Question 1

The wants of consumers are expressed on the demand side of the product market.

Accepted Answer

A) True 
 B)False

Question 2

The term consumer sovereignty means that:

Accepted Answer

A)   consumers are controlled by the actions of the marketplace.
B)   what is produced is ultimately determined by what consumers buy.
C)   there are no limits on what consumers may buy under capitalism.
D)   businesses produce with consumer satisfaction as their primary goal.E) A) and B)
F) A) and C)

Question 3

Which statement is correct?

Accepted Answer

A)   The operation of a market system eventually results in an equal distribution of income.
B)   Producers are "kings" in a market economy because they determine what is produced.
C)   The market system is efficient at allocation of resources,but not consumer goods to their most valued uses.
D)   Freedom of choice and enterprise are essential elements of the market system.E) B) and D)
F) None of the above

Question 4

The economy of the former Soviet Union was best described as:

Accepted Answer

A)   authoritarian capitalism.
B)   mixed capitalism.
C)   a command economy.
D)   market socialism.E) A) and B)
F) None of the above

Question 5

Which statement accurately summarizes the relationship between the prices of goods and their relative scarcity?

Accepted Answer

A)   The price of a good is a direct function of the relative scarcity of the good.
B)   The price of a good is an inverse function of the relative scarcity of the good.
C)   The price of a good is independent of the relative scarcity of the good.
D)   High prices lead to greater relative scarcity.E) B) and C)
F) A) and D)

Question 6

-In terms of the circular flow diagram households make expenditures in the _____ market and receive income through the _____ market.

Accepted Answer

A)   product;financial
B)   factor;product
C)   product;factor
D)   capital;productE) None of the above
F) All of the above

Question 7

Specialization and trade are beneficial to society because:

Accepted Answer

A)   the output of economic goods may be increased with no increase in resources.
B)   scarce resources are utilized more efficiently.
C)   a division of labour lowers prices for products.
D)   all of the above are correct.E) A) and B)
F) A) and D)

Question 8

Consumer sovereignty and "dollar votes" are most related to which fundamental question about a competitive market system?

Accepted Answer

A)   What will be produced?
B)   How is the output to be produced?
C)   How can the system accommodate change?
D)   Who is to receive the output?E) C) and D)
F) All of the above

Question 9

For whom is a given mix of goods and services to be produced? How,in other words,is the product to be distributed among people when such commodities and services are available? In a market economy,this problem is resolved primarily in the:

Accepted Answer

A)   public sector through the mechanism of central planning.
B)   business sector through the mechanism of advertising.
C)   private sector through the earning and spending of income.
D)   money market through borrowing and saving by households and businesses.E) A) and B)
F) A) and C)

Question 10

Which of the following best describes the "invisible hand" concept?

Accepted Answer

A)   The desires of resource suppliers and producers to further their own self-interest will automatically further the public interest.
B)   The nonsubstitutability of resources gives rise to a conflict between private and public interests and the need for government intervention.
C)   Mixed capitalism is the best system for overcoming the scarce resources-unlimited wants problem.
D)   Central direction by the government will improve resource allocation in a capitalistic economy.E) None of the above
F) C) and D)

Question 11

A characteristic of the market system is:

Accepted Answer

A)   extensive use of price controls.
B)   extensive use of barter.
C)   extensive use of capital goods.
D)   low interest rates.E) A) and D)
F) B) and C)

Question 12

Which is characteristic of the capitalistic ideology?

Accepted Answer

A)   unselfish individuals
B)   centralized decision-making
C)   free enterprise and choice
D)   government ownership of the means of productionE) A) and B)
F) A) and C)

Question 13

In the simple circular flow model:

Accepted Answer

A)   households are demanders of factors of production.
B)   businesses are suppliers of final products.
C)   households are suppliers of final products.
D)   there are real flows of goods,services,and factors,but not money flows.E) A) and D)
F) All of the above

Question 14

In a market economy the distribution of income would be determined primarily by

Accepted Answer

A)   consumer needs and preferences.
B)   the quantities and prices of the resources which households supply.
C)   government regulations which provide a minimum income for all.
D)   a social consensus as to what distribution of income is most equitable.E) All of the above
F) A) and D)

Question 15

The use of money for exchange:

Accepted Answer

A)   increases the use of barter.
B)   reduces consumer sovereignty.
C)   decreases the coincidence of wants.
D)   encourages more specialization in production.E) B) and C)
F) A) and C)

Question 16

How do workers typically express self-interest?

Accepted Answer

A)   by minimizing the economic losses of other business firms
B)   by maximizing the economic profits of other business firms
C)   by seeking the highest price when purchasing a consumer product
D)   by seeking jobs with the best combination of wages and benefitsE) A) and B)
F) All of the above

Question 17

Money functions as a medium of exchange in permitting the ready comparison of the relative worth of heterogeneous products.

Accepted Answer

A) True 
 B)False

Question 18

Consider a barter situation where you have pens and you want pencils.To achieve your objective there must be a(n) :

Accepted Answer

A)   use of capital goods.
B)   entry and exit from the market.
C)   large number of sellers.
D)   coincidence of wants.E) C) and D)
F) B) and D)

Question 19

The command system is also known as:

Accepted Answer

A)   the market system.
B)   pure capitalism.
C)   market socialism.
D)   socialism or communism.E) A) and B)
F) A) and C)

Question 20

Today,China's economy most closely approximates:

Accepted Answer

A)   pure capitalism
B)   a command economy
C)   market socialism
D)   authoritarian capitalismE) C) and D)
F) None of the above

Exam 2: The Market System and the Circular Flow

The command system is also known as:

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Which of the following best describes the "invisible hand" concept?

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In a market economy the distribution of income would be determined primarily by

Correct AnswerverifiedShow Answer

A characteristic of the market system is:

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Which statement accurately summarizes the relationship between the prices of goods and their relative scarcity?

Correct AnswerverifiedShow Answer

The term consumer sovereignty means that:

Correct AnswerverifiedShow Answer

Money functions as a medium of exchange in permitting the ready comparison of the relative worth of heterogeneous products.

Correct AnswerverifiedShow Answer

The economy of the former Soviet Union was best described as:

Correct AnswerverifiedShow Answer

The wants of consumers are expressed on the demand side of the product market.

Correct AnswerverifiedShow Answer

Today,China's economy most closely approximates:

Correct AnswerverifiedShow Answer

Consider a barter situation where you have pens and you want pencils.To achieve your objective there must be a(n) :

Correct AnswerverifiedShow Answer

Consumer sovereignty and "dollar votes" are most related to which fundamental question about a competitive market system?

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The use of money for exchange:

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How do workers typically express self-interest?

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In the simple circular flow model:

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For whom is a given mix of goods and services to be produced? How,in other words,is the product to be distributed among people when such commodities and services are available? In a market economy,this problem is resolved primarily in the:

Correct AnswerverifiedShow Answer

Specialization and trade are beneficial to society because:

Correct AnswerverifiedShow Answer

Which is characteristic of the capitalistic ideology?

Correct AnswerverifiedShow Answer

-In terms of the circular flow diagram households make expenditures in the _____ market and receive income through the _____ market.

Correct AnswerverifiedShow Answer

Which statement is correct?

Correct AnswerverifiedShow Answer

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-In terms of the circular flow diagram households make expenditures in the _ market and receive income through the _ market.

Correct Answer
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