Question 1

Who said,"Property is the exploitation of the weak by the strong.Communism is the exploitation of the strong by the weak"?

Accepted Answer

This quote is attributed to Pierre-Joseph Proudhon, a French philosopher and political theorist who became famous for his declaration "Property is theft!"

Question 2

Statement I.We have market failure when our resources are not allocated efficiently.
Statement II.An oil refinery incurs both private and social (or external)costs.

Accepted Answer

Statement I is true as market failure occurs when the market fails to efficiently allocate resources, leading to an inefficient allocation of goods and resources. 
Statement II is true as oil refineries incur private costs such as production costs, while also causing external costs such as pollution and health hazards for the surrounding community. This leads to a negative externality, which is an example of market failure as the market is not accounting for the social costs.

Question 3

Which statement most closely reflects the viewpoint of Karl Marx?

Accepted Answer

Marx's theory emphasizes the role of capital in the dynamics of societal control, arguing that the class which controls the means of production (capital) also controls the society. This viewpoint is encapsulated in choice A, reflecting Marx's focus on the economic base of society as the determinant of social relations and structures.

Question 4

In a capitalist country most resources are owned by

Accepted Answer

The answer of In a capitalist country most resources are...

Question 5

Statement I.The circular flow model oversimplifies the exchanges in our economy.
Statement II.Most of the money received by households in the form of wages,rent,interest,and profits flows back to business firms in the form of consumer expenditures.

Accepted Answer

Both statements are true. The circular flow model does oversimplify the exchanges in our economy, as it doesn't account for factors such as government intervention, international trade, and the underground economy. However, most of the money households receive does flow back to business firms in the form of consumer expenditures, as consumer spending drives business revenue and profits.

Question 6

Communist theory calls for each of the following except

Accepted Answer

Communist theory does not call for the free operation of the forces of demand and supply, as this is seen as perpetuating capitalist exploitation. Instead, communism advocates for collective ownership and control of the means of production.

Question 7

Which one of the following is a public good?

Accepted Answer

A local police department is a public good because it is non-excludable (once provided, it is difficult to exclude anyone from enjoying its benefits) and non-rivalrous (one person's use of the police department does not diminish another person's ability to use it). The other options listed are either excludable or rivalrous (or both), and therefore not public goods.

Question 8

Statement I.Under fascism,the government owns the means of production.
Statement II.Nearly one-third of the world's countries may be described as fascist.

Accepted Answer

Statement I is false because under fascism, while the state exerts strong control over the economy, it does not typically own the means of production as in communism. Statement II is false because far fewer than one-third of the world's countries are described as fascist, with most nations adhering to some form of democracy, republicanism, or other non-fascist government systems.

Question 9

A public good is

Accepted Answer

A public good is defined as a good or service that is non-excludable (meaning individuals cannot be prevented from using it) and non-rivalrous (meaning consumption by one person does not diminish the amount available for others to use). Option A is incorrect as it refers to a good deed and not a public good. Option B is incorrect as not all goods produced and sold by the government are public goods. Option D is incorrect as it is a vague and incomplete definition.

Question 10

Adam Smith

Accepted Answer

All of the statements about Adam Smith are true. Smith was a Scottish professor of philosophy who wrote The Wealth of Nations. In this book, he argued that the entrepreneur is motivated by self-interest and coined the term "the invisible hand," which means that the profit motive guides economic resources which effectively promotes the public interest.

Question 11

In theory,___________ advocates the abolition of private property.

Accepted Answer

Communism advocates for the abolition of private property and instead advocates for collective ownership of resources and means of production.

Question 12

Statement I.In the United States,the economic role of the government is played almost entirely at the federal level.
Statement II.The outcomes of each of the three basic economic questions are affected by government actions.

Accepted Answer

Statement I is false because the economic role of the government in the United States is not played almost entirely at the federal level; state and local governments also play significant roles in the economy through regulations, taxation, and spending. Statement II is true as government actions, through policies, regulations, and fiscal measures, indeed influence how resources are allocated, what goods and services are produced, and who receives them.

Question 13

Each of the following is a characteristic of socialism,except

Accepted Answer

Socialism allows for some private ownership of the means of production, but typically advocates for government ownership or control of certain key businesses and industries.

