Chapter 17 Review - The American Economy

What are the two main sectors in the basic Circular Flow model?

• Government and International

• Households and Businesses

• Financial and Product Markets

• Producers and Businesses

Which of the following is NOT a characteristic of capitalism?

• Private property rights

• Government ownership of production

• Competitive markets

• Profit motive

In a free enterprise system, who decides what to produce?

• The Government

• Consumers

• Producers

• Both B and C

Laissez-faire economics advocates for:

• High government intervention in the economy

• No government intervention in the economy

• Limited government intervention in the economy

• Government ownership of key industries

Specialization in production leads to:

• Decreased efficiency

• Increased need for trade

• Lower quality products

• Higher unemployment rates

GDP per capita is calculated by dividing:

• The total GDP by the adult population

• The total GDP by the total population

• The GDP of the wealthiest citizens by the total population

• The GDP of the working population by the total population

A high standard of living is typically characterized by:

• Low GDP per capita

• High levels of poverty

• High GDP per capita

• High levels of unemployment

In the Circular Flow model, the market where goods and services are exchanged is called the:

• Factor market

• Product market

• Capital market

• Labor market

Capitalism encourages innovation primarily through:

• Government planning

• The profit motive

• Redistribution of wealth

• Centralized economic decisions

Free enterprise is often synonymous with:

• Socialism

• Market economy

• Command economy

• Mixed economy