Question 1

-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. D

Question 2

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. C

Question 3

Today, China's economy most closely approximates:

Accepted Answer

A)  pure capitalism 
B)  a command economy 
C)  market socialism 
D)  authoritarian capitalism 
A)  pure capitalism 
B)  a command economy 
C)  market socialism 
D)  authoritarian capitalism C

Question 4

The competitive market system:

Accepted Answer

A)  encourages innovation because government provides tax breaks and subsidies to those who develop new products or new productive techniques. 
B)  discourages innovation because it is difficult to acquire additional capital in the form of new machinery and equipment. 
C)  discourages innovation because firms want to get all the profits possible from existing machinery and equipment. 
D)  encourages innovation because successful innovators are rewarded with economic profits. 
A)  encourages innovation because government provides tax breaks and subsidies to those who develop new products or new productive techniques. 
B)  discourages innovation because it is difficult to acquire additional capital in the form of new machinery and equipment. 
C)  discourages innovation because firms want to get all the profits possible from existing machinery and equipment. 
D)  encourages innovation because successful innovators are rewarded with economic profits.

Question 5

As opposed to the market system, in command economies:

Accepted Answer

A)  the reward for innovation is extensive. 
B)  the reward for innovation does not exist. 
C)  meeting the production targets are extremely important. 
D)  the profit motives are extremely high. 
A)  the reward for innovation is extensive. 
B)  the reward for innovation does not exist. 
C)  meeting the production targets are extremely important. 
D)  the profit motives are extremely high.

Question 6

Specialization may be conducive to an expansion of total output even though the individuals involved may have identical abilities.

Accepted Answer

A) True 
 B)False

Question 7

"The 'dollar votes' of consumers ultimately determine the composition of output and the allocation of resources in a market economy." This statement best describes the concept of:

Accepted Answer

A)  derived demand. 
B)  external costs and benefits. 
C)  consumer sovereignty. 
D)  the invisible hand. 
A)  derived demand. 
B)  external costs and benefits. 
C)  consumer sovereignty. 
D)  the invisible hand.

Question 8

The economy of the former Soviet Union was best described as:

Accepted Answer

A)  authoritarian capitalism. 
B)  mixed capitalism. 
C)  a command economy. 
D)  market socialism. 
A)  authoritarian capitalism. 
B)  mixed capitalism. 
C)  a command economy. 
D)  market socialism.

Question 9

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 10

In terms of the circular flow diagram households make expenditures in the _____ market and receive income through the _____ market.

Accepted Answer

A)  product; financial 
B)  factor; product 
C)  product; factor 
D)  capital; product 
A)  product; financial 
B)  factor; product 
C)  product; factor 
D)  capital; product

Question 11

-Refer to the diagram. Arrows (3) and (4) represent:

Accepted Answer

A)  goods and services respectively. 
B)  money incomes and consumer expenditures respectively. 
C)  resources and goods respectively. 
D)  consumer expenditures and money income respectively. 
A)  goods and services respectively. 
B)  money incomes and consumer expenditures respectively. 
C)  resources and goods respectively. 
D)  consumer expenditures and money income respectively.

Question 12

A characteristic of the market system is:

Accepted Answer

A)  extensive use of price controls. 
B)  extensive use of barter. 
C)  extensive use of capital goods. 
D)  low interest rates. 
A)  extensive use of price controls. 
B)  extensive use of barter. 
C)  extensive use of capital goods. 
D)  low interest rates.

Question 13

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 14

A purely competitive economy assumes the existence in each industry of a:

Accepted Answer

A)  large number of small firms facing a large number of small buyers. 
B)  few large firms facing a large number of small buyers. 
C)  large number of small firms facing a few large buyers. 
D)  few small firms facing a few small buyers. 
A)  large number of small firms facing a large number of small buyers. 
B)  few large firms facing a large number of small buyers. 
C)  large number of small firms facing a few large buyers. 
D)  few small firms facing a few small buyers.

Question 15

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

Question 16

What to produce in a market economy is ultimately determined by the:

Accepted Answer

A)  output decisions of business firms. 
B)  government. 
C)  spending decisions of households. 
D)  workers' technical skills. 
A)  output decisions of business firms. 
B)  government. 
C)  spending decisions of households. 
D)  workers' technical skills.

Question 17

The development of new technology and capital goods are essential elements for the market system. This is because:

Accepted Answer

A)  using more efficient production processes means more output for the economy. 
B)  more capital goods means less future consumption goods. 
C)  the standard of living and development of new technology are inversely related. 
D)  the most direct methods of production are more efficient. 
A)  using more efficient production processes means more output for the economy. 
B)  more capital goods means less future consumption goods. 
C)  the standard of living and development of new technology are inversely related. 
D)  the most direct methods of production are more efficient.

Question 18

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 19

The use of money for exchange:

Accepted Answer

A)  increases the use of barter. 
B)  reduces consumer sovereignty. 
C)  decreases the coincidence of wants. 
D)  encourages more specialization in production. 
A)  increases the use of barter. 
B)  reduces consumer sovereignty. 
C)  decreases the coincidence of wants. 
D)  encourages more specialization in production.

Question 20

Assume the demand for product Y increases and the subsequent market system responses result in the production of more Y. This illustrates:

Accepted Answer

A)  that the concept of derived demand is inapplicable. 
B)  that consumer sovereignty is inoperative in this economy. 
C)  the scarcity function of prices. 
D)  the directing or guiding function of prices. 
A)  that the concept of derived demand is inapplicable. 
B)  that consumer sovereignty is inoperative in this economy. 
C)  the scarcity function of prices. 
D)  the directing or guiding function of prices.

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

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

Today, China's economy most closely approximates:

The competitive market system:

As opposed to the market system, in command economies:

Specialization may be conducive to an expansion of total output even though the individuals involved may have identical abilities.

"The 'dollar votes' of consumers ultimately determine the composition of output and the allocation of resources in a market economy." This statement best describes the concept of:

The economy of the former Soviet Union was best described as:

The market system is an economic system that:

In terms of the circular flow diagram households make expenditures in the _ market and receive income through the _ market.

-Refer to the diagram. Arrows (3) and (4) represent:

A characteristic of the market system is:

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

A purely competitive economy assumes the existence in each industry of a:

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

What to produce in a market economy is ultimately determined by the:

The development of new technology and capital goods are essential elements for the market system. This is because:

The division of labour means that:

The use of money for exchange:

Assume the demand for product Y increases and the subsequent market system responses result in the production of more Y. This illustrates:

Limits, