Diaz- Intro To Economics Chapter 2

34 Questions | Total Attempts: 107

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Diaz- Intro To Economics Chapter 2 - Quiz

This quiz covers the material we have covered in Ch. 2 Upon completion of the quiz you need to begin your Economic analysis paper on the China/Hong Kong relationship.


Questions and Answers
  • 1. 
    Which economic system best describes the United States economic system?
    • A. 

      Laissez faire economy

    • B. 

      Mixed market economy

    • C. 

      Centrally planned (command) economy

    • D. 

      Free market economy

  • 2. 
    Which system answers the three economic questions in their society (what to produce, how to produce, and who gets it) with government intervention in the market?
    • A. 

      Traditional economies

    • B. 

      Mixed economies

    • C. 

      Centrally planned (command) economies

    • D. 

      Market (free) economies

  • 3. 
    Refers to the freedom for entrepreneurs to begin privately owned organizations without government regulation.
    • A. 

      Financial Freedom

    • B. 

      Fiscal Freedom

    • C. 

      Business Freedom

    • D. 

      Property Rights

  • 4. 
    North Korea is an example of a centrally planned market economy.
    • A. 

      True

    • B. 

      False

  • 5. 
    There is no true mixed economy in the world.
    • A. 

      True

    • B. 

      False

  • 6. 
    The Untied States is the best example of a free market in the world.
    • A. 

      True

    • B. 

      False

  • 7. 
    A government regulating the price of goods is an example of a centrally planned economy
    • A. 

      True

    • B. 

      False

  • 8. 
    What is an advantage of the free market system (market system)
    • A. 

      Equal distribution of resources

    • B. 

      Competition and self-interest leads to innovation of new products.

    • C. 

      There is an extensive safety net for the poor.

    • D. 

      Lower price of goods and services due to government regulation

  • 9. 
    Which of the following is a problem for a free market economy?
    • A. 

      Very little innovation due to lack of competition.

    • B. 

      Not enough competition exists

    • C. 

      Big gap in equality between the poor and the wealthy

    • D. 

      Very few economic freedoms

  • 10. 
    Which of the following is a problem for a command economy?
    • A. 

      Few economic freedoms and choices

    • B. 

      Wealth is distributed unequally

    • C. 

      Customs interfere with economic decisions.

    • D. 

      There is no government safety net for the poor

  • 11. 
    The invisible hand is associate with what type of economy?
    • A. 

      Free markets (market economies)

    • B. 

      Centrally (command) planned markets

    • C. 

      Traditional markets

    • D. 

      Mixed markets

  • 12. 
    Believed that a free market system reduces waste and regulates the economy in the most efficient manner when firms compete and consumers look out for their self-interest.
    • A. 

      Invisible Hand

    • B. 

      Karl Marx

    • C. 

      Communism

    • D. 

      Socialism

    • E. 

      Capitalism

    • F. 

      Adam Smith

    • G. 

      John Maynard Keynes

  • 13. 
    The economic idea that states that competition and a person’s self-interest would regulate the economy without the need for government intervention.
    • A. 

      Keynesian Economics

    • B. 

      Classical Economics

    • C. 

      Communism

    • D. 

      Invisible Hand

    • E. 

      Socialism

    • F. 

      Karl Marx

    • G. 

      Adam Smith

    • H. 

      John Maynard Keynes

  • 14. 
    Which of the following is the best example of a mixed economy?
    • A. 

      North Korea

    • B. 

      Hong Kong

    • C. 

      Cuba

    • D. 

      United States

  • 15. 
     According to the Heritage Foundation's Freedom Index, Hong Kong is considered the most economic "free market" place in the world. 
    • A. 

      True

    • B. 

      False

  • 16. 
     Jamestown Colony The following reading questions are practice for the Iowa Assessments.  Read the questions at the bottom first and then read the selection.  In 1612, John Rolfe began growing tobacco in Jamestown from seeds he obtained from the Spanish colonies.  Rolfe acquired the seeds despite the Spaniards’ threat of death to anyone selling tobacco seeds to anyone selling tobacco seeds to a non-Spaniard.  The local Native Americans may have aided Rolfe’s acquisition of the seeds, as he was engaged to marry the chief’s daughter, Pocahontas.  By 1614, the first tobacco from Virginia was sold in London, England.  Despite the disapproval of King James I, this “stinking weed” came into high demand in England and throughout Europe.  This led tobacco to become an incredibly profitable crop for Virginian farmers.  For England, tobacco became an ideal product.  It was easy to ship and cheap to produce.  By 1639, at least 750 tons of Virginia tobacco had been shipped to England.   Eventually, England did not allow Virginia tobacco to be shipped or sold anywhere but back to England.   With tobacco as the main crop, the Virginia colony had the foundation for its economic success. Which of the following factors of production did Rolfe obtain to help start his tobacco farming?
    • A. 

      Physcial Capital

    • B. 

      Labor

    • C. 

      Land

    • D. 

