Economics Quiz

Which would a laissez-faire economist most likely favor?

• government support of basic industries

• high protective tariffs on imports

• minimal government regulation of the marketplace

• unemployment insurance and workers’ compensation programs

A nation's gross national product functions primarily as

• a means of estimating next year's debt

• an indicator of economic activity

• a method of measuring international trade balances

• a verification of the consumer price index

Poor weather conditions in coffee-producing countries often lead to rises in coffee prices in the United States. This best illustrates the idea of

• balance of trade

• subsistence agriculture

• supply and demand

• economic competition

A decision of the United States Government to spend money for defense rather than on social programs illustrates the economic principle of

• opportunity cost

• diminishing returns

• laissez-faire

• progressive taxation

Which action would most likely lead to a lowering of the inflation rate?

• increasing consumer demand by cutting taxes and increasing the money supply

• increasing production while limiting the growth of the money supply

• cutting the production of goods and services

• increasing government spending for social welfare programs

Which action taken by a country would indicate it is following a policy of economic nationalism?

• removing from subsidies

• raising tariff rates

• decreasing exports

• liberalizing its immigration laws

The main purpose of any economic system is to:

• produce and distribute goods and services

• provide for equal distribution of wealth among the people

• provide equal opportunity for individual prosperity

• ensure that all members of society have adequate resources

One advantage to a country of the decline in the value of its currency abroad is that the decline tends to:

• eliminate the country's dependence on foreign trade

• increase the country's exports and decrease its imports

• make it financially easier for the country's citizens to travel abroad

• enable the country to pay its foreign debts in gold rather than paper money

What is economics?

• The study of buying and selling.

• The study of government function.

• The study of how goods and services are produced and consumed.

• The study of money remaining from revenues after expenses are paid.

Which factor is a common characteristic of a subsistence economy?

• a barely adequate supply of food

• a highly skilled labor force

• high levels of capital investment

• dependence on the export of goods