Question 1

Which of the following statements is false?

Accepted Answer

Sweden actually has a relatively high standard of living, despite its commitment to income equality.

Question 2

Statement I: In a centrally planned economy,consumers do not have to consider prices when shopping.
Statement II: In a capitalist economy the three basic economic questions (what,how and for whom)are determined by the price mechanism.

Accepted Answer

In a centrally planned economy, prices are usually set by the government, but consumers still need to consider prices when shopping because there may be shortages of certain goods and services. In a capitalist economy, prices serve as signals to allocative efficiency, determining what gets produced, how much gets produced, and who gets to consume those goods and services. Therefore, statement II is true, while statement I is false.

Question 3

In the circular flow model,households

Accepted Answer

In the circular flow model, households demand products (goods and services) from firms and supply resources (labor, capital, land, and entrepreneurship) to firms. This reflects the basic economic activities of consumption and resource provision in an economy.

Question 4

To have competition as economists define it,

Accepted Answer

Competition as defined by economists is perfect competition, which requires a large number of firms in an industry, where no single firm has significant market power to influence price. This way, all firms have to accept the market price, and none can meaningfully affect it. B) describes an oligopoly, where a few firms dominate the market and can influence the price. C) describes monopolistic competition, which also has many firms but allows each to differentiate its products and potentially influence their prices.

Question 5

Producers have an incentive to produce those goods most desired by consumers at the lowest price in

Accepted Answer

In a market economy, producers have the incentive to produce goods that are most desired by consumers because they compete with other producers for sales. The producers who can offer the lowest price for the desired goods will attract the most customers and therefore make the most profit. Centrally planned and communist economies do not operate on the basis of consumer demand and price competition, so producers do not have the same incentive to produce goods that are most desired at the lowest price.

Question 6

Which of the following is not a typical attribute of a socialist country?

Accepted Answer

In a socialist country, production is typically guided by central planning rather than the price system. The other attributes listed are typical of socialist countries.

Question 7

All of the following describes Nazi Germany's economic system,except that

Accepted Answer

Nazi Germany's economic system did not aim to redistribute income from the wealthy to the poor. In fact, the regime was highly supportive of the wealthy and aimed to create a class-based hierarchy. The ownership of land, labor, and capital remained in private hands, but the government did heavily regulate and often dictate what was to be produced, especially with regards to military goods and services.

Question 8

Which of the following statements is true?

Accepted Answer

C) is correct because one of the roles of government in many economies, including the United States, is to redistribute income through various means such as taxation and social welfare programs, aiming to reduce poverty and inequality. This is achieved by transferring some income from wealthier segments of society to support those with lower incomes.

Question 9

If a nation starts out with very little capital

Accepted Answer

A nation with a valuable commodity like oil can trade it for capital goods, facilitating industrialization.

Question 10

By the late 1970s,

Accepted Answer

By the late 1970s, China began implementing economic reforms under the leadership of Deng Xiaoping, which gradually shifted the country towards a more market-oriented economy. Russia, on the other hand, did not begin implementing significant economic reforms until the 1990s, after the collapse of the Soviet Union. Therefore, option B is the correct answer.

Question 11

An economic model is

Accepted Answer

An economic model is a simplified version of reality, used to explain and predict economic phenomena. It allows economists to isolate and analyze specific factors that influence economic behavior, while holding other factors constant. It is not a tool of logic that assumes causality or that the whole is greater than the sum of its parts.

Question 12

Which of the following statements is true?

Accepted Answer

Adam Smith, not Karl Marx, coined the term "the invisible hand" to describe the self-regulating nature of the market. Karl Marx wrote "Das Kapital," not Adam Smith. Marx indeed believed that the state would eventually wither away, leading to a classless society, which he referred to as a worker's paradise. Adam Smith argued that individuals pursue their own interests, which, through the operation of the market, can lead to the public good, but he did not suggest this pursuit was unselfish.

Question 13

Already the world's largest exporter,__________ passed Japan in 2009 to become the number one automobile producers.

