Unit 3 Test Review

Which economic system is characterized by private ownership of resources and minimal government intervention?

• a. Command economy

• b. Mixed economy

• c. Traditional economy

• d. Market economy

In a command economy, who typically makes the major economic decisions?

• a. Consumers

• b. Private businesses

• c. The government

• d. International organizations

What is the primary driving force behind economic decisions in a market economy?

• a. Government regulations

• b. Supply and demand

• c. Traditional customs

• d. Central planning

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

• a. Complete government control of all industries

• b. No private ownership of businesses

• c. A combination of market forces and government intervention

• d. Decisions based solely on customs and traditions

How does a progressive tax system typically influence individual economic choices?

• a. It encourages higher earners to work less

• b. It has no effect on individual choices

• c. It promotes equal distribution of wealth

• d. It incentivizes investment in tax-free bonds

In a market economy, what primarily influences a business's decision to produce more of a product?

• a. Government mandates

• b. Consumer demand

• c. Traditional practices

• d. Available natural resources

Which economic system is most likely to prioritize social welfare programs?

• Pure capitalism

• Traditional economy

• Mixed economy

• Laissez-faire economy

How do subsidies typically influence the choices of businesses and consumers?

• They decrease production and consumption of the subsidized good

• They have no effect on economic choices

• They increase the cost of the subsidized good

• They encourage production and consumption of the subsidized good

In a traditional economy, what primarily determines economic choices?

• Market forces

• Government planning

• Customs and habits

• Technological advancements

How does inflation generally affect the spending choices of individuals?

• It encourages saving and discourages spending

• It has no effect on spending choices

• It encourages spending and discourages saving

• It only affects government spending choices