ECON Chapter 7 Review

The United States has a modified private enterprise economy, or mixed economy.

• True

• False

The purpose of government in a command economy is to...

• ensure the availability of consumer products

• encourage entrepreneurs

• make major economic decisions

• promote economic freedom

An example of a country that is based on the market economy is...

• the Inuit

• the former Soviet Union

• the United States of America

• North Korea

The United States can best be described as having a...

• modified private enterprise system (mixed)

• traditional system

• command economy

• pure free enterprise system

All of the following are characteristics of a command economy EXCEPT...

• it can change direction drastically in a brief period of time.

• public services are available at little or no cost.

• it is not designed to meet the wants of consumers.

• it provides workers with few incentives to work hard.

A market economy...

• does not give the basic needs to the people for free.

• limits the choices of goods and services available.

• permits extensive government intervention.

• offers a high degree of certainty for its workers.

“So long as mankind lived by raising crops and herding animals, there was not much need for measuring small units of time. The seasons were all important—to know when to expect the rain, the snow, the sun, the cold. Why bother with hours and minutes? Daylight was the only important time, the only time when men could work.”

From Daniel J. Boorstin’s The Discoverers: A History of Man’s Search to Know His World and Himself, 1985

• traditional economy

• command economy

• market economy

• mixed economy

The study of economics is important because it enables us to...

• describe our standard of living.

• increase our consumption of consumer goods.

• become better decision makers.

• determine what goods ought to be produced.

The dollar value of all final goods and services and the most comprehensive measure of a country's total production output is...

• its standard of living.

• financial capital.

• a cost-benefit analysis.

• Gross Domestic Product (GDP).

An economy at its production possibilities frontier is operating...

• with slow economic growth.

• at full/maximum potential.

• without division of labor.

• as a free enterprise economy.