Econ 40 Final Practice Exam I.
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Which of the following is true?
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The Japanese rebuilt their economy after World War II by selling its goods to their own rapidly growing population.
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Slow U.S. population growth in the 19th century forced American farmers and manufacturers to seek foreign markets to propel its rapid economic growth.
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The Japanese rebuilt their economy after World War II by targeting the large U.S. market, while their own market remained largely closed to U.S. manufactured goods
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America's rapid population growth in the 19th century slowed its economic growth rate.
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Econ 40 Final Practice Exam I assesses understanding of key economic events and policies from the 20th century. It covers topics like post-WWII economic recovery, market dynamics in the 1920s, and inflation trends in the 1970s, essential for students of economic history.
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- 2.
Which statement is true?
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In 1900 most Americans still lived on farms.
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Except for the stock market, most of our economy was depressed in the 1920s.
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There was a depression within three years after World War I.
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None of the statements are true.
Correct Answer
A. There was a depression within three years after World War I.Explanation
The statement "There was a depression within three years after World War I" is true. After World War I, the United States experienced a post-war economic recession known as the "Depression of 1920-1921." This depression was characterized by a sharp decline in industrial production, high unemployment rates, and a contraction in the overall economy. It lasted for about 18 months before the economy began to recover.Rate this question:
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- 3.
Which was a decade of high inflation and high unemployment?
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The 1920s
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The 1940s
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The 1950s
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The 1960s
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The 1970s
Correct Answer
A. The 1970sExplanation
The 1970s was a decade of high inflation and high unemployment. This was due to several factors, including the oil crisis of 1973 and 1979, which led to a significant increase in oil prices and caused a sharp rise in inflation. Additionally, the 1970s saw a decline in productivity growth and an increase in government regulation, which further contributed to the high unemployment rates during this period.Rate this question:
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- 4.
Which statement is true?
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Few Americans blamed Herbert Hoover for the Great Depression.
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The U.S. experienced a brief depression in the early 1920s.
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Most American homes were not wired for electricity until the late 1940s.
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None of the choices are true.
Correct Answer
A. The U.S. experienced a brief depression in the early 1920s. -
- 5.
In the late 1920s, you could buy $10,000 worth of stock by putting down as little as
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$100
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$1,000
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$2,500
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$5,000
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$10,000
Correct Answer
A. $1,000Explanation
During the late 1920s, it was possible to purchase $10,000 worth of stock by only investing $1,000. This indicates that the margin requirement, or the amount of money an investor had to put down as a percentage of the total investment, was 10%. This allowed individuals to leverage their investments and potentially earn higher returns. However, it also increased the risk as any losses would be magnified. The low margin requirement was one of the factors that contributed to the stock market crash of 1929 and the subsequent Great Depression.Rate this question:
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- 6.
The economic expansion which began in 1933 was due to
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The fact that business had hit bottom and was ready to rebound.
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The efforts of the Roosevelt Administration to stimulate the economy.
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Both the efforts of the Roosevelt Administration and the readiness of business to rebound.
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Neither the efforts of the Roosevelt Administration nor the readiness of business to rebound.
Correct Answer
A. Both the efforts of the Roosevelt Administration and the readiness of business to rebound.Explanation
The correct answer is both the efforts of the Roosevelt Administration and the readiness of business to rebound. This is because the economic expansion in 1933 was a result of multiple factors. The Roosevelt Administration implemented various policies and programs, such as the New Deal, to stimulate the economy and create jobs. At the same time, businesses had reached a low point during the Great Depression and were ready to recover. Therefore, it was a combination of government efforts and the natural cycle of business that led to the economic expansion.Rate this question:
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- 7.
Which statement is false?
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Before the Civil War about three quarters of the farms of over 500 acres were located in the South
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The great abundance of land was the most influential factor in our economic development during the 19th century.
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Although the percentage of Americans living on farms has declined substantially over the last 70 years, the actual number of people living on farms has remained constant.
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None of the statements are false.
