Economics Test Review

Countries determine what to produce, how to produce it, and who will receive it based on -

• the type of economy the country has

• geography

• the resources of the country

• goods and services within the country

What's the major difference between a free market economy and a mixed market economy?

• government is more involved in a free market economy

• government is more involved in mixed market economy

• the amount of supply of resources

• the amount of demand for resources

Scarcity is caused by ___________ resources.

• cheap

• many

• functional

• limited

As the central bank of the US, the primary function of the Federal Reserve system is to -

• regulate stock market trading

• preserve fair competition

• maintain the value of the dollar by keeping inflation law and steady

• maintain a high rate of deflation

Why does the government create anti-trust laws? CHOOSE TWO (2) answers.

• to stop monopolies

• to develop specialization

• to promote competition

• to stop government regulations

What is TRUE about a command economy? CHOOSE TWO (2) answers.

• lots of consumer choices

• government owns all property/resources

• centrally planned economy

• competition is encouraged

What is TRUE about the American economy? CHOOSE TWO (2) answers.

• Lack of consumer choice

• People can earn profit

• Mixed economy

• completely centrally owned property

What is consumer sovereignty?

• power to self-rule

• power to produce

• power to sell

• power to buy

What is TRUE about incentives? CHOOSE TWO (2) answers.

• Incentives support the development of new ideas and products.

• Incentive is what is given up when a choice is made.

• Incentives motivate us to make certain economic decision.

• Incentives change our economic behavior

To prevent an outbreak of deflation, the Fed decreases interest rates. Which role of the Fed is this?

• protect consumers

• manage the amount of money in the economy

• regulate smaller banks to ensure safety of deposits

• act as federal government's bank