True/False
Indicate whether the sentence or statement is true
or false. |
| | 1. | The three
basic economic questions are what to produce, how to produce, and for whom to produce. |
| | 2. | No pure
economic systems really exist. |
| | 3. | In a command
economy, private ownership of property and individual decision-making are combined with government
regulations. |
| | 4. | In a market
economy, the flow of resources, goods and services, and dollars is circular. |
| | 5. | A
traditional economy provides a wide choice of goods and services. |
Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question. |
| | 6. | All economic
systems a. | produce the same
goods. | b. | must answer the same three basic questions. | c. | have the same
resources. | d. | distribute products through majority rule. | | |
|
| | 7. | Almost all
economic systems today are a. | traditional economies. | c. | command economies. | b. | mixed
economies. | d. | market
economies. | | | | |
|
| | 8. | Who owns the
factors of production and makes economic decisions in a market economy? a. | individuals | c. | economists | b. | government | d. | communities | | | | |
|
| | 9. | Which of the
following groups of people have a traditional economy? a. | Australian
Aborigines | c. | North
Koreans | b. | medieval peasants | d. | Chinese factory workers | | | | |
|
| | 10. | One
advantage of a controlled economy is a. | the incentive to work hard. | c. | the speed of rerouting resources. | b. | consumer
choices. | d. | the opportunities for
wealth. | | | | |
|
| | 11. | Since the
1880s, the role of government in the United States has a. | decreased. | c. | been
eliminated. | b. | increased significantly. | d. | had no impact on the economy. | | | | |
|
| | 12. | Which of the
following describes a free enterprise system? a. | Individuals are free to own and control the factors of
production. | b. | Government owns and controls the factors of
production. | c. | Businesses cannot make a profit. | d. | There are no legal
restrictions on freedom of enterprise. | | |
|
| | 13. | In a free
enterprise system, who makes the decisions about what should be produced? a. | sellers | c. | consumers | b. | entrepreneurs | d. | government | | | | |
|
| | 14. | What
motivates people to establish new businesses or expand existing ones? a. | private
property | c. | freedom of
choice | b. | government regulations | d. | profit incentive | | | | |
|
| | 15. | Competition
forces businesses to a. | keep prices low. | c. | lower the quality of their products. | b. | raise
prices. | d. | raise the costs of
production. | | | | |
|
| | 16. | The goal of
economic freedom is to a. | allow the government to control the economy. | b. | limit
competition. | c. | allow each member of society to make
choices. | d. | prevent businesses from failing. | | |
|
| | 17. | When the
benefits of an economic action exceed the costs, a. | economic efficiency increases. | b. | economic efficiency
decreases. | c. | production of goods and services decreases. | d. | economic freedom
decreases. | | |
|
| | 18. | A law
dealing with unemployment compensation helps provide a. | economic
growth. | c. | economic
security. | b. | economic stability. | d. | economic equity. | | | | |
|
| | 19. | Economic
equity deals with the issue of a. | profit. | c. | fairness. | b. | choices. | d. | specialization. | | | | |
|
| | 20. | The goal of
economic stability is to reduce extreme ups and downs in the a. | minimum
wage. | c. | factors of
production. | b. | standard of living. | d. | nation's economy. | | | | |
|
Completion
Complete each sentence or
statement. |
| 21. | An economic
system in which individuals own the factors of production and decide how to use them within legal
limits is called a _________________________.
|
| 22. | ____________________ means the government lets people and businesses make their own
economic decisions without interference.
|
| 23. | Another term
for free enterprise system is ____________________.
|
| 24. | By
protecting the rights of private property, the U.S. Constitution also gives individuals a
____________________ or desire to make money by producing and selling goods.
|
| 25. | ____________________ leads producers to use resources efficiently and keeps prices low
for consumers.
|
| 26. | Another name
for a free enterprise system is ____________________.
|
| 27. | Economic
efficiency is the wise use of ____________________ so that costs do not exceed
benefits.
|
| 28. | The goal of
____________________ is to reduce extreme ups and downs in the standard of living.
|
| 29. | Economic
security provides protection against ____________________.
|
| 30. | The goal of
economic equity is ____________________.
|
Matching |
| | Match
each item with the correct statement below. a. | economic system | b. | traditional
economy | c. | command economy | d. | market | e. | mixed economy | | |
|
| | 31. | freely
chosen activity between buyers and sellers of goods and services |
| | 32. | system in
which the government controls the factors of production and makes all decisions about their
use |
| | 33. | way in which
a nation uses its resources to satisfy its people's needs and wants |
| | 34. | system
combining characteristics of more than one type of economy |
| | 35. | system in
which economic decisions are based on customs that have been handed down from generation to
generation |
| | Match
each item with the correct statement below. a. | capitalism | b. | laissez-faire | c. | profit | d. | private property | e. | competition | | |
|
| | 36. | money left
over after all the costs of production have been paid |
| | 37. | rivalry
among producers or sellers of similar goods and services to win more business |
| | 38. | economic
system in which the government lets people do as they choose |
| | 39. | economic
system in which private individuals own factors of production |
| | 40. | whatever is
owned by individuals rather than by government |
| | Match
each item with the correct statement below. a. | economic efficiency | b. | economic
equity | c. | standard of living | d. | economic
growth | e. | economic responsibility | | |
|
| | 41. | material
well-being of an individual, group, or nation measured by how well necessities and luxuries are
satisfied |
| | 42. | expansion of
the economy to produce more goods, jobs, and wealth |
| | 43. | wise use of
available resources so that costs do not exceed benefits |
| | 44. | obligation
of individuals in a free enterprise system to function as productive members of society |
| | 45. | the attempt
to balance an economic policy so that everyone benefits fairly |