Economics Topic 2 Review

Which of the following BEST answers the below question? 

"Who benefits from the free market economy? "

• Consumers and producers 

• People living in poverty 

• Wealthy entrepreneurs

• The federal government 

This photograph represents the type and scale of economic activity that is typical of a

• Centrally planned economy

• Free market economy

• Specialized economy.

• Traditional economy.

Which of these is NOT an advantage of the free market?

• growth & innovation

• freedom of choice

• no private ownership

• variety of goods

The goal of both communism and socialism is

• even distribution of wealth

• ownership of some private property

• government is authoritarian

• democracy

What is one of the major disadvantages of a centrally planned economy?

• It lacks the capacity to produce factory goods because its resources are scarce. 

• It places individual freedoms above the pursuit of societal goals. 

• It focuses on rewarding innovation instead of guaranteeing jobs and income. 

• It does not allow producers of goods and services to respond to consumer signals. 

“Safety nets” are a part of which basic economic goals of society.

• Efficiency 

• Security

• Growth

• Equity

Which of the below are NOT elements of a free market?

• Factor markets 

• Product markets

• Government

• Households

• Firms

Adam Smith, the father of economics, is known for the concept of

• mixed economy

• centrally planned economy

• traditional economy

• the invisible hand

Which role of the government, in the U.S. free enterprise system, does this image illustrate? 

• To ensure that producers provide consumers with basic information about goods and services. 

• To ensure consumers pay only those costs that the government has agreed to 

• To ensure that consumers are taxed on all transactions in the marketplace

• none of these

Command economies directly oppose all the below EXCEPT

• Free market pricing 

• Government ownership

• Consumer choice

• Competition