Question 14

The circular flow model shows the relationships between

Accepted Answer

The circular flow model depicts the interactions between households and business firms, as households provide resources such as labor and receive income in return, which is then used to purchase goods and services produced by business firms, thereby creating a circular flow of income and goods/services. While government can play a role in the economy, it is not included in the basic circular flow model.

Question 15

Statement I.The circular flow model traces the flow of money,resources,and goods and services through the economy.
Statement II.Most household income is spent on investment or capital goods.

Accepted Answer

Statement I is true as the circular flow model does indeed trace the flow of money, resources, and goods and services in the economy. However, statement II is false as most household income is actually spent on consumption goods such as food, clothing, and housing rather than investment or capital goods.

Question 16

Under the old Soviet version of communism in the U.S.S.R. ,the questions of 'What?','How?',and 'For whom?' were answered by

Accepted Answer

Under Soviet communism in the USSR, the government had a planned economy in which a planning committee made all decisions about what should be produced, how it should be produced, and for whom it should be produced. This meant that the government had complete control over the economy and the allocation of resources.

Question 17

Statement I.If the owner of an office park plants shade trees on the grounds,she is not only providing private benefits,but external benefits as well.
Statement II.The federal government does virtually nothing to discourage companies from incurring external costs.

Accepted Answer

Statement I is true because planting shade trees on the grounds not only provides benefits to the owner, such as reduced energy costs for air conditioning, but also external benefits like reduced urban heat island effect and improved air quality. Statement II is false because the federal government has implemented various regulations and policies to discourage companies from incurring external costs, such as the Clean Air Act and Superfund program for cleaning up hazardous waste sites.

Question 18

Capital is _______________

Accepted Answer

All of the statements are correct. Capital is crucial in economic systems because it is used to produce goods and services. It is also a key aspect in determining a society's standard of living because it influences the level of investment and productivity. In addition, capital is often the result of savings, either through personal savings or investments made by others.

Question 19

The price mechanism deals _____ with the issue of an equitable income distribution and ____ with the issue of efficiency.

Accepted Answer

The price mechanism is efficient in allocating resources and determining production and consumption levels based on supply and demand, but it does not inherently address or ensure equitable income distribution. This is because the price mechanism focuses on efficiency and market equilibrium without considering the fairness or equality of the income distribution outcome.

Question 20

As an economy modernizes and its standard of living rises,the proportion of transactions conducted with barter

Accepted Answer

As an economy modernizes and its standard of living rises, people typically shift away from the barter system towards a monetary system. This is because the use of currency facilitates transactions and makes them more efficient. Therefore, the proportion of transactions conducted with barter falls.

Quiz 3: The Mixed Economy

Who said,"Property is the exploitation of the weak by the strong.Communism is the exploitation of the strong by the weak"?

Statement I.We have market failure when our resources are not allocated efficiently. Statement II.An oil refinery incurs both private and social (or external) costs.

Which statement most closely reflects the viewpoint of Karl Marx?

In a capitalist country most resources are owned by

Statement I.The circular flow model oversimplifies the exchanges in our economy. Statement II.Most of the money received by households in the form of wages,rent,interest,and profits flows back to business firms in the form of consumer expenditures.

Communist theory calls for each of the following except

Which one of the following is a public good?

Statement I.Under fascism,the government owns the means of production. Statement II.Nearly one-third of the world's countries may be described as fascist.

A public good is

Adam Smith

In theory,___________ advocates the abolition of private property.

Statement I.In the United States,the economic role of the government is played almost entirely at the federal level. Statement II.The outcomes of each of the three basic economic questions are affected by government actions.

Each of the following is a characteristic of socialism,except

The circular flow model shows the relationships between

Statement I.The circular flow model traces the flow of money,resources,and goods and services through the economy. Statement II.Most household income is spent on investment or capital goods.

Under the old Soviet version of communism in the U.S.S.R. ,the questions of 'What?','How?',and 'For whom?' were answered by

Statement I.If the owner of an office park plants shade trees on the grounds,she is not only providing private benefits,but external benefits as well. Statement II.The federal government does virtually nothing to discourage companies from incurring external costs.

Capital is _______________

The price mechanism deals _ with the issue of an equitable income distribution and with the issue of efficiency.

As an economy modernizes and its standard of living rises,the proportion of transactions conducted with barter