Correct Answer
A. Although the percentage of Americans living on farms has declined substantially over the last 70 years, the actual number of people living on farms has remained constant. -
- 8.
Who said the nation was "ill-fed, ill-clothed, and ill-housed?"
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Herbert Hoover
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Franklin D. Roosevelt
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Lyndon B. Johnson
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Jimmy Carter
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Ronald Reagan
Correct Answer
A. Franklin D. RooseveltExplanation
Franklin D. Roosevelt said the nation was "ill-fed, ill-clothed, and ill-housed" during his presidency. This statement reflects the challenging economic conditions of the Great Depression era, which Roosevelt aimed to address through his New Deal programs. These programs aimed to provide relief, recovery, and reform to the American people, including measures to improve access to food, clothing, and housing for those suffering from poverty and unemployment. Roosevelt's presidency is often associated with his efforts to combat the economic hardships of the time and bring about positive change for the nation.Rate this question:
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- 9.
Which statement is false?
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Had the stock market not crashed and the rest of the world not gone into a depression, the U.S. depression might have been avoided.
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The end of 1930 thousands of banks had failed.
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. By the first week in March 1933 every single bank in the United States had shut its doors.
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None of the statements are false.
Correct Answer
A. None of the statements are false.Explanation
The given correct answer states that none of the statements are false. This means that all the statements provided in the question are true. The first statement suggests that if the stock market had not crashed and the rest of the world had not gone into a depression, the U.S. depression could have been avoided. The second statement states that by the end of 1930, thousands of banks had failed. The third statement indicates that by the first week in March 1933, every single bank in the United States had closed. As none of these statements are false, the correct answer is that none of the statements are false.Rate this question:
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- 10.
Choosing from among the following, the worst recession was in
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1937-1938
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1980
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1990-1991
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2001
Correct Answer
A. 1937-1938Explanation
The worst recession among the given options was in 1937-1938. This period is known as the Recession of 1937-1938 or the Roosevelt Recession. It occurred during the Great Depression and was characterized by a sharp decline in economic activity, including a significant drop in industrial production and a rise in unemployment rates. The recession was caused by the government's decision to reduce fiscal stimulus and tighten monetary policy, which led to a contraction in the economy. This downturn was severe and had a negative impact on the overall economic recovery during the Great Depression.Rate this question:
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- 11.
Which statement is true?
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All regions of the United States were primarily agricultural in 1865
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Only the South was primarily agricultural in 1865
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Only the North and West were primarily agricultural in 1865
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None of the statements are true
Correct Answer
A. All regions of the United States were primarily agricultural in 1865Explanation
In 1865, all regions of the United States were primarily agricultural. This means that farming and agriculture were the main economic activities in all parts of the country. This statement implies that both the North and the West, in addition to the South, relied heavily on agriculture as their primary source of income and livelihood.Rate this question:
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- 12.
When General Dwight D. Eisenhower ran for the presidency for the first time, he said he would
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End the recession and end inflation.
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End the recession and end the Korean War.
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End inflation and end the Korean War
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End the recession, the Korean War, and inflation
Correct Answer
A. End inflation and end the Korean WarExplanation
During his presidential campaign, General Dwight D. Eisenhower promised to address two major issues: inflation and the Korean War. This answer choice accurately reflects his intentions to tackle both problems. He did not mention ending the recession specifically, so that option is not included in the answer.Rate this question:
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- 13.
In the decades before the Civil War, the South _________________________.
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Opposed the extension of slavery into the territories
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Supported the extension of slavery into the territories
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Cooperated with the North to establish both free and slavery territories
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None of the choices are true
Correct Answer
A. Supported the extension of slavery into the territoriesExplanation
In the decades before the Civil War, the South supported the extension of slavery into the territories. This means that they were in favor of spreading slavery to new regions and expanding its reach. This support for the extension of slavery was one of the major factors that led to the tensions between the North and the South and eventually culminated in the Civil War.Rate this question:
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- 14.
Statement I. The generation that came of age in the 21st century did better economically than their parents' generation. Statement II. The American economic picture was brighter in the 1980s than the 1990s.
