Unit 1: CFA 3 (Standard 3) Review

In a command economy, what does the government or central planner decide to produce?

• The government has no control over production decisions
• Production decisions are made by individual consumers
• Production decisions are randomly determined
• The government or central planner decides what to produce.

In a market economy, how are goods and services produced?

• Goods and services are produced based on consumer demand and the profit motive.
• Goods and services are produced solely based on the producer's preferences.
• Goods and services are produced randomly without any planning.
• Goods and services are produced based on government regulations.

In a command economy, how is the distribution of goods and services decided?

• By the government or central authority
• By market demand
• By individual consumers
• By random selection

What does economic security refer to?

• Protecting individuals and businesses from risk

• Increasing production of goods and services

• Ensuring fairness within the economy

• Allocating resources to their most productive use

Which of the following is an example of economic equity?

• Increasing the overall price level of goods and services

• Allocating resources to their most productive use

• Providing equal access to jobs, goods, and services

• Ensuring that all willing and able to work have the opportunity to do so

Which of the following is an example of a nonrival good?

• A private tutoring session

• A public park

• A sandwich

• A pair of shoes

What characteristic defines a nonrival good?

• It is only available to those who pay for it.

• Its consumption by one person does not reduce availability to others.

• It is a physical product that can be owned.

• It can be consumed by one person at a time.

What is the "free-rider" problem associated with nonexcludable goods?

• Someone benefits from a good or service without paying for it.

• Everyone pays for the good or service.

• The good or service is not used by anyone.

• The good or service is only available to a few people.

What is deregulation?

• The imposition of new production rules

• The removal of production rules from an industry

• The increase of government oversight

• The creation of new regulations

People can make whatever they want as producers and buy whatever they like as consumers because the government has no power in the economy

• Traditional

• Command

• Market