Unit 2 - Chapters 3 and 4

Question 1

The struggle between companies for customers is called _______.

Answer 1

competition

Question 2

Exclusive control over a product or the means of producing is called a(n) _______.

Answer 2

monopoly

Question 3

Potential for loss or failure is called _______.

Answer 3

risk

Question 4

_______ provides the incentive for people to risk their money on business ventures.

Answer 4

Profit

Question 5

The United States is considered a(n) _______ free enterprise system because of the government involvement in its economy.

Answer 5

modified

Question 6

The military on a national level and the police on a local level are examples of how the government is considered a(n) _______.

Answer 6

service provider

Question 7

The government agencies that help protect consumers and workers, such as OSHA and the FDA, are examples of how the government is considered a(n) _______.

Answer 7

regulartor

Question 8

The Sherman Antitrust Act was enacted to prevent _______.

Answer 8

monopolies

Question 9

In a free enterprise system, _______ decide which products will be produced and which companies will stay in business.

Answer 9

consumers

Question 10

_______ and _______ interact to determine the price customers are willing to pay for the number of products producers are willing to make.

Answer 10

Supply, demand

Question 11

Name the four factors of production.

Answer 11

land, labor, capital, entrepreneurship

Question 12

List the three economic questions all countries must answer.

Answer 12

what will be produced, how it will be produced, and who will get what is produced

Question 13

Place the United States, North Korea, and Sweden on a continuum with the left side of the continuum representing communism, the middle left socialism, and the far right capitalism.

Answer 13

Far Left–North Korea; middle left–Sweden; and right side–United States

Question 14

Explain the philosophy behind “cradle to grave” services, which some socialist countries offer their people, and explain who ultimately pays for those services.

Answer 14

Socialistic countries take care of their people with regard to medical care, education, and retirement; high taxes paid by workers and employers ultimately pay for these services.

Question 15

How does privatization help emerging countries become more market-driven?

Answer 15

It helps countries generate needed income to improve their infrastructure, balance their budgets, and stimulate foreign investment in their countries.

Question 16

Name the three goals of any economy.

Answer 16

stable prices, low unemployment, and high productivity

Question 17

Why is a country’s GDP an important economic measurement?

Answer 17

It reflects the productivity of a country because it is all goods and services produced using labor and property in a country.

Question 18

Explain the difference between CPI and core CPI.

Answer 18

CPI measures the change in price over a time of some 400 specific retail goods and services used by the average urban household. The core CPI excludes food and energy prices, which tend to be volatile.

Question 19

Name two economic indicators that reflect the consumer’s influence on the economy.

Answer 19

consumer confidence, retail sales, sales of trucks and autos

Question 20

Name the four stages of the business cycle.

Answer 20

prosperity or expansion, recession, depression, and recovery