Deck 8: Political Economy

Question 1

Which of the following is NOT a major factor of production?

A) Land
B) Exports
C) Labor
D) Capital
E) A and B

Answer 1

Exports

Question 2

The basic economic principle in which price is determined by how much consumers want a given product is known as

A) the efficiency principle.
B) the circular-flow model.
C) supply and demand.
D) the factors of production balance.
E) supply-side economics.

Answer 2

supply and demand.

Question 3

A benefit of using "purchasing power parity" (PPP) is that

A) it considers the size of the population in comparing countries' relative wealth.
B) it controls for the value of a country's currency in the world market.
C) it improves between-country comparisons of the monetary value of the bundle of goods consumers can afford.
D) it takes into account the value of goods produced by all workers within the country's economy, not just citizens.
E) it improves the operation of fair trade between countries.

Answer 3

it improves between-country comparisons of the monetary value of the bundle of goods consumers can afford.

Question 4

The gross domestic product is

A) the total value of all final goods and services produced by all the citizens of the state.
B) the total value of all final goods and services exported by a state.
C) the total value of all the goods and services produced or purchased by the government.
D) the value of a country's exports minus its imports.
E) the total value of all final goods produced within a state's territorial boundaries.

Question 5

In which of the following ways can the state affect the political economy?

A) By purchasing goods from producers
B) By producing goods
C) By regulating the actions of consumers or producers
D) By A and B , but not C
E) By A, B, and C

Question 6

In a market economy, the factors of production are controlled primarily by

A) the state.
B) private economic actors.
C) a balance of state and private actors.
D) banks and other financial institutions.
E) those who sell manufactured goods.

Question 7

Adam Smith's concept of the "invisible hand" describes

A) the large corporations that control the market economy.
B) the indirect means through which the state controls the market economy.
C) all the actions of households and firms regarding the uses of factors of production.
D) the economic impact of the policy decisions of a country's political leaders.
E) the effects of the movement of money among financial actors.

Question 8

In a command economy, the value of goods and services is determined by

A) the level of demand.
B) the costs of production.
C) the amount some other actor is willing to pay.
D) the marginal cost.
E) what the state deems appropriate.

Question 9

Which of the following is most likely to be a shortcoming of a market economy?

A) Production of poor-quality goods
B) Inadequate capital for investment
C) Substantial inequality in the distribution of resources
D) Over-centralization and inflexibility
E) Severe oversupply or undersupply of desired goods

Question 10

Which of the following is most likely to be a shortcoming of a command economy?

A) Insufficient incentives for high productivity
B) Severe economic cycles
C) Production for profit rather than need
D) Excessive competition
E) All of the above

Question 11

In a mixed economy,

A) most key infrastructure systems and financial resources are owned by individuals.
B) production decisions are set forth in a detailed economic plan.
C) value is primarily determined by the state.
D) the state attempts to balance competition and state control.
E) there is a favorable mix of goods and services.

Question 12

The use of tariffs and quotas is

A) the strategy of a state committed to free trade.
B) an attempt to insure that only high-quality goods are available.
C) a strategy to stimulate demand.
D) an effort to limit imports.
E) a strategy to provide consumers with more inexpensive goods.

Question 13

While competition in a market economy can -----------, it also tends to produce ---------.

A) be ruthless, shoddy products
B) stimulate productivity, greater inequalities in wealth
C) encourage innovation, a lazy workforce
D) limit product diversity, economic cycles of boom and bust
E) increase employment, high inflation

Question 14

"Opportunity cost" refers to

A) what someone is willing to pay or trade for a good.
B) the monetary loss an economic factor suffers if there is oversupply.
C) the tax a business must pay to enter a new market.
D) a government tax used to redistribute resources.
E) the amount of funds necessary for an innovation.

Question 15

Which of the following is NOT a characteristic of a mixed economy?

A) The value of most goods is established by supply and demand.
B) The state owns some major factors of production.
C) The state redistributes resources to the less successful actors.
D) The state regulates the behavior of private actors.
E) The state produces most of the important goods.

Question 16

Which of the following is committed to a significant reduction in economic inequalities, but not to total economic equality?

A) Socialism
B) Fascism
C) Communism
D) Corporatism
E) Capitalism

Question 17

Which of these are significant problems associated with using GDP to measure the prosperity of a country's population?

A) Different countries produce different kinds of goods.
B) Many individuals have a level of prosperity that is different from their country's average production level per person.
C) It is difficult to calculate the value of certain kinds of goods (e.g., housework, the underground economy).
D) B and C but not A
E) A, B and C

Question 18

In which of the following systems is economic competition most intense?

A) Capitalism
B) Communism
C) Fascism
D) Socialism
E) Corporatism

Question 19

Which approach is most committed to using the political economy to achieve economic and social equality?

A) Corporatism
B) Liberalism
C) Socialism
D) Capitalism
E) Communism

Question 20

The nonhuman productive input from other resources including financial resources, machinery, and technology is known as

A) land.
B) capital.
C) collateral.
D) imports.
E) final goods.

Question 21

Any individual can act as either a(n)------, transforming productive resources, or as a(n)-------, acquiring final goods.

A) consumer, household
B) household, producer
C) factory, household
D) exporter, importer
E) firm, consumer

Question 22

In which way is an active state least likely to affect the overall political economy?

A) Facilitating the invisible hand of the market
B) Acting as a firm
C) Regulating the behavior of producers
D) Transferring payments to households
E) Raising taxes

Question 23

A saying repeated twice in the Debate in 8 is: If you are not a communist at 20, you have no ---------; if you are still a communist at 40, you have no -------.

A) understanding, knowledge.
B) soul, success.
C) heart, head
D) ideals, experience.
E) dreams, motivation

Question 24

The role of the state in the command economy is --------- while in the market economy the state is more ----------.

A) indirect, proactive
B) dominant, passive
C) reliable, unpredictable
D) demand oriented, supply oriented
E) like a firm, like a household

Question 25

Give two significant examples which illustrate each of the following ways in which the state affects the political economy of the United States (or another actual/hypothetical country) and explain why such intervention is attempted:A) asserting direct control over factors of productionB) regulating the behavior of economic actorsC) extracting resources from economic actors

Question 26

Compare the two ideal-type political economies in terms of control of factors of production, production decisions, determination of value, distribution decisions, and the role of the state.

Question 27

Identify and explain the distinguishing features of socialism, communism, and capitalism. Are they best understood as points on a single continuum?