Test

Question 1

the study of individuals, families, and businesses in the economy

Answer 1

Microeconomics

Question 2

the study of the economy as a whole and is concerned with large-scale economic activity

Answer 2

Macroeconomics

Question 3

studies economic behavior as it is

Answer 3

Positive Economics

Question 4

involves judgements of what economic behavior ought to be

Answer 4

Normative Economics

Question 5

the way a society uses its scarce resources to satisfy its people’s unlimited wants

Answer 5

Economic System

Question 6

There are three basic types of economic systems:

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Traditional, Command, and Market Economies

Question 7

an economic system in which families, clans, or tribes make economic decisions based on customs and beliefs that have been handed down from generation to generation

Answer 7

Traditional Economy

Question 8

the government decides what goods and services will be produced, how they will be produced and how they will be distributed

Answer 8

Command Economy

Question 9

is based on individual choice, not government directives; Consumers and producers drive the economy

Answer 9

Market Economy

Question 10

No other economist has had as much influence as

Answer 10

Adam Smith

Question 11

was born in Scotland in 1723 and studied, and later taught, literature, logic, and moral philosophy

Answer 11

Adam Smith

Question 12

In this book, Smith challenged the government of the homeland controlled trade with its colonies

Answer 12

Wealth of Nations

Question 13

What guides the marketplace according to Adam Smith?

Answer 13

Invisible Hand

Question 14

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

Answer 14

Centrally Planned Economy

Question 15

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

Answer 15

Socialism

Question 16

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

Answer 16

Communism

Question 17

requires absolute obedience to those in power

Answer 17

Authoritarian System

Question 18

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

Answer 18

Democratic Socialism

Question 19

was born in what is now Germany in 1818 and grew up in middle-class comfort

Answer 19

Karl Marx

Question 20

What did Marx think created wage slavery?

Answer 20

Industrial Revolution

Question 21

Marx, assisted by Engels, laid out ideas of worker overthrow in

Answer 21

The Communist Manifesto

Question 22

Advantages of a traditional economy:

Answer 22

Traditional economies clearly answer the three economic questions
They produce what best ensures its survival
The methods of productions are the same as they have always been
Systems of distribution are determined by custom or tradition
Little disagreement over economic goals and roles

Question 23

Advantages of Command Ecomony

Answer 23

They seek to provide for everyone

Leaders in a command economy can use the nation’s resources to produce items that may not make money in a market economy

Question 24

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

Answer 24

Laissez Faire Economics

Question 25

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

Answer 25

Capitalism

Question 26

is a market economy in its pure form

Answer 26

Laissez Faire capitalism

Question 27

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

Answer 27

Voluntary Exchange

Question 28

What guides voluntary exchanges?

Answer 28

Self-interest

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

Answer 31

Consumer Sovereignty

Question 32

acts as a control on self-interested behavior, guiding the market toward a balance between higher value and lower prices

Answer 32

Competition

Question 33

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

Answer 33

Specialization

Question 34

removes the need for household to be self-sufficient, and markets allow households to trade for what they need

Answer 34

Specialization

Question 35

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

Answer 35

Circular Flow Model

Question 36

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

Answer 36

Households and Businesses

Question 37

The market for goods and services is called

Answer 37

Product Market

Question 38

The suppliers of the product market are

Answer 38

businesses

Question 39

is the market for the factors of production

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Factor Market

Question 40

What is the primary focus In a pure market economy,

Answer 40

The good of the individual

Question 41

most common type of economic system today

Answer 41

Mixed economy

Question 42

is an economy that has elements of traditional, command, and market systems

Answer 42

mixed economy

Question 43

In the United States what economy dominates?

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Market

Question 44

tried to find a middle ground between socialism and capitalism

Answer 44

France

Question 45

while also a mixed economy, has much greater government involvement

Answer 45

Sweden

Question 46

The Swedish government and government-related organizations own

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1/3 of all Swedish companies

Question 47

Swedish citizens receive

Answer 47

Cradle to grave benefits

Question 48

to change from private ownership to government or public ownership

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nationalize

Question 49

to change from government or public ownership to private ownership

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privatize

Question 50

One way to help privatize an industry is to

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open it up to foreign investors | \

Question 51

refers to all the economic interactions that cross international boundaries

Answer 51

Global Economy

Question 52

also have been enhanced by cross-border business partnerships

Answer 52

Globalization