Ch002TestBank[1] - CHAPTER 2 The Market System and the...

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CHAPTER 2 The Market System and the Circular Flow Topic Question numbers ___________________________________________________________________________________________________ 1. Economic systems 1-10 2. Characteristics of the market system 11-28 3. Five fundamental questions 29-59 4. Invisible hand 60-65 5. Demise of the command systems 66-76 6. Circular flow model 77-92 Consider This 93-95 Last Word 96-97 True-False 98-109 ___________________________________________________________________________________________________ Multiple Choice Questions Economic systems Econ: 29 LO: 2-1 Macro: 29 Micro: 29 Topic: 1 Type: Fact 1. The two general types of economic systems that exist today are: A) market systems and capitalism. B) socialism and central planning. C) market systems and command systems. D) laissez faire systems and pure command systems. Ans: C Econ: 29 LO: 2-1 Macro: 29 Micro: 29 Topic: 1 Type: Definition 2. Which of the following is a distinguishing feature of a command system? A) private ownership of all capital. C) heavy reliance on markets. B) central planning. D) wide-spread dispersion of economic power. Ans: B Econ: 29 LO: 2-1 Macro: 29 Micro: 29 Topic: 1 Type: Definition 3. Which of the following is a distinguishing feature of a market system? A) public ownership of all capital. B) central planning. C) wide-spread private ownership of capital. D) a circular flow of goods, resources, and money.
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Ans: C Econ: 29 LO: 2-1 Macro: 29 Micro: 29 Topic: 1 Type: Application of a Concept 4. Examples of command economies are: A) the United States and Japan. C) Mexico and Brazil. B) Sweden and Norway. D) Cuba and North Korea. Ans: D Econ: 29 LO: 2-1 Macro: 29 Micro: 29 Topic: 1 Type: Application of a Concept 5. Of the following countries, the one that best exhibits the characteristics of a market economy is: A) Canada. B) Cuba. C) North Korea. D) China. Ans: A Econ: 29 LO: 2-1 Macro: 29 Micro: 29 Topic: 1 Type: Definition 6. The French term "laissez-faire" means: A) "there is no free lunch." B) "let it be." C) "circular flow." D) "public ownership." Ans: B Econ: 29 LO: 2-1 Macro: 29 Micro: 29 Topic: 1 Type: Definition 7. An economic system: A) requires a grouping of private markets linked to one another. B) is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem. C) requires some sort of centralized authority (such as government) to coordinate economic activity. D) is a plan or scheme that allows a firm to make money at some other firm's expense. Ans: B Econ: 29 LO: 2-1 Macro: 29 Micro: 29 Topic: 1 Type: Definition 8. The term laissez faire suggests that: A) land and other natural resources should be privately owned, but capital should be publicly owned. B)
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Ch002TestBank[1] - CHAPTER 2 The Market System and the...

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