of the following best describes a combination of government regulation, partially free markets, and limited property rights?

-Capitalism
-Immiseration
-Mixed economy
-Communism

Answer 8

Mixed economy

Question 9

Who of the following believed that free markets and private property produce greater benefits than government interference could?

-John Locke
-Adam Smith
-David Ricardo
-Karl Marx

Answer 9

Adam Smith

Question 10

Which of the following is copyright?

-An invention of machines, processes, and products that is private property of the individual or organization
-A nonphysical object such as music or a software program.
-A specific expression of an idea owned by a person or organization.
-The use of government policies to remedy differences.

Answer 10

A specific expression of an idea owned by a person or organization

Question 11

Which of the following is an assumption made by David Ricardo in supporting his claim that comparative advantage creates free trade and supports globalization?

-The resources used to produce goods can be easily moved from one country to another.
-Production costs are constant and do not decline with the acquisition of new technology.
-Workers cannot move from one industry to another.
-Multinational companies only close when they no longer have comparative advantage.

Answer 11

Production costs are constant and do not decline with the acquisition of new technology

Question 12

Distributing goods and services, and determining which members of society will receive what, is one of the tasks that must be achieved to have

-a utilitarian economy.
-an economic system.
-free trade.
-globalization.

Answer 12

an economic system

Question 13

Economist David Ricardo developed one of the most important concepts in international trade theory used today. Ricardo’s idea that globalization and free trade boost economic output is based on

-comparative advantage.
-injustice.
-capitalist economics.
-materialism.

Answer 13

comparative advantage

Question 14

Which of the following is a key assumption made by Adam Smith?

-Private property is unnecessary to human life.
-Private property encourages societies to look after each other.
-Private property is naturally produced.
-Private property must exist.

Answer 14

Private property must exist

Question 15

A system of normative beliefs that are shared by members of a social group are referred to as

-free markets.
-perfect freedom.
-globalization.
-ideology.

Answer 15

ideology

Question 16

Which of the following is considered to be a weakness of Locke’s views on rights?

-Locke’s belief that natural rights are negative rights and they do not conflict with positive rights
-Locke’s belief that human beings are atomistic
-Locke’s belief that markets should be free because free markets reduce injustice and inequality
-Locke’s belief that governments should control the rights to life, liberty, and property

Answer 16

Locke’s belief that natural rights are negative rights and they do not conflict with positive rights

Question 17

David Ricardo’s theory of comparative advantage generally ignores rules of international trade. Which of the following is the group that sets rules and guidelines for international trade in an effort to minimize disagreements and conflicts?

-World Bank
-U.S. federal government
-World Trade Organization
-International Monetary Fund

Answer 17

World Trade Organization

Question 18

As traditionally communist countries move from economies based on pure socialism to economies that combine the best of socialism and capitalism, there has been great debate. Which of the following best represents the beliefs of followers of Smith and Locke toward mixed economies?

-Governments will favor business interests.
-Government intervention tolerated by mixed economies does more harm than good.
-Allowing businesses to operate without government oversight worsens economic problems.
-Mixed economies diminish utilitarian benefits of free markets in terms of human rights.

Answer 18

Government intervention tolerated by mixed economies does more harm than good.

Question 19

According to John Locke, if there were no governments, what civil liberties would human beings have?

-Aggregate demand
-Invisible hand welfare
-Natural rights
-Market resource allocation

Answer 19

Natural rights

Question 20

Karl Marx claimed that free markets create inequalities and assume that justice means equality or distribution according to need. What argument do critics of Karl Marx use to dispute his claim?

-True justice requires the presence of free markets.
-Free markets can encourage community instead of creating alienation.
-The principles of justice are difficult to define.
-The benefits of private property are more important than equality.

Answer 20

Free markets can encourage community instead of creatin alienation

Question 21

Which of the following best represents Adam Smith’s view of government intervention in advancing public welfare?

-Governments are responsible for intervening when it benefits the middle class.
-Governments should let individuals pursue their own self-interests, and buy and sell whatever they wish.
-Humans do not behave like rational economic creatures and must be forced into such behaviors.
-Governments can influence a consumer’s desire to save, thereby lowering aggregate demand.

Answer 21

Governments should let individuals pursue their own self-interests, and buy and sell whatever they wish

Question 22

Which of the following best describes how contemporary societies carry out the production of goods and services, and the distribution of these goods in society?

-Commands
-Debate
-Free trade
-Traditions

Answer 22

Commands