Economics Chapter 2 Test

Which of the following is NOT a 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 market place does not address

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

• To make sure that the government can fulfill its needs for military personnel

• So that 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 economy be characterized?

• Free Market

• Centrally Planned

• Mixed, but on the side of centrally planned

• Mixed, but on 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 easy 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 a 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 as their parents did