Economics System Test 2020 SI

Which of the following is true in a market economy?

• A. Custom and tradition determine what type of work people will be required to do to earn a living.

• B. The government controls the most profitable businesses.

• C. The government decides what the prices of goods will be.

• D. Supply and demand influences the economic decisions of businesses and individuals.

Which of these best describes why money is an effective medium of exchange?

• A. Nearly everyone will accept money as payment.

• B. Every person has access to about the same amount of money.

• C. Money allows people to negotiate instead of paying a set price.

• D. Money has practical uses other than spending.

Advocates of a mixed economic system believe it is able to balance apparently conflicting social and economic goals. They believe that freedom and security can be balanced with equity and efficiency. It is able to do this, they say, by

• A. requiring that lawmakers be chosen from all income groups.

• B. combining aspects of traditional and command economies.

• C. combining aspects of market and command economies.

• D. requiring that employees be part owners of all businesses.

What is the best title for the list?

• What to produce?

• How to produce?

• For whom to produce?

• A. The Three Basic Economic Questions

• D. The Three Basic Historical Questions

• C. The Three Basic Political Questions

• B. The Three Basic Legal Questions

Some things that cost money tend to benefit people whether they pay for them or not. An example is police protection. These are a problem in a market system because people resist paying for things that other people get for free. This helps explain why the government

• A. provides public goods and services.

• B. protects property rights of businesses.

• C. redistributes income among all people.

• D. regulates interest rates for banks.

Which of these services is provided by the national government?

• A. fire fighters

• B. road repair

• C. electricity

• D. military defense

One of the objectives of a command economy is to ensure that everyone who is able to work has a job. This can be seen as an effort to achieve the broad social and economic goals of

• A. equity and price stability.

• B. freedom and efficiency.

• C. competition and profit.

• D. security and full employment.

Which of the following is true in a mixed economy?

• A. Businesses are free to do whatever they want, and they face little government regulation.

• B. Businesses are free to make many choices, but they face some government regulation.

• C. The government makes all economic decisions for businesses.

• D. The government makes all economic decisions for consumers.

Which type of government regulation is primarily designed to protect consumers?

• A. guidelines for technology research

• B. rules for food packaging labels

• C. tariffs on imported products

• D. bankruptcy rules and copyright law

Property rights, such as copyright, are enforced by the legal system. Explain why protecting property rights is essential to a market economy.

• A. The government reserves the right to automatically transfer the income to others.

• B. Every individual or businesses has the right to copy other people's goods for profit.

• C. A market economy relies on the free exchange of goods and services without rules.

• D. Individuals and businesses need control over profits, use, and distribution of goods.