Question 1

In the small nation of Equalia,the government owns several of the key businesses and provides a wide range of social services.The government places a great deal of emphasis on eliminating large disparities in people's incomes.These features of Equalia's economy are consistent with a socialist economic system.
Level of Learning 3: Application of principles

Accepted Answer

The description of Equalia's economy suggests that it operates under a socialist economic system, which is characterized by state ownership of key industries and a focus on reducing income inequality through social services and policies.

Question 2

A major distinction between capitalism and socialism concerns the distribution of income.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

Capitalism is characterized by a free market economy where individuals and corporations own and control the means of production, and production and distribution decisions are made based on market forces. In this system, income is distributed based on one's ability to generate profit or provide value in the market. Socialism, on the other hand, is characterized by collective ownership and control of the means of production, with production and distribution decisions made for the benefit of the community as a whole. In this system, income is distributed based on one's contribution to society, rather than their ability to generate profit. Therefore, the distribution of income is a fundamental difference between capitalism and socialism.

Question 3

Although mixed economies tend to improve economic conditions,moral values prevent communist nations such as China and Vietnam from progressing in this direction.Overall,economic progress continues to be very slow in these nations.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

China and Vietnam have adopted mixed economic models, incorporating market-oriented reforms, which have led to significant economic growth and development.

Question 4

In a mixed economy,the government's goal is to grow the economy and maintain some measure of social equality.
Level of Learning 3: Application of principles

Accepted Answer

A mixed economy is characterized by the coexistence of private and public sectors where the government regulates economic activities to ensure social welfare and maintain economic growth. Therefore, the statement is true.

Question 5

As indicated in "Prospering in Foreign Lands",Reaching Beyond Our Borders box: Companies founded in the U.S.under a capitalistic system are seldom successful in breaking through the communistic and socialistic systems when they go global.
Level of Learning 1: Knowledge of key terms

Accepted Answer

The statement is false because U.S. companies have often been successful in entering and operating in countries with communistic and socialistic systems by adapting their strategies to local markets and regulations.

Question 6

There is general agreement in the United States on the degree to which the government should be involved in the economy.
Level of Learning 1: Knowledge of key terms

Accepted Answer

There is not general agreement in the United States on the degree to which the government should be involved in the economy. Opinions vary widely depending on factors such as political ideology and economic theory.

Question 7

Governments that were predominantly capitalistic are moving toward socialism,while governments that were predominantly socialistic are moving toward capitalism.
Level of Learning 1: Knowledge of key terms

Accepted Answer

This statement is true. Many governments have shifted their economic policies over time, and some that were previously more capitalistic have moved toward socialism, while others that were more socialistic have moved toward capitalism. Examples of this include China's shift toward a mixed economy with capitalist elements, and many European countries' adoption of social welfare programs.

Question 8

Workers in nations who are strong proponents of communism work much harder and longer hours.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

This statement is false. While communism may promote the idea of a strong work ethic, the actual work hours and output of workers can vary based on a variety of factors, including government policies and economic conditions. Additionally, there are many nations that are not communist that have a strong work ethic and long work hours.

Question 9

Abby left her native land in Eastern Europe in order to become a nanny for a family in a western suburb of Chicago,Illinois.One of the benefits of her arrangement was that she could attend the community college near her family's residence.When she arrived at her new job,she experienced the differences from a predominately socialist nation and a capitalist nation.Abby noted that public transportation in northern Illinois was limited and expensive,making it difficult to get to school.For a negligible fee,the government in her native country provided public transportation for everyone.Abby's native country's economic system was more characteristic of socialism.
Level of Learning 3: Application of principles

Accepted Answer

The passage clearly states that Abby's native country had a predominantly socialist economic system where public transportation was provided for everyone at a negligible fee. She also noted the limited and expensive public transportation in northern Illinois, which is a characteristic of a capitalist economic system.

Question 10

Deanne is a vocal critic of socialism.She likes to point out that in recent years the governments in many socialistic nations have cut back on government services and have reduced taxes.Deanne believes that this trend will ultimately result in all nations adopting pure capitalistic ideals.Recent evidence suggests that Deanne's views are essentially correct.
Level of Learning 3: Application of principles

Accepted Answer

There is no conclusive evidence that all nations will adopt pure capitalistic ideals, as economic systems are complex and influenced by various factors, including cultural, political, and historical contexts.

Question 11

Subtle differences such as the right to one's religious preference make the command economic system known as communism more like a mixed economy than a socialistic system.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

Communism is a form of socialism where the state controls all means of production, and individual rights like religious preference are often suppressed, making it less like a mixed economy, which allows for some private ownership and individual freedoms.

Question 12

Most communist countries today are suffering from severe economic problems.
Level of Learning 1: Knowledge of key terms

Accepted Answer

Communist countries are often associated with command economies, in which the government controls the allocation of resources and sets prices. However, this approach can lead to inefficiencies and lack of innovation, which can contribute to economic problems. Some examples of communist countries experiencing economic difficulties include Cuba, North Korea, and Venezuela.

