QUESTION Which of the following goods and services available in the United States is NOT factored into counting GDP? A) Apple software produced in Silicon Valley B) education at the University of Iowa C) Ford trucks manufactured in Michigan D) Toblerone chocolate manufactured in Switzerland E) Honda sedans manufactured in Kentucky ANSWER Answer: D […]
QUESTION Which of the following potential drawbacks of an economic system is most influenced by human nature? A) income inequality B) exploitation C) high exposure to risk D) central planning E) lack of incentive ANSWER Answer: B Explanation: B) The other options are more a product of systemic forces. Exploitation is mainly driven by […]
QUESTION What is a core premise of 18th-century economist Adam Smith’s philosophy on free-market economies? A) dividing fixed resources B) central planning of production C) eliminating business risk D) expanding resources E) redistribution of wealth ANSWER Answer: D Explanation: D) Smith’s theory of the “invisible hand” would drive people to produce goods and services […]
QUESTION During the 2010s, what was partly the cause of dangerously high levels of government debt among some eurozone countries? A) central planning errors B) the welfare state C) “brain drain” D) high taxes E) income inequality ANSWER Answer: B Explanation: B) Provision of high levels of social services in some eurozone socialist economies […]
QUESTION Compared to communism and socialism, what has capitalism excelled at? A) eliminating budget deficits B) creating income equality C) creating jobs D) eliminating poverty E) economic central planning ANSWER Answer: C Explanation: C) People’s drive to create wealth through the production of goods and services results in job creation.
QUESTION The U.S. government’s ownership of Amtrak suggests that the economy is an example of what type? A) socialist B) capitalist C) blended D) mixed E) command ANSWER Answer: D Explanation: D) In a mixed economy, some resources are allocated by the free market and some resources are allocated by the government.
QUESTION How does income distribution occur in communist countries? A) by the “invisible hand” dynamic B) according to individual needs C) by market forces D) by income to wealthy creators E) by a mix of wealth-creator income and state benefits ANSWER Answer: B Explanation: B) According to Karl Marx, the originator of communist philosophy, […]
QUESTION Where can a U.S. consumer find an example of the “ideal” supply and demand model? A) auto dealerships B) electric utilities C) hospitals D) farmers markets E) coffee-and-doughnut chains ANSWER Answer: D Explanation: D) An example of “ideal” supply and demand operates with perfect (equal) competition and no outside influence. Farmers markets are […]
QUESTION What is the general goal of the shift toward mixed economies? A) lowering taxes B) offering more consumer choice C) strengthening wealth-creation incentive D) shrinking the welfare state E) balancing freedom and economic equality ANSWER Answer: E Explanation: E) A mixed economy’s allocation of some resources by the government and some by the […]
QUESTION Which of the following countries has an economic system based solely on nonmaterial incentives such as status? A) United States B) Japan C) India D) England E) Cuba ANSWER Answer: E Explanation: E) As a purely communist country, Cuba’s economy provides no material incentives, such as money, for production. Only nonmaterial incentives, such […]
