Practice Questions_Ch2 - Department of Economics University...

Practice Questions_Ch2
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Department of Economics University of Lethbridge Econ 1010A Practice Questions – Chapter 2 1. Market economies are based upon A) private property and individual good will towards others. B) government planning and individual good will towards others. C) government planning and individual self-interest. D) private property and individual planning. 2. Historically, the distinction between socialism and capitalism has become A) more pronounced as capitalist countries have eliminated reliance on government planning. B) more pronounced as socialist countries have eliminated reliance on markets. C) less pronounced as both capitalist and socialist countries have both eliminated reliance on government planning. D) less pronounced as government's economic role in capitalist countries has increased and socialist countries have integrated some capitalist institutions. Use the following to answer question 3: C D A B Pre-K toys Children's toys Pre-K toys 3. Which of the following would be most likely to shift Iraq's production possibility curve in? A) Damage done to its human and capital resources during the U.S.-led invasion. Page 1
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B) Attacks by insurgents opposed to the U.S. presence. C) Aid given by foreign countries. D) All of the above. E) A and B. Use the following to answer question 4: Good X Good Y A B C D 4. Refer to the graph above. If the production possibility curve shifts along its y-axis, point __ will remain an efficient point of production: A) A B) B C) C D) D 5. Which two systems require the least amount of government intervention? A) Mercantilism and capitalism. B) Feudalism and socialism. C) Capitalism and feudalism. D) Mercantilism and socialism. Page 2
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6. Which of the following is NOT one of the three principal components of a command economy compared to a market economy? A) Government ownership of means of production, rather than private ownership as in capitalism. B) Workers directed by a government planning board as to where they will work and how much they will be paid. C) Entrepreneurs are encouraged by the profit motive, rather than government directive, to satisfy consumer wants in the most efficient manner possible. D) Distribution is according to need, as determined by central planners, rather than by ability. 7. A mixed economy is
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