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Statement I is true and statement II is false.
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Statement II is true and statement I is false.
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Both statements are true.
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Both statements are false.
Correct Answer
A. Both statements are false.Explanation
The correct answer is "Both statements are false." This means that neither statement I nor statement II is true. The generation that came of age in the 21st century did not do better economically than their parents' generation, and the American economic picture was not brighter in the 1980s than the 1990s.Rate this question:
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- 15.
Which president had to cope with both rising deficits and a rising rate of inflation?
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John Kennedy
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Dwight Eisenhower
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Jimmy Carter
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Ronald Reagan
Correct Answer
A. Jimmy CarterExplanation
Jimmy Carter had to cope with both rising deficits and a rising rate of inflation during his presidency. In the late 1970s, the United States experienced high inflation, reaching double-digit percentages. Additionally, Carter faced a growing budget deficit due to increased government spending and a decrease in tax revenues. These economic challenges posed significant difficulties for his administration and were major issues during his time in office.Rate this question:
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- 16.
Which statement is true?
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In 1900 most Americans lived on farms.
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Our nation's industrial base was largely destroyed by World War I.
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John D. Rockefeller controlled the U.S. automobile industry during the first two decades of the 20th century.
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. Andrew Carnegie was the leading steel producer in the U.S. in 1900.
Correct Answer
A. . Andrew Carnegie was the leading steel producer in the U.S. in 1900.Explanation
In 1900, Andrew Carnegie was indeed the leading steel producer in the U.S. He built a vast steel empire and his company, Carnegie Steel Company, dominated the American steel industry during that time. Carnegie's innovative methods and vertical integration allowed him to control a significant portion of the market and make him the leading figure in the steel industry.Rate this question:
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- 17.
The most important factor in reversing the economic decline of 1929-1933 was that
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The federal government finally balanced its budget.
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The stock market began to rise.
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People became more optimistic.
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The federal government began to spend a huge amount of money.
Correct Answer
A. The federal government began to spend a huge amount of money.Explanation
The correct answer is that the federal government began to spend a huge amount of money. During the economic decline of 1929-1933, the federal government implemented various policies and programs to stimulate the economy. One of the most significant actions taken was the increase in government spending. The government invested heavily in infrastructure projects, job creation programs, and social welfare initiatives. This increased spending injected money into the economy, creating demand and stimulating economic growth. As a result, the economy began to recover from the decline.Rate this question:
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- 18.
Which statement is false?
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The rate of inflation rose during the Eisenhower Administration.
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Our economy has not had an unemployment rate below 5 percent since the early 1940s.
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President Reagan believed the federal government should "tax, tax, tax, spend, spend, spend", its way to prosperity.
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All of the statements are false.
Correct Answer
A. All of the statements are false.Explanation
All of the statements are false because the rate of inflation did not rise during the Eisenhower Administration, our economy has had an unemployment rate below 5 percent since the early 1940s, and President Reagan did not believe in taxing and spending as a means to prosperity.Rate this question:
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- 19.
Which of the following is true?
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The completion of the transcontinental railroad system in the 1880s eventually made the United States the world's first mass market.
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Southern manufacturers were hurt by the high protective tariffs of the 19th century that kept out cheaper British manufactured goods.
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The national railroad network created an "American economy" rather than just a series of regional economies located in one country.
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Agricultural inventions such as John Deere's steel plows greatly improved farm productivity.
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All of the choices are true.
Correct Answer
A. All of the choices are true.Explanation
The completion of the transcontinental railroad system in the 1880s allowed for the transportation of goods and people across the entire United States, leading to the development of a mass market. Southern manufacturers were indeed negatively impacted by the high protective tariffs of the 19th century, as these tariffs made it more difficult for them to compete with cheaper British manufactured goods. The national railroad network connected different regions of the country, creating an integrated American economy rather than separate regional economies. Agricultural inventions such as John Deere's steel plows did contribute to improved farm productivity. Therefore, all of the choices are true.Rate this question:
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- 20.
Which of the following was considered a mild recession?
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1937-1938
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1973-1975
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1981-1982
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1990-1991
Correct Answer
A. 1990-1991Explanation
The recession that occurred in 1990-1991 is considered a mild recession because it was relatively short-lived and had a less severe impact on the economy compared to other recessions. This recession lasted for only eight months and was primarily caused by a combination of factors such as the savings and loan crisis, high oil prices, and a decline in consumer spending. While it did lead to a significant increase in unemployment and a decline in GDP, the economy quickly recovered and resumed its growth trajectory.Rate this question:
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- 21.
Statement I. Employment discrimination causes underemployment. Statement II. The concept of opportunity cost has little validity in the global economy.
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Statement I is true and statement II is false.
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Statement II is true and statement I is false.
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Both statements are true.
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Both statements are false.
Correct Answer
A. Statement I is true and statement II is false.Explanation
Employment discrimination refers to the unfair treatment of individuals based on characteristics such as race, gender, or age, which can result in them being underemployed or not given equal opportunities. This means that statement I, which states that employment discrimination causes underemployment, is true. On the other hand, statement II suggests that the concept of opportunity cost has little validity in the global economy. However, opportunity cost is a fundamental concept in economics, which states that by choosing one option, you forgo the benefits of the next best alternative. Therefore, statement II is false.Rate this question:
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- 22.
Our economy would be operating at full employment with labor unemployment rate of ___ percent and a capacity utilization rate of _____ percent.
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5; 95
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5; 85
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10; 95
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10; 85
Correct Answer
A. 5; 85Explanation
This answer suggests that the labor unemployment rate is 5% and the capacity utilization rate is 85%. This means that only 5% of the labor force is unemployed and 85% of the available resources and capacity are being utilized. This indicates that the economy is operating close to its full potential, with a low unemployment rate and a high utilization of resources.Rate this question:
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- 23.
Which of the following is not demonstrated by a production possibility curve?
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Scarcity
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Opportunity cost
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Necessity for choice due to scarcity
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Price
Correct Answer
A. PriceExplanation
A production possibility curve represents the different combinations of two goods that can be produced given the available resources and technology. It illustrates the concept of scarcity, as it shows the limited nature of resources and the need to make choices. It also demonstrates the concept of opportunity cost, as producing more of one good requires sacrificing the production of another good. However, a production possibility curve does not directly represent the concept of price, which is determined by factors such as supply and demand in a market economy.Rate this question:
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- 24.
Assuming that a society always operates on its production possibilities curve, an outward shift of the curve implies
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Economic growth has occurred
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. the society is making more efficient use of its available resources
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Consumer demand has increased
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The present value of capital resources has increased
Correct Answer
A. Economic growth has occurredExplanation
An outward shift of the production possibilities curve indicates that the society is now able to produce more goods and services than before. This suggests that the economy has experienced economic growth, as it is now operating at a higher level of productivity and efficiency. The society has likely found ways to utilize its available resources more effectively, leading to an increase in output. Therefore, the correct answer is that economic growth has occurred.Rate this question:
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- 25.
The reason that opportunity costs arise is that
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People have unlimited wants.
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There are no alternative decisions that could be made.
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An economy relies on money to facilitate exchange of goods and services.
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Resources are scarce.
Correct Answer
A. Resources are scarce.Explanation
Opportunity costs arise because resources are scarce. This means that there is a limited amount of resources available to fulfill unlimited wants and needs. When a decision is made to allocate resources towards one option, it means that those resources cannot be used for alternative options. Therefore, the opportunity cost is the value of the next best alternative that is forgone.Rate this question:
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- 26.
The production possibilities curve illustrates the basic principle that
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An economy's capacity to produce increases in proportion to its population size
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If all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.
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An economy will automatically seek that level of output at which all of its resources are employed.
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The production of more of any one good will in time require smaller and smaller sacrifices of other goods.
Correct Answer
A. If all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.Explanation
The correct answer is that if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. This is because resources are limited and finite, so they can only be allocated to produce a certain amount of goods. If more of one good is desired, resources must be reallocated from the production of another good, resulting in less of that good being produced. This concept is illustrated by the production possibilities curve, which shows the trade-off between producing different goods when resources are fully utilized.Rate this question:
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- 27.
The production possibilities curve tells us that if full employment exists and a nation wishes to permanently increase its production of military goods, it must
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Also increase its production of nonmilitary goods
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Reduce its output of nonmilitary goods
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Suffer inflation.
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Suffer unemployment.
Correct Answer
A. Reduce its output of nonmilitary goodsExplanation
The production possibilities curve shows the maximum combination of goods that can be produced given the available resources and technology. If a nation wants to permanently increase its production of military goods, it would need to reallocate some of its resources from producing nonmilitary goods to military goods. This means reducing its output of nonmilitary goods in order to increase the production of military goods. This is because resources are limited and reallocating them towards one type of good means there are fewer resources available for producing the other type of good.Rate this question:
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- 28.
Chart refers to units of butter & guns. Plots H,F,G,I During most of our involvement in World War II we temporarily operated at point
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F
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G
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H
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I
Correct Answer
A. FExplanation
During most of our involvement in World War II, the country operated at point F on the chart referring to units of butter and guns. This suggests that during this time, the country was producing and allocating more resources towards guns (military equipment) rather than butter (consumer goods). This is likely due to the increased demand for military equipment and the need to prioritize defense during wartime.Rate this question:
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- 29.
Graph refers to consumer goods. Plots X, Y Imagine that country X is at point X of this production possibilities frontier and country Y is at point Y.
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Country X will probably grow faster then country Y.
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Country Y will probably grow faster then country X
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The two countries will probably grow at about the same speed.
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There is no way of predicting which country will grow faster.
Correct Answer
A. Country Y will probably grow faster then country XExplanation
Based on the information given, it can be inferred that country Y is at a point further along the production possibilities frontier compared to country X. This suggests that country Y is currently utilizing its resources more efficiently and has the potential for greater growth. Therefore, country Y will probably grow faster than country X.Rate this question:
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- 30.
Statement I. Technological advance pushes a country's production possibilities frontier outward. Statement II. Our economic growth slowed down from the early 1970s compared to the two decades before the 1970s.
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Statement I is true and statement II is false.
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Statement II is true and statement I is false.
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Both statements are true.
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Both statements are false.
Correct Answer
A. Both statements are true.Explanation
Statement I is true because technological advance allows for the development of new and more efficient production methods, which increases a country's potential output and expands its production possibilities frontier.
Statement II is true because it states that economic growth slowed down from the early 1970s compared to the two decades before the 1970s. This is a factual statement that can be supported by historical data and economic analysis. Therefore, both statements are true.Rate this question:
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- 31.
Which of the following will NOT shift an economy's production possibilities curve outward?
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An increase in technology
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An improvement in the literacy rate
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A reduction in the unemployment rate
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An increase in the number of workers available
Correct Answer
A. A reduction in the unemployment rateExplanation
A reduction in the unemployment rate will not shift an economy's production possibilities curve outward because it does not directly affect the economy's capacity to produce goods and services. While reducing unemployment can lead to increased productivity and efficiency, it does not directly expand the economy's production possibilities. Factors such as an increase in technology, improvement in the literacy rate, and an increase in the number of workers available can all contribute to an outward shift in the production possibilities curve by increasing the economy's productive capacity.Rate this question:
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- 32.
Hypothetical Production Schedule for a Two-Product Economy (Table) If the economy were producing at point C and moves to point B
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4 units of capital goods are gained, while the capacity to produce 32 consumer goods are lost.
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Of capital goods are gained at an opportunity cost of producing 40 consumer goods.
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16 units of capital goods are gained at an opportunity cost of producing 72 consumer goods
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4 units of capital goods are gained, while the capacity to produce 72 consumer goods are lost
Correct Answer
A. 4 units of capital goods are gained, while the capacity to produce 32 consumer goods are lost.Explanation
Moving from point C to point B in the production schedule results in gaining 4 units of capital goods but losing the capacity to produce 32 consumer goods. This means that the economy is reallocating some of its resources from producing consumer goods to producing capital goods. As a result, the economy can produce more capital goods, but at the cost of producing fewer consumer goods.Rate this question:
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- 33.
Hypothetical Production Schedule for a Two-Product Economy (Table) If the economy were producing at point E and moves to point D,
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Resources will shift from producing capital goods to producing consumer goods.
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Resources will shift from producing consumer goods to producing capital goods.
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More capital goods can be produced without any sacrifice in consumer goods production.
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More consumer goods can be produced without any sacrifice in capital goods production.
Correct Answer
A. Resources will shift from producing consumer goods to producing capital goods.Explanation
Moving from point E to point D on the production schedule indicates a shift in the allocation of resources. Specifically, resources will shift from producing consumer goods to producing capital goods. This means that the economy will prioritize the production of capital goods, which are used to produce other goods and services, over consumer goods, which are directly consumed by individuals. This shift suggests that the economy is focusing on long-term growth and investment rather than immediate consumption.Rate this question:
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- 34.
Which statement about entrepreneurship in America is true?
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Alexander Graham Bell and Thomas Edison were two of the most famous American inventors who became entrepreneurs.
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The American entrepreneur led the way to the country's economic success
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Often the entrepreneur is an innovator
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The vast majority of entrepreneurs in America either work for themselves or have just one or two employees.
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All of the statements are true.
Correct Answer
A. All of the statements are true.Explanation
All of the statements are true. Alexander Graham Bell and Thomas Edison were indeed famous American inventors who became entrepreneurs. American entrepreneurs have played a significant role in the country's economic success. Entrepreneurship often involves innovation, making the statement "Often the entrepreneur is an innovator" true. Lastly, the majority of entrepreneurs in America either work for themselves or have a small number of employees, making the statement "The vast majority of entrepreneurs in America either work for themselves or have just one or two employees" true as well.Rate this question:
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- 35.
Statement I: In the modern global economy, if our steel industry were operating at full capacity we could easily get steel from other steel-producing countries. Statement II: The only constraints on our production possibilities frontier are physical constraints such as the number of steel factories available, etc.
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Statement I is true and statement II is false.
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Statement II is true and statement I is false.
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Both statements are true.
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Both statements are false
Correct Answer
A. Statement I is true and statement II is false.Explanation
The explanation for the given answer is that statement I is true because in the modern global economy, if our steel industry were operating at full capacity, we could easily import steel from other steel-producing countries. However, statement II is false because the constraints on our production possibilities frontier are not only physical constraints like the number of steel factories available, but also economic constraints such as cost, demand, and technology.Rate this question:
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- 36.
Which statement is true?
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On the production possibilities frontier, unemployment is zero percent
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On the production possibilities frontier, 85 percent of the labor force is employed.
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To get out of a recession, we must move to some point closer to the production possibilities frontier.
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To have economic growth, we must have zero unemployment.
Correct Answer
A. To get out of a recession, we must move to some point closer to the production possibilities frontier. -
- 37.
Statement I: When the unemployment rate is five percent, we are inside our production possibilities frontier. Statement II: Full production means that the nation's resources are being allocated in the most efficient manner possible.
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Statement I is true and statement II is false.
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Statement II is true and statement I is false.
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Both statements are true.
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Both statements are false.
Correct Answer
A. Statement II is true and statement I is false.Explanation
The correct answer is that Statement II is true and statement I is false. This means that full production does not necessarily mean that the nation's resources are being allocated in the most efficient manner possible. The unemployment rate being at five percent does not necessarily indicate that we are inside our production possibilities frontier.Rate this question:
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- 38.
The United States was able to produce temporarily outside its production possibilities curve for several years during World War II by doing which of the following?
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Recruiting housewives to work in tank and airplane factories
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Convincing workers who qualified for retirement to put off retirement.
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Pressing older machinery and equipment into use.
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Expansion of the work week.
