Question 1

Which of the following is unique to a market economy system?

Accepted Answer

A)  the extensive use of capital goods 
B)  private ownership of property resources 
C)  specialization 
D)  the use of money 
A)  the extensive use of capital goods 
B)  private ownership of property resources 
C)  specialization 
D)  the use of money B

Question 2

The process in which workers select specialized tasks to make a product is referred to as:

Accepted Answer

A)  a coincidence of wants. 
B)  roundabout production. 
C)  freedom of choice. 
D)  division of labour. 
A)  a coincidence of wants. 
B)  roundabout production. 
C)  freedom of choice. 
D)  division of labour. D

Question 3

-Refer to the circular flow model of the economy.In the diagram flow (3)represents:

Accepted Answer

A)  wage,rent,interest,and profit income. 
B)  land,labour,capital,and entrepreneurial ability. 
C)  goods and services. 
D)  consumer expenditures. 
A)  wage,rent,interest,and profit income. 
B)  land,labour,capital,and entrepreneurial ability. 
C)  goods and services. 
D)  consumer expenditures. C

Question 4

-Refer to the circular flow model of the economy.In the diagram flow (2)represents:

Accepted Answer

A)  wage,rent,interest,and profit income. 
B)  land,labour,capital,and entrepreneurial ability. 
C)  goods and services. 
D)  consumer expenditures. 
A)  wage,rent,interest,and profit income. 
B)  land,labour,capital,and entrepreneurial ability. 
C)  goods and services. 
D)  consumer expenditures.

Question 5

The most efficient combination of resources in producing any output is that combination which:

Accepted Answer

A)  comes closest to using the same quantities of land,labour,capital,and entrepreneurial ability. 
B)  can be obtained for the smallest money outlay. 
C)  uses the smallest total quantity of all resources. 
D)  conserves most on the use of labour. 
A)  comes closest to using the same quantities of land,labour,capital,and entrepreneurial ability. 
B)  can be obtained for the smallest money outlay. 
C)  uses the smallest total quantity of all resources. 
D)  conserves most on the use of labour.

Question 6

Property rights do not encourage people to cooperate.

Accepted Answer

A) True 
 B)False

Question 7

Government alters the distribution of income by market intervention,in which case it modifies the prices established by market forces.

Accepted Answer

A) True 
 B)False

Question 8

The most important consequence of property rights is that

Accepted Answer

A)  they facilitate exchange. 
B)  allow for freedom of choice. 
C)  they encourage people to cooperate by helping to ensure that only mutually agreeable economic transactions take place. 
D)  they allow for a division of labour. 
A)  they facilitate exchange. 
B)  allow for freedom of choice. 
C)  they encourage people to cooperate by helping to ensure that only mutually agreeable economic transactions take place. 
D)  they allow for a division of labour.

Question 9

Competition is more likely to exist when:

Accepted Answer

A)  there is free entry into and exit out of industries. 
B)  there is a single supplier of all goods and services. 
C)  the government purchases most goods and services. 
D)  products are produced by a few large firms. 
A)  there is free entry into and exit out of industries. 
B)  there is a single supplier of all goods and services. 
C)  the government purchases most goods and services. 
D)  products are produced by a few large firms.

Question 10

The market system is an economic system that:

Accepted Answer

A)  produces more consumer goods than capital goods. 
B)  produces more capital goods than consumer goods. 
C)  gives private individuals and institutions the right to own resources used in production. 
D)  gives the government the right to tax individuals and corporations for the production of capital goods. 
A)  produces more consumer goods than capital goods. 
B)  produces more capital goods than consumer goods. 
C)  gives private individuals and institutions the right to own resources used in production. 
D)  gives the government the right to tax individuals and corporations for the production of capital goods.

Question 11

The "invisible hand" refers to the many indirect controls which the federal government imposes in a system of mixed capitalism.

Accepted Answer

A) True 
 B)False

Question 12

Consumer sovereignty means that legislation now protects the rights of consumers to dispose of their incomes as they see fit.

Accepted Answer

A) True 
 B)False

Question 13

The division of labour means that:

Accepted Answer

A)  labour markets are geographically segmented. 
B)  unskilled workers outnumber skilled workers. 
C)  workers specialize in various production tasks. 
D)  each worker performs a large number of tasks. 
A)  labour markets are geographically segmented. 
B)  unskilled workers outnumber skilled workers. 
C)  workers specialize in various production tasks. 
D)  each worker performs a large number of tasks.

Question 14

-Given the information provided and assuming trade does occur between the provinces,we can expect:

Accepted Answer

A)  that there is no means by which British Columbia can obtain lettuce while specializing in the production of autos. 
B)  that money will not be needed to accomplish the desired exchanges. 
C)  money to flow counterclockwise from British Columbia to Ontario to Alberta. 
D)  money to flow clockwise from British Columbia to Alberta to Ontario. 
A)  that there is no means by which British Columbia can obtain lettuce while specializing in the production of autos. 
B)  that money will not be needed to accomplish the desired exchanges. 
C)  money to flow counterclockwise from British Columbia to Ontario to Alberta. 
D)  money to flow clockwise from British Columbia to Alberta to Ontario.

