Unit 1 The Global Economy

What is the fundamental reason for scarcity in economics?

• Because resources are unlimited and can satisfy all human wants.

• Because resources are limited and cannot satisfy all human wants.

• Because inflation reduces the purchasing power of money.

• Because technological advancements eliminate the need for resources.

What is a key benefit of capitalist economies over communist economies?

• More stable economic cycles

• Increased consumer choice

• Fairer distribution of resources

• Broader social welfare systems

What is a fundamental characteristic of a socialist economic system?

• Emphasis on individual entrepreneurship and private profit.

• Government ownership and control of major industries.

• Free market competition without restrictions.

• Decentralized decision-making by private entities.

Kai is setting up a new business and is considering what he needs to get started. Which of the following is NOT an example of a capital good?

• A person’s skills and abilities, which can be employed to produce valuable goods and services

• Factories and offices where goods and services are produced

• Tools and equipment

• Computers and Robotics used by a company

Sarah decides to spend her afternoon volunteering at a local shelter instead of going to a concert with her friends. What is an example of Sarah's opportunity cost?

• Gaining experience from volunteering

• Missing out on the concert experience

• Both of her choices are opportunity costs.

• Neither of her choices are opportunity costs.

Josh buys a cheeseburger at Burger King. What type of market is he participating in when he buys the cheeseburger?

• Free Market

• Factor Market

• Product Market

• Command Market

Sarah is a freelance graphic designer and charges $15 per hour for her services. In which market is she participating when she offers her design services?

• Free Market

• Factor Market

• Product Market

• Command Market

When a person uses a smartphone manufactured in South Korea, drinks coffee from Colombia, and wears shoes made in Italy, what economic principle is being demonstrated?

• Currency exchange

• Market dynamics

• Global interdependence

• Trade deficit

What are the fundamental elements of a capitalist economy?

• State control, communal ownership, and no competition

• Private property, free markets, competition, and profit motive

• Government planning, tradition-based production, and shared profits

• Monopolized markets, public ownership, and regulated competition

What is a characteristic of a traditional economy?

• People frequently change jobs to pursue better opportunities.

• Individuals often inherit their roles from family traditions.

• There is a strong emphasis on technological innovation.

• The government heavily regulates all aspects of trade.