Econ Unit 2 review review review

According to Adam Smith, what is the most important way for a nation to boost its living standards and productivity?

• Investing in new plants, equipment, worker education, and research.
• Borrowing resources from other nations to pay for imports.
• Putting a larger proportion of the population to work.
• Increasing government taxes on producers.
• Pluto

What is the "division of labour"?

• A production method where a complex process is broken into simple, specialized tasks.
• A negotiation strategy used by shareholders to demand dividends.
• The point where supply and demand are equal.
• A type of high-risk investment strategy.

In Adam Smith's pin factory example, what was the primary effect of using the division of labour?

• A massive increase in productivity.
• A decrease in the quality of the pins.
• An increase in the cost of production.
• The elimination of the profit incentive for workers.

Adam Smith argued that the key to improving a nation's standard of living is growth in what?

• Productivity.
• The number of stocks on an exchange.
• Government regulation.
• The price of substitute goods.

Which of these is one of the three primary ways Adam Smith identified for a nation to increase its standard of living?

• Putting a larger proportion of the population to work.
• Implementing new taxes on imported goods.
• Creating a virtual stock exchange like the NASDAQ.
• Issuing more dividends to shareholders.

What provides the incentive for people to save and invest, according to Smith's principles?

• Rewards, such as the ability to keep earnings and interest.
• Government requirements to buy stocks.
• The fear of a bear market.
• The availability of complementary goods.

Besides new plants/equipment and education/training, what is the third major area for productivity-enhancing investment identified by Smith?

• Research.
• Government subsidies.
• Buying on margin.
• Marketing and advertising.

What does the Law of Supply state?

• A producer will supply more of a good as the price for that good increases.
• A consumer will buy more of a good as the price for that good decreases.
• The economy must be in a bull market for producers to make a profit.
• The government must provide subsidies for supply to exist.

What is the primary motivation that drives the Law of Supply for producers?

• The profit incentive.
• The principle of diminishing marginal utility.
• The popularity of complementary goods.
• The cost of an Initial Public Offering (IPO).

What does the Law of Demand state?

• Consumers will generally buy more of a good when its price goes down.
• Producers will supply more of a good when its price goes up.
• The cost of production always determines consumer interest.
• Demand is only created by high-risk investors.