Question 15

Specialization in production is economically beneficial primarily because it:

Accepted Answer

A)  allows everyone to have a job which they like. 
B)  permits the production of a larger output with fixed amounts of resources. 
C)  facilitates trade by bartering. 
D)  guarantees full employment. 
A)  allows everyone to have a job which they like. 
B)  permits the production of a larger output with fixed amounts of resources. 
C)  facilitates trade by bartering. 
D)  guarantees full employment.

Question 16

In the circular flow model:

Accepted Answer

A)  households supply factors of production to firms. 
B)  households receive income through the factor market. 
C)  households spend income in the product market. 
D)  all of the above hold true. 
A)  households supply factors of production to firms. 
B)  households receive income through the factor market. 
C)  households spend income in the product market. 
D)  all of the above hold true.

Question 17

The development of the Internet and e-mail to replace regular mail services in many cases would be an example of:

Accepted Answer

A)  roundabout production. 
B)  derived demand. 
C)  creative destruction. 
D)  specialization. 
A)  roundabout production. 
B)  derived demand. 
C)  creative destruction. 
D)  specialization.

Question 18

-Refer to the diagram.Arrows (1)and (2)represent:

Accepted Answer

A)  goods and resources respectively. 
B)  money incomes and output respectively. 
C)  output and money incomes respectively. 
D)  resources and goods respectively. 
A)  goods and resources respectively. 
B)  money incomes and output respectively. 
C)  output and money incomes respectively. 
D)  resources and goods respectively.

Question 19

Which of the following is not a part of a market system?

Accepted Answer

A)  private property 
B)  freedom of enterprise and choice 
C)  competition in product and resource markets 
D)  government determination of basic economic goals 
A)  private property 
B)  freedom of enterprise and choice 
C)  competition in product and resource markets 
D)  government determination of basic economic goals

Question 20

If competitive industry Y is incurring substantial losses,we can expect that output will:

Accepted Answer

A)  expand,product price will rise,and losses will tend to disappear. 
B)  contract,product price will fall,and losses will increase. 
C)  contract,product price will rise,and losses will tend to disappear. 
D)  expand,product price will fall,and losses will tend to disappear. 
A)  expand,product price will rise,and losses will tend to disappear. 
B)  contract,product price will fall,and losses will increase. 
C)  contract,product price will rise,and losses will tend to disappear. 
D)  expand,product price will fall,and losses will tend to disappear.

Which of the following is unique to a market economy system?

The process in which workers select specialized tasks to make a product is referred to as:

-Refer to the circular flow model of the economy.In the diagram flow (3)represents:

-Refer to the circular flow model of the economy.In the diagram flow (2)represents:

The most efficient combination of resources in producing any output is that combination which:

Property rights do not encourage people to cooperate.

Government alters the distribution of income by market intervention,in which case it modifies the prices established by market forces.

The most important consequence of property rights is that

Competition is more likely to exist when:

The market system is an economic system that:

The "invisible hand" refers to the many indirect controls which the federal government imposes in a system of mixed capitalism.

Consumer sovereignty means that legislation now protects the rights of consumers to dispose of their incomes as they see fit.

The division of labour means that:

-Given the information provided and assuming trade does occur between the provinces,we can expect:

Specialization in production is economically beneficial primarily because it:

In the circular flow model:

The development of the Internet and e-mail to replace regular mail services in many cases would be an example of:

-Refer to the diagram.Arrows (1)and (2)represent:

Which of the following is not a part of a market system?

If competitive industry Y is incurring substantial losses,we can expect that output will:

Limits, Alternatives, and Choices

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

An Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

Exam 2: The Market System and the Circular Flow

Which of the following is unique to a market economy system?

The process in which workers select specialized tasks to make a product is referred to as:

-Refer to the circular flow model of the economy.In the diagram flow (3)represents:

-Refer to the circular flow model of the economy.In the diagram flow (2)represents:

The most efficient combination of resources in producing any output is that combination which:

Property rights do not encourage people to cooperate.

Government alters the distribution of income by market intervention,in which case it modifies the prices established by market forces.

The most important consequence of property rights is that

Competition is more likely to exist when:

The market system is an economic system that:

The "invisible hand" refers to the many indirect controls which the federal government imposes in a system of mixed capitalism.

Consumer sovereignty means that legislation now protects the rights of consumers to dispose of their incomes as they see fit.

The division of labour means that:

-Given the information provided and assuming trade does occur between the provinces,we can expect:

Specialization in production is economically beneficial primarily because it:

In the circular flow model:

The development of the Internet and e-mail to replace regular mail services in many cases would be an example of:

-Refer to the diagram.Arrows (1)and (2)represent:

Which of the following is not a part of a market system?

If competitive industry Y is incurring substantial losses,we can expect that output will:

Limits, Alternatives, and Choices

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

An Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters