Economics Final Review

Which of the following is a characteristic of the U.S. free enterprise system?

• Government controls prices

• No private property rights

• Competition among businesses

• Central planning of resources

What does the production-possibilities curve illustrate?

• Economic growth

• Opportunity cost and scarcity

• Changes in government policy

• Levels of unemployment

Which economic philosopher is known for advocating free markets with minimal government intervention?

• John Maynard Keynes
• Karl Marx
• Adam Smith
• Milton Friedman

How does the circular flow model represent households?

• Households are illustrated as government entities regulating firms.
• Households are shown as banks lending money to consumers.
• Households are represented as consumers providing labor to firms in exchange for income.
• Households are depicted as producers selling goods to firms.

What is the primary problem of scarcity?

• Scarcity only affects wealthy nations.
• limited resources and unlimited human wants.

• Scarcity is the result of technological advancements.
• Scarcity is caused by overproduction of goods.

How do incentives drive economic decision-making in a free enterprise system?

• Incentives are solely based on government regulations.
• Incentives only benefit large corporations and not individuals.
• Incentives have no impact on economic decision-making.
• Incentives drive economic decision-making by motivating individuals and businesses to act in ways that maximize their benefits and minimize their costs.

Which of the following best describes economic freedom in the U.S. free enterprise system?

• Economic freedom restricts individual choices to ensure equality.
• Economic freedom allows individuals and businesses to make their own economic choices with minimal government intervention.
• Economic freedom means government controls all business activities.
• Economic freedom is only available to large corporations in the U.S.

What role does government play in a free enterprise system?

• The government has no involvement in the economy.
• The government completely controls all businesses.
• The government only focuses on taxation without regulation.
• The government establishes rules, protects rights, and regulates to ensure fair competition in a free enterprise system.

How does a production possibilities curve (PPC) demonstrate efficiency?

• A PPC shows the total resources available for production.
• A PPC illustrates the demand for goods in the market.
• A PPC indicates the profit margins of producing goods.
• A PPC demonstrates efficiency by showing the maximum output combinations of two goods that can be produced with available resources.

What does a point inside the production possibilities curve represent?

• Optimal allocation of resources.
• Underutilization of technology.
• Maximum production efficiency.
• Inefficient use of resources.