Accepted Answer

China surpassed Japan in automobile production in 2009, making it the number one automobile producer in the world. The United States and Canada are also major automobile producers, but they do not currently hold the top spot. India is a significant producer of automobiles but is not yet on the same level as China, the United States, or Japan.

Question 14

Statement I: By collecting taxes,providing services,and issuing regulations,the government has some effect on the three economic questions: what,how,and for whom.
Statement II: In the United States economy,the goals of equity and efficiency do not in any way come into conflict.

Accepted Answer

Statement I is true because the government's actions through taxes, services, and regulations can influence what goods and services are produced, how they are produced, and who gets them. Statement II is false because equity and efficiency can sometimes come into conflict. For example, policies that ensure everyone has equal access to healthcare may not be the most efficient way to allocate resources.

Question 15

Karl Marx

Accepted Answer

All of the statements about Karl Marx are true. He did believe in the eventual "withering away" of the state, he did write Das Kapital, he believed in the exploitation of workers by factory owners to accumulate surplus capital, and he believed that control of capital meant control of society.

Question 16

Karl Marx believed in all of the following,except

Accepted Answer

Karl Marx believed that controlling ownership of capital was more important than controlling political power in order to dominate society. He believed that capitalists exploited workers for their own profit, and that one's social consciousness was determined by their relationship to the means of production. Marx also believed in the inevitability of a class struggle between capitalists and workers. However, he did not believe that political power was more important than ownership of capital.

Question 17

In Sweden

Accepted Answer

All of the choices are true. The Swedish government has implemented policies to keep unemployment low through subsidies and incentives, education is free from nursery school through college, and women are entitled to a year of paid parental leave after giving birth.

Question 18

Which of the following (is)are considered market failure(s)?

Accepted Answer

All of the choices listed are considered market failures.

A monopoly represents a market failure because it results in decreased competition, higher prices, and lower output.

Externalities, such as pollution or noise, are considered market failures because they impose costs or benefits on individuals who did not choose to incur them, thus resulting in inefficient market outcomes.

The lack of public goods and services, such as national defense or basic research, are also considered market failures because they are likely to be under-provided by the private sector due to the difficulty of excluding non-payers and the free-rider problem.

Question 19

Each of the following is an example of the price mechanism at work,except when

Accepted Answer

During World War II, wage and price controls were used to control inflation, which means that the price mechanism was not allowed to function freely.

Question 20

Which of the following nations is a pure capitalist economy where the role of government is kept to a bare minimum?

Accepted Answer

No nation is a pure capitalist economy where the role of government is kept to a bare minimum. All nations have some level of government intervention or regulation, even the United States which is often considered a model of capitalism. Norway, Japan, and Russia all have varying degrees of government involvement in their economies.

Quiz 3: The Mixed Economy

Which of the following statements is false?

Statement I: In a centrally planned economy,consumers do not have to consider prices when shopping. Statement II: In a capitalist economy the three basic economic questions (what,how and for whom) are determined by the price mechanism.

In the circular flow model,households

To have competition as economists define it,

Producers have an incentive to produce those goods most desired by consumers at the lowest price in

Which of the following is not a typical attribute of a socialist country?

All of the following describes Nazi Germany's economic system,except that

Which of the following statements is true?

If a nation starts out with very little capital

By the late 1970s,

An economic model is

Which of the following statements is true?

Already the world's largest exporter,__________ passed Japan in 2009 to become the number one automobile producers.

Statement I: By collecting taxes,providing services,and issuing regulations,the government has some effect on the three economic questions: what,how,and for whom. Statement II: In the United States economy,the goals of equity and efficiency do not in any way come into conflict.

Karl Marx

Karl Marx believed in all of the following,except

In Sweden

Which of the following (is) are considered market failure(s) ?

Each of the following is an example of the price mechanism at work,except when

Which of the following nations is a pure capitalist economy where the role of government is kept to a bare minimum?