Understanding Basic Economic Concepts Quiz

1. What is a Traditional System?

A system solely based on modern technology and innovations.

A system where the government controls all economic activities.

A system that prioritizes individual profit over community welfare.

A traditional system is characterized by its reliance on age-old methods and techniques that have social acceptance despite being considered outdated.

Explanation

A traditional system is characterized by its reliance on age-old methods and techniques that have social acceptance despite being considered outdated.

2. What does specialization refer to?

Attempting to be knowledgeable in all areas of work.

Concentrating on one area of work.My specialization is building and fixing things.

Diversifying work responsibilities.

Avoiding focusing on a specific skill.

Specialization involves focusing on a specific area of work or skill to become proficient and expert in that particular field.

Explanation

Specialization involves focusing on a specific area of work or skill to become proficient and expert in that particular field.

3. What is an investment?

When you give something away for free with no expectation of return.

When you make a financial commitment in order to make a profit or achieve a long-term goal.

When you sell something and lose money in return.

When you hoard money without any intention of using it for growth or profit.

An investment involves committing money or capital to purchase assets with the expectation of gaining profit or income in the future. It is different from simply selling, giving away for free, or hoarding money without any growth or profit motive.

Explanation

An investment involves committing money or capital to purchase assets with the expectation of gaining profit or income in the future. It is different from simply selling, giving away for free, or hoarding money without any growth or profit motive.

4. What is an entrepreneur?

Someone who organizes a business.I am an Entrepreneur because I started the business Coke.

A person who invests in the stock market.

An employee who works for a company.

A student studying business in college.

An entrepreneur is someone who takes the initiative to start and organize a business venture. It involves taking risks and being innovative in order to create a successful business.

Explanation

An entrepreneur is someone who takes the initiative to start and organize a business venture. It involves taking risks and being innovative in order to create a successful business.

5. What is a Market System?

Anarchy System

Barter System

Command System

A Market System is an economic system that relies on the interaction of supply and demand to allocate resources and determine prices. It is different from an Anarchy System, which lacks any system of government, a Command System where the government dictates resource allocation, and a Barter System where goods and services are exchanged directly without using money.

Explanation

A Market System is an economic system that relies on the interaction of supply and demand to allocate resources and determine prices. It is different from an Anarchy System, which lacks any system of government, a Command System where the government dictates resource allocation, and a Barter System where goods and services are exchanged directly without using money.

6. What is a quota?

The total amount of money a person makes in a year.

An increase in the price of goods.

A type of tax imposed on imported goods.

A quota is specifically a limit on the amount of goods that can be traded, not an increase in price, total income, or a type of tax.

Explanation

A quota is specifically a limit on the amount of goods that can be traded, not an increase in price, total income, or a type of tax.

7. What is a tariff?

A tax on imported goods. The tariff for rice imported from Australia is 5%.

A surcharge on domestic goods.

A subsidy for exported goods.

A discount on imported goods.

A tariff is a tax imposed on imported goods to protect domestic industries, generate revenue for the government, or address trade imbalances. It is not a discount, subsidy, or surcharge.

Explanation

A tariff is a tax imposed on imported goods to protect domestic industries, generate revenue for the government, or address trade imbalances. It is not a discount, subsidy, or surcharge.

8. What is Human Capital?

The measure of a person's physical strength.

The talents and capabilities that individuals contribute to the process of production.You go to college to gain human capital.

The physical assets owned by a company.

The amount of money a person has in their bank account.

9. What is a Mixed Economy?

An economic system that combines private and state enterprisesMost nations have a mixed economy.

A system where only state enterprises operate.

A system where economic activities are solely controlled by the government.

A system where only private enterprises operate.

A mixed economy combines elements of both private and state enterprises, allowing for a combination of free market principles and government intervention.

Explanation

A mixed economy combines elements of both private and state enterprises, allowing for a combination of free market principles and government intervention.

10. What is an embargo?

When a country forms a trading partnership with another country.

When a country promotes trade with another country through incentives.

When a country imposes additional taxes on imports from another country.

An embargo refers to the act of a country stopping all trade with another country for political or economic reasons. This includes stopping imports and exports between the two countries.

Explanation

An embargo refers to the act of a country stopping all trade with another country for political or economic reasons. This includes stopping imports and exports between the two countries.

11. What are Trade Barriers?

Trade barriers only include tariffs and do not encompass other forms of restrictions.

A trade barrier refers to the act of a country promoting international trade through free market policies.

Trade barriers are restrictions on domestic trade within a country.

Trade barriers are any government policies or regulations that hinder international trade, such as quotas, embargoes, and tariffs.

Explanation

Trade barriers are any government policies or regulations that hinder international trade, such as quotas, embargoes, and tariffs.

12. What is interdependence?

A country being self-sufficient in all aspects.

A country relying on multiple countries equally for goods.

A country relying on another country for goods, resources, or services.The US has interdependence on China for goods.

A country isolating itself from global trade.