Quiz 2

Question 1

no other economist has had as much influence as

Answer 1

Adam Smith

Question 2

In the _____________, smith challenged the idea of mercantilism being economically sound

Answer 2

Wealth of Nations

Question 3

______________ is a system by which the government of the homeland controlled trade with its colonies

Answer 3

Mercantilism

Question 4

A nation would be wealthier if it engaged in__________

Answer 4

free trade

Question 5

He reasoned that people behave in ways satisfy their ______________ also helpes with voluntarry exchange

Answer 5

economic self-interest

Question 6

An _______________ guides the marketplace

Answer 6

“invisible hand”

Question 7

A system in which the society’s leaders usually members of the central government make all economic decision is called a _________________

Answer 7

centrally planned economy

Question 8

Modern societies that have adopted command economies have done so largely because of the influence of _______

Answer 8

Karl Marx

Question 9

Marx predicted that in time the workers would overthrow this system and transfer ownership of the factories to _______________

Answer 9

public hands

Question 10

________ is an economic system in which the government owns some or all of the factors of production

Answer 10

Socialism

Question 11

_______ is an economic system in which the government owns all the factors of production and there is little or no political freedom

Answer 11

Communism

Question 12

an ____________ require absolute obedience to those in power this is what communism will usually become

Answer 12

authoritarian system

Question 13

______________ is established through the democratic political process rather than through the violent overthrow of the government

Answer 13

Democratic socialism

Question 14

In democratic socialism the government owns the ____________________

Answer 14

basic industries but other industries are privately owned

Question 15

Marx would be exiled from his homeland for becoming involved in

Answer 15

radical politics

Question 16

During his travels he met ___________ the son of a factory worker

Answer 16

Friedrich Engels

Question 17

Marx concluded that the Industrial Revolution had created a system of ______

Answer 17

wage slavery

Question 18

Marx assisted by Engels laid out ideas of worker overthrow in the ____________

Answer 18

Communist Manifesto (1848)

Question 19

still has an economy with mostly command elements

Answer 19

north korea

Question 20

Self interest behavior is behind two features of a market economy:

Answer 20

private property rights

market

Question 21

________________ are the rights of individuals and groups to own businesses and resources

Answer 21

Private property rights

Question 22

The ___________ is any place where people buy and sell goods and services

Answer 22

market

Question 23

_________________ are necessary to make markets work property

Answer 23

Private property rights

Question 24

The principle that the government should not interfere in the economy is called_____________

Answer 24

laissez faire

Question 25

the concept of laissez faire is often paired with __________

Answer 25

capitalism

Question 26

_____________ is an economic system that is based on private ownership of the factors of production

Answer 26

Capitalism

Question 27

_____________ is a market economy in its pure form

Answer 27

Laissez faire capitalism

Question 28

a _____________ is a trade in which both traders believe that what they are getting is worth more than what they are giving up

Answer 28

voluntary exchange

Question 29

__________ is considered a financial gain from a business transaction

Answer 29

profit

Question 30

_________ is the effort of two or more people acting independently to get the business of others by offering the best deal

Answer 30

Competition

Question 31

_____________ is the idea that because consumers are free to purchase what they want and refuse products they do not have the ultimate control over what is produced

Answer 31

Consumer sovereignty

Question 32

______________ is a situation in which people concentrate their efforts in the areas which they have an advantage

Answer 32

Specialization

Question 33

Specialization _______________________ and markets allow households to trade for what they need

Answer 33

removes the need for household to be self-sufficient

Question 34

The ______________ is a tool that economists use to understand how market economies operate

Answer 34

circular flow model

Question 35

The model represents the two key economic decisions makers in a market economy

Answer 35

households | businesses

Question 36

The market for goods and services is called the ____________

Answer 36

product market

Question 37

The _____________ is the market for the factors of production

Answer 37

factor market

Question 38

Individuals own all the _____________

Answer 38

factors of production

Question 39

_______________ a key feature of the market economy ensures that resources will be allocated efficiently since inefficiencies would result in lower profits

Answer 39

profit motive

Question 40

___________ to come up with good ideas is related to another advantage of a market economy: Competition

Answer 40

Incentives

Question 41

Competition leads to higher-quality products at lower prices and helps create a __________________

Answer 41

diverse product market

Question 42

In a ____________________ the economic good of the individual is the primary focus

Answer 42

pure market economy

Question 43

The _____________ is the most common type of economic system today

Answer 43

mixed economy

Question 44

A mixed economy is an economy that has elements of _____________________

Answer 44

traditional, command, and market systems

Question 45

Even though there are traditional and command elements the driving forces of the US economy are such features as __________________

Answer 45

private ownerships and markets

Question 46

Swedish citizens receive ___________ social benefits

Answer 46

“cradle to grave”

Question 47

To __________ means to change from private ownership to government or public ownership

Answer 47

nationalize

Question 48

To __________ means to change from government or public ownership to private ownership

Answer 48

privatize

Question 49

One way to help privatize an industry is to open it up to _____________

Answer 49

foreign investors

Question 50

the _____________ refers to all the economic interactions that cross international boundaries

Answer 50

global economy

Question 51

Globalization also have been enhanced by _____________________

Answer 51

cross-border business partnerships