Econ Alive! Chapter 3 Review

The three fundamental economic questions are

• how much credit to extend, at what cost, and for whom?

• what to produce, how, and for whom?

• how many jobs to create, when, and for whom?

• what currency to use, at what value, and how to exchange it?

Why does every society face difficult choices in deciding what to produce?

• Each society has limited resources and limited wants.

• Each society has unlimited resources and limited wants.

• Each society has limited resources but unlimited wants.

• Each society has unlimited resources and unlimited wants.

The ability to make our own economic decisions without interference from the government is called:

• economic equity.

• economic freedom.

• economic growth.

• economic stability.

A society that values economic equity seeks to

• provide its poorer members with food, shelter, and health care to live decently.

• ensure that the good and services we rely on are always there.

• provide a job to everyone who seeks one.

• give everyone a fair share of the economic pie.

Which economic goal is encroached upon when the government taxes your wages in order to provide unemployment benefits to help those out of work?

• economic equity

• economic stability

• economic freedom

• economic efficiency

Most traditional economies today are found

• in countries headed by powerful rulers who make all major economic decisions.

• among indigenous people who live much as their ancestors did.

• in nations that value economic freedom and efficiency.

• in communist countries where economic decisions are made by the state.

Market economies

• call for property to be owned by society as a whole for the equal benefit of all.

• ensure that all property is owned by all members of society, and government is no longer needed.

• are inefficient and wasteful, resulting in very slow production of shoddy products.

• are highly efficient at producing goods and services that people want and are willing to pay for.

What does the circular flow model illustrate?

• It shows how money, goods, and resources move through a market economy.

• It explains the theory of the overthrow of capitalism and the development of communism.

• It illustrates the differences among traditional, command, and market economies.

• It depicts the key characteristics of the United States economic system.

The two kinds of markets in the circular flow model are

• the product market and the factor market.

• the free market and the command market.

• the capitalist market and the socialist market.

• the online market and the brick-and-mortar market.

When Adam Smith wrote about "the invisible hand," he was referring to the power of

• markets to provide goods and services at prices people will pay.

• capitalists to exploit workers and keep them in poverty.

• central planning committees in nations with command economies.

• custom and tradition in deciding what to produce, how to produce it, and for whom.