Sprenkle Fundamental Concepts Unit Review

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

• full employment

• price stability

• economic growth

• innovation

In a free market economy, who primarily decides what goods and services are produced?

• state officials

• consumers

• business owners

• the legislature

All of the following are characteristics of a command economy EXCEPT

• it can change direction drastically in a brief period of time.
• does not permit extensive government intervention
• it is not designed to meet the wants of consumers.
• it provides workers with few incentives to work hard.

Maya is studying the impact of different federal laws on society. She learns that the minimum wage is an example of a federal law that supports

• economic growth.

• full employment.

• economic equity.

• economic efficiency.

In a school project about economic systems, Grace and Avery are discussing the government's role in a mixed economy. They conclude that it is the

• definer of goals.

• coordinator of basic economic activity.

• regulator charged with preserving competition.

• central planner.

“[E]very individual, therefore, endeavours as much as he can [to direct his resources toward his own business] so that its produce may be of greatest value; every individual...neither intends to promote the public interest, nor knows how much he is promoting it...He intends only his own gain, and he is in this...led by an invisible hand to promote an end which was no part of his intention...By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.” From Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nation, 1776. According to Adam Smith, what directs the choices business people make about how to use their resources?

• profit
• desire to benefit society
• economic equity
• government

Diaguita Indians have lived in this region for generations...We grow beans, corn and potatoes on the mountain slopes. To irrigate these crops, we still use the channels built centuries ago by our ancestors. We also breed llamas...In our community, the more llamas you own, the richer you are.

• government leaders
• habits and customs
• market prices
• individual consumers

The structure a society uses to fulfill the desires and requirements of its members defines its type of ____________________.

• political system

• economic system

• social hierarchy

• cultural identity

Social Security is a federal program that addresses the goal of economic ____________________.

• equity
• efficiency
• growth
• security

In Noah's economics class, they learned that the economic system in the U.S. is called a ________________________________________ because people generally carry on their economic affairs freely, but are subject to some government regulation.

• command

• market

• traditional

• mixed market