Economics Quiz

What is economics? (1.1.7)

• The study of outer space and celestial bodies
• The study of how individuals and societies allocate resources and make choices to satisfy their wants and needs.
• The study of how to grow plants and vegetables
• The study of ancient civilizations

Answer explanation

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Societies are faced with which three basic questions about production of goods? (1.1.9-10)

• What, how, for whom (to produce)

• what where when and why

• taxes, loans, bargains

What is opportunity cost? (1.2.17)

• The value of the next best alternative that is given up when a decision is made.
• The cost of the least desirable option
• The cost of the chosen alternative
• The total cost of all available options

What are trade-offs? (1.2.18-19)

• choice of how to use your resources

• Gains or benefits obtained from a particular decision
• Unavoidable consequences of a particular action
• Rewards or advantages received from making a compromise

In which economic system is the government most likely to provide people with goods and services they could not otherwise afford? (2.1.41)

• Capitalist
• Communist
• Socialist
• Anarchist

What are the advantages and disadvantages of a market economy? (2.1.45-46)

• The advantages of a market economy include inefficiency and lack of innovation, while the disadvantages include equal opportunities for all individuals.
• A= change direction easily D= government makes things that people dont want or need

• The advantages of a market economy include high taxes and government control, while the disadvantages include equal distribution of wealth.
• The advantages of a market economy include slow economic growth and lack of competition, while the disadvantages include high employment rates.

What is the most common economic system in the world today? (2.2.48)

• Communism
• Feudalism
• mixed economy

• Socialism

What three synonyms can be used to describe the American Economic system? (3.1.72)

• Socialist
• Communist
• Capitalist, free market, free enterprise

• Planned economy

How do economists define incentives? (3.1.73)

• what motivates people to work, save and invest

• Physical barriers that restrict choices
• Emotional responses that guide behavior
• Financial assets that impact decision-making

What are possible effects of inflation? (3.3.89)

• Increase in purchasing power, decrease in interest rates, and increase in real wages
• Stagnation in the economy, decrease in savings, and increase in unemployment
• No impact on the economy, decrease in stock prices, and increase in exports
• work more to pay for basic necessities