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Foundations of Economics — Test Answers

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What are some ways to address unemployment in a market economy? Choose three correct answers.

A
lowering restrictions
B
promoting hiring
C
creating new projects
D
raising more taxes
E
increasing regulation
2
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Which statement best describes a command economy?

A
Producers and consumers make some economic choices while the government makes others.
B
Government intervention in economic choices is strictly forbidden.
C
The government determines economic choices and makes most decisions.
D
The decisions made by producers and consumers drive all economic choices.
3

One of the three main questions of economics addresses who should

A
produce goods and services.
B
market goods and services.
C
distribute goods and services.
D
receive goods and services.
4

What is the best definition of automation?

A
the application of scientific knowledge to find answers and fix problems
B
the use of resources to manufacture goods more efficiently
C
the use of robotic equipment in a manufacturing process
D
the hiring of workers from all over the world to manufacture goods
5

A pure market economy is sometimes called pure

A
socialism.
B
command economy.
C
capitalism.
D
communism.
6

How does a command economy differ from a mixed market economy?

A
In a command economy, citizens have fewer property rights. In a mixed market economy, citizens have more property rights.
B
In a command economy, citizens own all private property. In a mixed market economy, the government owns all public property
C
In a command economy, citizens have more property rights. In a mixed market economy, citizens have fewer property rights.
D
In a command economy, citizens own all public property. In a mixed market economy, the government owns all private property.
7

What are the basic types of resources used by producers? Choose three correct answers.

A
land
B
scarcity
C
labor
D
capital
E
value
8

Which statement best describes a pure market economy?

A
Producers and consumers make some economic choices while the government makes others.
B
The government determines economic choices and makes most decisions.
C
The decisions made by producers and consumers drive all economic choices.
D
Producer intervention in economic choices is strictly forbidden.
9

One method for studying opportunity cost is to think in terms of

A
risk and ability.
B
tradeoffs.
C
trial and error.
D
pros and cons.
10

Which of the illustrates an opportunity cost?

A
Lydia does not have enough money to buy a new shirt.
B
James has enough money to buy some socks and a book.
C
Amir only has time to study or to play basketball.
D
Alyssa does not have enough time to study for her test.
11

What is the best definition of technology?

A
Technology is replacing human workers with mechanical or electronic devices.
B
Technology is using fewer resources to manufacture goods more efficiently.
C
Technology is applying scientific knowledge to find answers and fix problems.
D
Technology is hiring workers from all over the world to manufacture goods.
13

Private property is land or goods

A
used by state officials.
B
owned by the government.
C
owned by an individual.
D
used for taxation.
14

Which resource is renewable?

A
minerals
B
coal
C
gold
D
lumber
15

Assessing opportunity cost involves

A
choosing consequences over rewards.
B
minimizing profit and loss.
C
reviewing past decisions and changing them.
D
making choices and dealing with consequences.
16

One of the main questions of economics involves deciding upon the method for

A
pricing goods and services.
B
distributing goods and services.
C
enhancing goods and services.
D
creating goods and services.
17

What is the best definition of ownership?

A
Ownership is the right to possess land alone.
B
Ownership is the right to purchase goods alone.
C
Ownership is the right to purchase land or goods.
D
Ownership is the right to possess land or goods.
18

What is one way that technology can improve the distribution of goods?

A
Automation can create goods more cheaply and easily.
B
Workers can take Internet classes to gain new skills.
C
Container ships can transport a number of goods at once.
D
Businesses can hire factory workers across the world.
19

One of the three economic questions deals with deciding

A
how consumers will receive products.
B
how goods and services will be marketed.
C
what the costs of production should be.
D
what goods and services should be produced.
20

In free-enterprise systems around the world, there are

A
no restrictions on business ownership or business activity.
B
some restrictions on business ownership and business activity.
C
some restrictions on business ownership but not on business activity.
D
some restrictions on business activity but not on business ownership.
21

What kind of economy uses a free-enterprise system?

A
a traditional economy
B
a market economy
C
a closed economy
D
a command economy

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