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1. | The basic issues that every nation's economic system addresses are __________.
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| a) the types of goods and services that should be produced, how the goods and services should be produced, and who should share in what is produced.
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| b) the types of goods and services that should be produced, the trade-offs required by producing each type of good and service, and who should produce them.
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| c) the type of goods and services that should be produced, what labor should be used to produce them, and who should distribute the goods and services.
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| d) the type of goods and services that should be produced, the quantity of each type of good and service produced, and who should share in their use.
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2. | The major types of economic systems are __________
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| a) command, market, and mixed.
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| b) traditional, market, and mixed.
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| c) traditional, command, market, and mixed.
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| d) traditional, command, and market.
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3. | The economic system that answers the three basic economic questions according to societal customs is called __________
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| a) command.
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| b) mixed.
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| c) market.
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| d) traditional.
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4. | Which of the following is NOT a major characteristic of a pure market economic system?
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| a) lack of competition
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| b) freedom of enterprise
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| c) freedom of choice
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| d) little or no government control
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5. | Which statement about the role of government in the United States today is TRUE?
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| a) The limits imposed on the federal government by the Constitution are the same today as when it was written.
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| b) Although the federal government provides many more public services today, it is still forbidden to regulate private business in any way.
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| c) The roles of government—federal, state, and local—over economic activities has increased significantly since the 1880s.
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| d) The ideas introduced by Adam Smith influence the federal government as much today as they did when the Constitution was written.
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6. | Which statement about the United States's free enterprise system is NOT TRUE?
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| a) Entrepreneurs are guaranteed unrestricted freedom and financial success.
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| b) Laws that set safety standards protect buyers but limit freedom of choice.
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| c) Individuals are free to buy whatever they can afford.
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| d) The main reason that people produce goods and services is the profit incentive.
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7. | Each of the following statements about the American economy is true EXCEPT __________
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| a) "Private property" refers to land owned by Americans.
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| b) "Profit incentive" can be described as the motivating factor behind an entrepreneur establishing a business.
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| c) Competition among businesses has the effect of forcing the prices of goods and services down.
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| d) "Freedom of choice" in our economic system means that buyers, not sellers, make the decisions about what should be produced.
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8. | Which of the following fulfills the goal of security in a market economy?
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| a) an individual choosing to start a business
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| b) a nation using its limited resources wisely
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| c) the government paying Medicare
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| d) an employer paying the minimum wage to unskilled workers
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9. | Which of the following is NOT an advantage of the American free enterprise system?
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| a) Individuals enjoy a high degree of economic and personal freedom.
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| b) Individuals do not have to take on any economic or political responsibilities.
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| c) Americans enjoy a high standard of living.
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| d) Individuals may choose from a wide range of lifestyles.
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