QUESTION Karl Marx’s concept of a communist economic system based on the philosophy “from each according to his abilities, to each according to his needs” sounds noble on paper. In practice, what core aspect of communism has led to the global collapse of this system? A) high taxes B) welfare state C) lack of incentive […]
QUESTION Mischka owns a regional chain of jewelry stores and has been a huge fan of America since he left the former Soviet Union. He says that people have so many basic rights under capitalism, and it’s even protected in the U.S. Constitution. Which specific right is Mischka referring to? A) the right to free […]
QUESTION Catherine works in a government agency focused on economic resource development. Her current project is to develop strategies to reverse “brain drain.” This process has the strongest impact on which factor of production for a modern economy? A) natural resources B) capital C) human resources D) entrepreneurship E) knowledge ANSWER Answer: E Explanation: […]
QUESTION What do the four basic rights under capitalism limit for a businessperson? A) liability B) incentive C) tax burden D) risk E) rewards ANSWER Answer: D Explanation: D) By limiting the risks of operating a business, the four rights help support the functioning of a market economy.
QUESTION Which of the following is NOT considered a drawback of socialism? A) high taxes B) “brain drain” C) income inequality D) government deficits E) less job creation ANSWER Answer: C Explanation: C) Redistribution of wealth under socialism results in less social inequality and poverty.
QUESTION Julio has lived all his life in a country operating under a strongly socialist economy. Compared to a resident of the United States, Julio and his fellow citizens likely experience all of the following EXCEPT which? A) less poverty B) lower infant mortality C) lower taxes D) higher life expectancy E) a developed welfare […]
QUESTION Which of the following is NOT a characteristic of socialist economies? A) high proportion of government-owned enterprises B) extensive welfare state C) central planning D) high social equality E) low taxes ANSWER Answer: E Explanation: E) Socialist economies have higher tax burdens on individuals and business to support extensive welfare-state social services.
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 […]
