SW Asia Economics Practice Test (SS7E4a-c, SS7E5a-d, SS7E6d)

What is the purpose of an embargo?

• To tax imported goods

• To limit imported goods

• To promote domestic industries

• To stop all or some trade

Answer explanation

An embargo is a government order that restricts or prohibits trade with specific countries or the exchange of specific goods. Therefore, the correct purpose of an embargo is to stop all or some trade.

What answer choice describes economic specialization?

•  an economy in which the government controls the means of production

• an economy in which producers produce the goods they can create most efficiently and trade for others

•  an economy in which all economic barriers to trade have been eliminated

• an economy in which producers look to the past in order to answer the three basic economic questions

Answer explanation

Economic specialization occurs when producers focus on creating goods they can produce most efficiently, allowing them to trade for other goods. This enhances productivity and trade efficiency.

 What is the primary function of OPEC?

• to control which nations are allowed to produce oil

• to control the amount of oil each nation is allowed to purchase

• to control the global price of oil by controlling the supply

• to control the amount of oil each nation is allowed to export

Answer explanation

OPEC's primary function is to control the global price of oil by managing the supply. By coordinating production levels among member countries, OPEC influences oil prices in the international market.

Why do countries with high levels of investment in capital goods tend to experience economic growth?

•  improved capital goods increase productive efficiency

•  improved capital goods increase demand for unskilled workers

•  improved capital goods increase employees' skills

•  improved capital goods increase competition between businesses

Answer explanation

Countries with high investment in capital goods enhance their productive efficiency, allowing for more output with the same resources. This leads to economic growth as businesses can produce more effectively.

Which of the following is a characteristic of a mixed economy?

• Only government makes all the economic decisions

• Only private businesses make all the economic decisions

• Both government and private businesses make economic decisions

• Neither government nor private businesses make economic decisions

Answer explanation

A mixed economy features both government and private businesses making economic decisions, combining elements of capitalism and socialism. This allows for a balance between public welfare and private enterprise.

Countries tend to specialize in producing goods and services that are relatively easy to produce with the resources they have available. This explains why Saudi Arabia specializes in _________.

• raising cattle

• growing food

• extracting oil

• making textiles

Answer explanation

Saudi Arabia specializes in extracting oil because it has abundant natural resources in the form of oil reserves, making it easier and more profitable to produce oil compared to other goods like cattle or textiles.

Which of the following describes how many nations of SW Asia have been affected by the distribution of oil?

• many nations have become very wealthy

• many nations economies have not been affected

• the populations of many urban areas have increased

• many nations have become very wealthy and populations of many urban areas have increased

Answer explanation

The correct choice highlights that many nations in SW Asia have become wealthy due to oil distribution, leading to increased urban populations as wealth often drives urbanization and economic growth.

How do command economies compare to market economies?

• command economies offer consumers greater choices

• command economies offer businesses greater freedom

• the government plays a greater role in command economies

• supply and demand play greater roles in command economies

Answer explanation

In command economies, the government controls production and distribution, leading to less consumer choice and business freedom. This contrasts with market economies, where supply and demand dictate economic activity.

What is the primary function of OPEC?

• to control which nations are allowed to produce oil for world markets

• to control the amount of oil each nation is allowed to purchase

• to control the global supply of oil in order to control the price on world markets

• to control the number of nations who are allowed to produce oil for world markets

Answer explanation

OPEC's primary function is to control the global supply of oil, which allows it to influence prices in world markets. This is essential for stabilizing the oil market and ensuring fair pricing for member countries.

What would happen if OPEC decided to reduce its oil production target?

• tariffs on oil would increase

• tariffs on oil would decrease

• prices for oil would increase

• prices for oil would decrease

Answer explanation

If OPEC reduces its oil production target, the supply of oil decreases. With lower supply and constant demand, prices for oil would increase, making this the correct choice.