Chapter 2 Economic Pre-Test

Which of the following is NOT characteristic of a centrally planned economy?

• the central government owns all land and capital

• the central government makes all economic decisions

• each collective or factory sets its own goals

• each person is assigned a job

What is the struggle among various producers for the consumer's business called?

• socialism

• competition

• incentive

• self-regulation

Why does even a free market economy need some government intervention

• to provide for things that the marketplace does not address

• to ensure that the government has the freedom to tax as necessary

• to make sure that the government can fulfil its needs for military personnel

• so the government has some control over factor resources

Which of the following is NOT a key economic question?

• What goods and services should be produced?

• How should these goods and services be produced?

• Who consumes these goods and services?

• How should it be ensured that goods and services are paid for?

What does the process of specialization do for an economy?

• it eliminates unemployment

• it makes it more efficient

• it fosters competition

• it makes it easier to control

How could the Chinese econ0my be characterized?

• free market

• centrally planned

• mixed, but on the side of centrally planned

• mixed, but in the side of free market

What is one of the most important advantages of a free market?

• it can change rapidly

• it protects the less fortunate

• it is east to regulate

• it encourages growth

What incentive motivates a manufacturer to sell a product?

• Making profits on sales

• putting others out of business

• pleasing the consumer

• popularity of the product

Which of the following was a free market philosopher?

• Karl Marx

• Adam Smith

• Vladimir Lenin

• Friedrich Engels

Which of the following is characteristic of a traditional economy?

• Communities tend to be fast-growing

• they are usually based on light industrial production

• they have a high standard of living

• children tend to have the same jobs their parents did