Latin American Economy Test Study Guide

How do command economies answer the three basic economic questions?

• The government answers the questions of what, how, and for whom to produce goods and services. The government will make all decisions.

• The past will guide producers in answering what, how, and for whom to produce goods and services.The past will guide all decisions.

• Supply and demand will answer the questions of what, how, and for whom to produce goods and services. Supply and demand will guide all decisions.

• Supply and demand will answer the questions of what, how, and for whom to produce goods and services. The government will intervene to make sure that everything is fair.

Which is a benefit or advantage of a market economy?

• The market can change over time, allowing people to recover from economic depressions and market setbacks.

• The market will control the cost of labor and capital goods.

• The market will set high prices for all goods and services.

• The market will limit consumer choices to certain goods.

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Use the continuum to answer the question.

Which country on the economic continuum has the LEAST free economy?

• Cuba

• Mexico

• United States

• United Kingdom

Use the information and the continuum to answer the question.

Where would the country being described be placed on the continuum?

• Point A

• Point B

• Point C

• Point D

Use the information to answer the question:

Country C is close to the Arctic Circle and is often covered by ice. It has a short season for farming. The farmers cannot supply the population with enough food. However, they do have an abundant (very big) supply of fresh water from melted snow and many lakes that have fresh water also.

What is a solution for Country C’s food scarcity?

Scarcity = having very little of something, or even none

• Specialize in fresh water to trade for food

• Increase their growing season by clearing land

• Use their fresh water to help grow their crops

• Use trade barriers to protect their workers and goods

The U.S. banned all trade with Cuba after the Cuban Missile Crisis. The U.S. wanted to punish Cuba for becoming Communist and being allies with the Soviet Union. What kind of trade barrier was this?

• tariff

• embargo

• quota

• specialization

Use the information to answer the question.

Mariana lives in Mexico. She is planning her second trip to Brazil to visit her brother, who recently moved to Brazil for a new job. Once she arrives in Brazil, Mariana plans to take a city bus into downtown Rio de Janeiro from the airport to save money.

What must Mariana do to pay for public transportation (the city bus)?

• get a job so that she can pay for her trip to Brazil

• pay a tariff to the government in order to visit Brazil

• exchange her Mexican pesos for Brazilian reals

• pay a travel agent to plan her trip back to Mexico

What effect did the North American Free Trade Agreement (NAFTA) have on U.S.-Mexican relations?

• More jobs became available to Mexico's population, which led to an increase in trade.

• The U.S. sponsored Mexico to leave the United Nations

• The U.S. increased its tariffs on all Mexican products.

• The U.S. ordered the closing of Mexican factories close to the U.S. border that caused pollution.

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What do some believe is the consequence of increased industrialization and trade as a result of the North American Free Trade Agreement (NAFTA)?

Industrialization = a lot of factories producing/ manufacturing goods

• increased taxes

• increased inflation

• increased tariffs

• increased pollution

Which countries are closer to a pure market economy?

Hint: In a market economy, citizens actively participate in their country's economy by starting their own businesses. Which countries below provide the MOST personal freedoms?

• Cuba and Brazil

• Brazil and Mexico

• Cuba and Mexico

• Brazil, Cuba, and Mexico