      Human Capital

  • 17. 
     Jamestown Colony In 1612, John Rolfe began growing tobacco in Jamestown from seeds he obtained from the Spanish colonies.  Rolfe acquired the seeds despite the Spaniards’ threat of death to anyone selling tobacco seeds to anyone selling tobacco seeds to a non-Spaniard.  The local Native Americans may have aided Rolfe’s acquisition of the seeds, as he was engaged to marry the chief’s daughter, Pocahontas.  By 1614, the first tobacco from Virginia was sold in London, England.  Despite the disapproval of King James I, this “stinking weed” came into high demand in England and throughout Europe.  This led tobacco to become an incredibly profitable crop for Virginian farmers.  For England, tobacco became an ideal product.  It was easy to ship and cheap to produce.  By 1639, at least 750 tons of Virginia tobacco had been shipped to England.   Eventually, England did not allow Virginia tobacco to be shipped or sold anywhere but back to England.   With tobacco as the main crop, the Virginia colony had the foundation for its economic success. According to the text, how did Rolfe acquire the seeds while risking being put to death?
    • A. 

      He stole it from the Spaniards

    • B. 

      He did not use the Spanish seeds for this tobacco farm

    • C. 

      Native American friends acquired it for hiim.

    • D. 

      He purchased it directly from the Spaniards

  • 18. 
     Jamestown Colony In 1612, John Rolfe began growing tobacco in Jamestown from seeds he obtained from the Spanish colonies.  Rolfe acquired the seeds despite the Spaniards’ threat of death to anyone selling tobacco seeds to anyone selling tobacco seeds to a non-Spaniard.  The local Native Americans may have aided Rolfe’s acquisition of the seeds, as he was engaged to marry the chief’s daughter, Pocahontas.  By 1614, the first tobacco from Virginia was sold in London, England.  Despite the disapproval of King James I, this “stinking weed” came into high demand in England and throughout Europe.  This led tobacco to become an incredibly profitable crop for Virginian farmers.  For England, tobacco became an ideal product.  It was easy to ship and cheap to produce.  By 1639, at least 750 tons of Virginia tobacco had been shipped to England.   Eventually, England did not allow Virginia tobacco to be shipped or sold anywhere but back to England.   With tobacco as the main crop, the Virginia colony had the foundation for its economic success. What factor of production best describes John Rolfe?
    • A. 

      Specialist

    • B. 

      Thief

    • C. 

      Human Capitalist

    • D. 

      Entrepreneur

  • 19. 
     With the success of tobacco, the demand for labor in the colony increased.  Labor was first supplied by indentured servants, who sold their labor for passage to Virginia, food, clothing, and other necessities- but no money.  After filling the terms of the contract, usually three to seven years, the indentured servant would be given land, tools, and perhaps a small amount of money.  A 20 percent death rate on the voyage over, and further exposure to hard work and disease, made it difficult to recruit indentured laborers.  Eventually, farmers turned to slaves to fill their jobs.  Although more expensive up-front, slaves were cheaper form of labor in the long run as their work was bought for life.  Tobacco was profitable on any size of farm.  Although crops other than tobacco, such as wheat, could be grown in the South, the opportunity cost was high.  By specializing in growing tobacco, a farmer could maximize his profits over what could be made from growing other crops.  One drawback was that the soil on tobacco farms was worn out every four to seven years.  For this reason, tobacco farming favored large scale farmers.  With this success, Virginia’s comparative advantage lay in growing tobacco.  This paragraph suggests that tobacco is directly linked to the development of slavery in the United States:
    • A. 

      True

    • B. 

      False

  • 20. 
     With the success of tobacco, the demand for labor in the colony increased.  Labor was first supplied by indentured servants, who sold their labor for passage to Virginia, food, clothing, and other necessities- but no money.  After filling the terms of the contract, usually three to seven years, the indentured servant would be given land, tools, and perhaps a small amount of money.  A 20 percent death rate on the voyage over, and further exposure to hard work and disease, made it difficult to recruit indentured laborers.  Eventually, farmers turned to slaves to fill their jobs.  Although more expensive up-front, slaves were cheaper form of labor in the long run as their work was bought for life.  Tobacco was profitable on any size of farm.  Although crops other than tobacco, such as wheat, could be grown in the South, the opportunity cost was high.  By specializing in growing tobacco, a farmer could maximize his profits over what could be made from growing other crops.  One drawback was that the soil on tobacco farms was worn out every four to seven years.  For this reason, tobacco farming favored large scale farmers.  With this success, Virginia’s comparative advantage lay in growing tobacco.  Why did tobacco farmers choose to use slaves instead of indentured servants?
    • A. 

      Because it was hard to recruit indentured servants to work on farms

    • B. 

      Because indentured servants worked for free for only 3 to 7 years.

    • C. 

      Because slaves were a cheaper form of labor

    • D. 

      All options

  • 21. 
    What are the three economic questions all societies have to answer?
    • A. 

      What to produce, how to produce it, and who gets what is produced

    • B. 

      When to produce, What is is going to cost, and Who gets what is produced

    • C. 

      Where to sell it, How to sell it, and How much it is going to cost

    • D. 

      What resources to use, who produces it, and how much it is going to cost

  • 22. 
    Which of the following terms best describes the idea that the government should not become involved in the marketplace?
    • A. 

      Scarcity

    • B. 

      Laissez Faire

    • C. 

      Entrepreneurship

    • D. 

      Socialism

  • 23. 
    Communism and Socialism are both forms of centrally planned economies, the major difference is that in Communist countries the people are able to elect their leaders while in Socialist countries that leaders are not elected. 
    • A. 

      True

    • B. 

      False

  • 24. 
    Which of the following goals is not easily met in a Centrally Planned economy
    • A. 

      Economic growth

    • B. 

      Economic equity (equality)

    • C. 

      Economic freedom

    • D. 

      Economic efficiency

  • 25. 
    Traditional economies are the most common form of economic systems in the world. 
    • A. 

      True

    • B. 

      False

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