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All of the choices are true
Correct Answer
A. All of the choices are trueExplanation
During World War II, the United States was able to produce temporarily outside its production possibilities curve by implementing various strategies. Recruiting housewives to work in tank and airplane factories increased the labor force, enabling higher production levels. Convincing workers who qualified for retirement to postpone retirement extended the availability of skilled workers. Pressing older machinery and equipment into use allowed for increased production capacity. Lastly, expanding the work week provided more hours for production. Therefore, all of these choices are true and contributed to the United States' ability to produce outside its production possibilities curve during the war.Rate this question:
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- 39.
If we are operating inside our production possibilities frontier,
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It is possible the economy is in a recession.
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It is possible the economy is in a depression.
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It is possible that the economy is in neither a recession or a depression.
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All of the choices are correct.
Correct Answer
A. All of the choices are correct.Explanation
If we are operating inside our production possibilities frontier, it means that the economy is not utilizing all of its available resources efficiently. This could be due to various factors such as a decrease in consumer demand or a decrease in investment. Consequently, it is possible that the economy is in a recession or a depression. However, it is also possible that the economy is in neither a recession nor a depression, but rather experiencing a temporary slowdown in growth. Therefore, all of the choices are correct.Rate this question:
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- 40.
During 2009 and 2010, ______ of Americans under 25 were unemployed.
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One-half
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One-third
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One-quarter
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Three-quarters
Correct Answer
A. One-quarterExplanation
During 2009 and 2010, one-quarter of Americans under 25 were unemployed. This means that 25% of the population in this age group did not have a job during that time period.Rate this question:
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- 41.
. The price mechanism deals _____ with the issue of an equitable income distribution and ____ with the issue of efficiency.
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Well; well
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Poorly; poorly
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Well; poorly
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Poorly; well
Correct Answer
A. Poorly; wellExplanation
The price mechanism deals poorly with the issue of an equitable income distribution because it tends to concentrate wealth in the hands of a few individuals, leading to income inequality. However, it deals well with the issue of efficiency because it allocates resources based on supply and demand, allowing for the most efficient use of resources in the production of goods and services.Rate this question:
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- 42.
Which of the following statements is false?
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Critics feel that wage and price controls interfere with the price mechanism.
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Sweden has one of the world's most equal distributions of income, but also has a relatively low standard of living.
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In the former Soviet Union, most of the crops were produced on collective farms.
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The price system is based on supply and demand.
Correct Answer
A. Sweden has one of the world's most equal distributions of income, but also has a relatively low standard of living.Explanation
The given statement that "Sweden has one of the world's most equal distributions of income, but also has a relatively low standard of living" is false. Sweden is known for its high standard of living and strong social welfare system, which contributes to a relatively equal distribution of income.Rate this question:
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- 43.
Which description of capitalism was coined by Karl Marx?
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The capitalist is led by an invisible hand to promote an end which was no part of his intention.
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By pursing his own interest he frequently promotes that of the society more effectively than when he really intends to promote it.
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The factory owner, by paying his workers meager wages, is able to use this surplus to buy more capital goods.
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None of these statements were coined by Karl Marx.
Correct Answer
A. The factory owner, by paying his workers meager wages, is able to use this surplus to buy more capital goods. -
- 44.
Which of the following is NOT an example of a command-and-control regulation to limit pollution?
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Fuel economy standards for all new cars
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A 50-cent tax on gasoline
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Mandating the use of catalytic converters on all new vehicles
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A ban on leaded gasoline
Correct Answer
A. A 50-cent tax on gasolineExplanation
A 50-cent tax on gasoline is not an example of a command-and-control regulation to limit pollution because it is a market-based instrument rather than a direct regulatory measure. Command-and-control regulations typically involve specific mandates and requirements, whereas a tax on gasoline aims to influence behavior by increasing the cost of polluting activities. This tax can incentivize individuals to reduce their consumption of gasoline and choose more environmentally friendly alternatives, but it does not directly dictate the use of specific technologies or impose specific restrictions on pollution levels.Rate this question:
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- 45.
Which of these is NOT an example of opportunity cost?
