Economics Unit 1 Test Review

What are the four factors of production necessary for the production of goods and services?

• Land, labor, capital, and entrepreneurship

• Money, time, effort, and resources

• Land, money, effort, and entrepreneurship

• Labor, capital, time, and resources

What is the role of money in an economy?

• Medium of exchange, store of value, and unit of account

• Medium of exchange, source of income, and unit of account

• Store of value, source of income, and unit of account

• Medium of exchange, store of value, and source of income

Which of the following is NOT a broad goal of economic policy?

• Efficiency

• Full employment

• Price stability

• Scarcity

What is the concept of opportunity cost?

• The cost of the next best alternative foregone

• The cost of all alternatives foregone

• The cost of the chosen alternative

• The cost of production

Which economic system attempts to answer the questions: What to produce? How to produce it? To produce it for whom?

• Market economy

• Command economy

• Mixed economy

• All of the above

Who are the theorists associated with capitalism and communism?

• Adam Smith and Karl Marx

• John Maynard Keynes and Karl Marx

• Adam Smith and John Maynard Keynes

• Milton Friedman and Karl Marx

What are positive and negative incentives in voluntary exchange?

• Rewards and penalties

• Profits and losses

• Benefits and costs

• All of the above

Which of the following is NOT a factor of production?

• Land

• Labor

• Money

• Capital

What does the production possibilities curve explain?

• Choice, productivity, tradeoffs, and opportunity cost

• Choice, productivity, scarcity, and unemployment

• Tradeoffs, growth, scarcity, and unemployment

• Growth, security, freedom, and equity

Which of the following is a characteristic of a command economy?

• Government makes all economic decisions

• Prices are determined by supply and demand

• Private ownership of resources

• Competition among businesses