Chapter 2 Test

Pick the 3 questions every economy must answer.

• What goods and services should be produced?
• Why are the goods and services produced?
• How should goods and services be produced?
• Who consumes the goods and services?

A(n) _______________ is the structure of methods and principles that a society uses to produce and distribute goods and services.

• factor payment
• standard of living
• economic system
• None of these

The concentration of the productive efforts of individuals and businesses on a limited number of activities is ___________________.

• incentive
• competiton
• self-interest
• specialization

A _______________ is the arena of exchange in which firms purchase the factors of production from households.

• factor market
• household
• incentive
• competition

______________ is a market-based economy where the government plays a limited role.

• Command economy
• Mixed economy
• Traditional economy

Does the U.S. government play a big or small role in the economy?

Does the U.S. economy give you a high or low level of freedom?

Does "Laissez Faire" mean the government should have a big or small role in the economy?

A _______________ is the hope of reward or fear of penalty that encourages a person to behave in a certain way.

• incentive
• competition
• self-interest
• None of these

This kind of economic system relies on habit, custom, or ritual, and is similar to the family system.

• Command economy
• Mixed economy
• Traditional economy