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Lobster catchers in Point Judith, Rhode Island continued to trap lobsters at the cost of depleting the lobster population.
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President George W. Bush's administration has pushed for oil exploration in the Arctic National Wildlife Refuge in Alaska at the cost of environmental preservation.
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Lobster catchers in Port Lincoln, Australia paid a licensing fee for the right to own lobster traps.
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The "bridge to nowhere" to be built near Anchorage, Alaska comes at the cost of adding to the federal budget deficit.
Correct Answer
A. Lobster catchers in Port Lincoln, Australia paid a licensing fee for the right to own lobster traps.Explanation
This answer is correct because paying a licensing fee for the right to own lobster traps is not an example of opportunity cost. Opportunity cost refers to the value of the next best alternative that is forgone when a decision is made. In the other examples, there is a clear trade-off or sacrifice being made. The lobster catchers in Point Judith are depleting the lobster population, President George W. Bush's administration is sacrificing environmental preservation, and the "bridge to nowhere" is adding to the federal budget deficit. However, paying a licensing fee does not involve giving up an alternative option or sacrificing something else.Rate this question:
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- 46.
A socialist economy is characterized by
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An extensive reliance on markets to allocate final goods and services.
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An extensive reliance on the profit motive to govern resource allocation decisions.
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Elimination of the problem of scarcity since all basic necessities are available to all citizens.
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Public ownership of productive resources.
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High levels of unemployment and inflation.
Correct Answer
A. Public ownership of productive resources.Explanation
A socialist economy is characterized by public ownership of productive resources. This means that the government or the community as a whole owns and controls the means of production, such as factories, land, and natural resources. In a socialist economy, the profits generated from these resources are typically used for the benefit of society as a whole, rather than being privately owned and controlled by individuals or corporations. This approach aims to promote equality and ensure that resources are used in a way that benefits the entire society.Rate this question:
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- 47.
Statement I: China's southern provinces have become "export platforms", sending out streams of consumer goods to Japan, Europe, and North America. Statement II: China has become a wealthy nation as a result of getting rid of its communist economic system.
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Statement I is true and statement II is false.
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Statement II is true and statement I is false.
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Both statements are true.
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Both statements are false.
Correct Answer
A. Statement I is true and statement II is false.Explanation
The explanation for the correct answer is that statement I is true because China's southern provinces have indeed become major exporters of consumer goods to various countries. However, statement II is false because China's economic system is still largely communist, although it has implemented some market-oriented reforms. Therefore, only statement I is true and statement II is false.Rate this question:
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- 48.
In the former Soviet Union distributing scarce consumer goods was accomplished by
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Higher prices which eliminated some potential consumers.
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Making the consumer stand in a long line for hours if not days.
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The government simply printing more money.
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None of the choices are true.
Correct Answer
A. Making the consumer stand in a long line for hours if not days.Explanation
In the former Soviet Union, distributing scarce consumer goods was accomplished by making the consumer stand in a long line for hours if not days. This method was used to control the distribution of goods and ensure that everyone had a chance to obtain them. By making people wait in long lines, the government could regulate the amount of goods each person could receive and prevent hoarding or excessive consumption. This system was a common practice in socialist countries where resources were limited and the government had to manage their distribution.Rate this question:
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- 49.
Which of the following is NOT a characteristic of the capitalist form of economic organization?
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Central planning.
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A reliance on decentralized market processes for resource allocation purposes.
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Private ownership of productive resources.
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All of the choices are true.
Correct Answer
A. Central planning.Explanation
Central planning is not a characteristic of the capitalist form of economic organization. In capitalism, the allocation of resources is primarily determined by the decentralized market processes, where individuals and businesses make decisions based on supply and demand. Private ownership of productive resources is also a key feature of capitalism, allowing individuals and businesses to own and control their assets. However, central planning is more commonly associated with socialist or command economies, where the government plays a significant role in resource allocation and economic decision-making.Rate this question:
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Aug 19, 2024Quiz Edited by
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Dec 19, 2012Quiz Created by
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