Question 13

In command economies,the government plays a major role in deciding which goods are produced and who will get them.
Level of Learning 1: Knowledge of key terms

Accepted Answer

In command economies, the government holds the power to direct economic activities and make decisions about production and distribution of goods and services.

Question 14

Sweetland is a nation that publicly supports a free market economy with private ownership of businesses.Over time,the government of Sweetland has developed policies designed to help the needy and reduce the level of income inequality.It pays for these programs by levying relatively high taxes on businesses and workers.These arrangements suggest that the economy of Sweetland is trending toward pure capitalism.
Level of Learning 3: Application of principles

Accepted Answer

Sweetland's policies of high taxes and social programs indicate a trend towards a mixed economy, which combines elements of capitalism and socialism, rather than pure capitalism.

Question 15

Most countries throughout the world can be classified as either purely capitalist or purely socialist.
Level of Learning 1: Knowledge of key terms

Accepted Answer

Most countries throughout the world operate under a mixed economy system, which combines elements of both capitalism and socialism. No country can be purely capitalist or purely socialist.

Question 16

According to the Reaching Beyond our Borders box,"Prospering in Foreign Lands",the success of Yum!Brands' (owner of KFC,Taco Bell,and Pizza Hut)global attempts is mixed.In some cases,opening stores in communist and socialist nations has proven to be profitable;in others,it has proven to be a more costly venture.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

The statement accurately reflects the information provided in the Reaching Beyond our Borders box about Yum! Brands' global attempts.

Question 17

Socialism and communism are both variations of a free-market economy.
Level of Learning 1: Knowledge of key terms

Accepted Answer

This statement is false. Socialism and communism are both economic systems that seek to replace or drastically reform capitalism, which is a type of free-market economy. However, socialism and communism involve different degrees of government control and ownership of resources, while free-market economies prioritize private ownership and competition.

Question 18

In the past,socialist nations have realized that some of the government run businesses do not grow as quickly as businesses that operate for a profit.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

This statement is true. Socialist nations have often struggled with the inefficiencies of government-run businesses and have sometimes found that businesses that operate for profit are more successful and grow more quickly.

Question 19

Like most nations,the United States has a mixed economy.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A mixed economy is an economic system that includes both private and government participation. The United States has a mixed economy, as it has a combination of private enterprise and government intervention in areas such as taxes, regulations, and social welfare programs.

Question 20

Countries that wish to avoid shortages and surpluses of goods should adopt a communist system.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

Communist systems aim to eliminate private ownership and establish collective ownership and control of goods and resources. However, history has shown that communist economies are prone to shortages due to central planning inefficiencies and lack of market incentives, as seen in Soviet Union and China. Surpluses can also occur in communist systems when the state overproduces certain goods at the expense of others. Therefore, a mixed economy that combines market mechanisms with government intervention may be a better system to avoid shortages and surpluses.

Quiz 2: Understanding How Economics Affects Business

A major distinction between capitalism and socialism concerns the distribution of income. Level of Learning 2: Understanding of concepts and principles

Although mixed economies tend to improve economic conditions,moral values prevent communist nations such as China and Vietnam from progressing in this direction.Overall,economic progress continues to be very slow in these nations. Level of Learning 2: Understanding of concepts and principles

In a mixed economy,the government's goal is to grow the economy and maintain some measure of social equality. Level of Learning 3: Application of principles

As indicated in "Prospering in Foreign Lands",Reaching Beyond Our Borders box: Companies founded in the U.S.under a capitalistic system are seldom successful in breaking through the communistic and socialistic systems when they go global. Level of Learning 1: Knowledge of key terms

There is general agreement in the United States on the degree to which the government should be involved in the economy. Level of Learning 1: Knowledge of key terms

Governments that were predominantly capitalistic are moving toward socialism,while governments that were predominantly socialistic are moving toward capitalism. Level of Learning 1: Knowledge of key terms

Workers in nations who are strong proponents of communism work much harder and longer hours. Level of Learning 2: Understanding of concepts and principles

Subtle differences such as the right to one's religious preference make the command economic system known as communism more like a mixed economy than a socialistic system. Level of Learning 2: Understanding of concepts and principles

Most communist countries today are suffering from severe economic problems. Level of Learning 1: Knowledge of key terms

In command economies,the government plays a major role in deciding which goods are produced and who will get them. Level of Learning 1: Knowledge of key terms

Most countries throughout the world can be classified as either purely capitalist or purely socialist. Level of Learning 1: Knowledge of key terms

Socialism and communism are both variations of a free-market economy. Level of Learning 1: Knowledge of key terms

In the past,socialist nations have realized that some of the government run businesses do not grow as quickly as businesses that operate for a profit. Level of Learning 2: Understanding of concepts and principles

Like most nations,the United States has a mixed economy. Level of Learning 1: Knowledge of key terms

Countries that wish to avoid shortages and surpluses of goods should adopt a communist system. Level of Learning 2: Understanding of concepts and principles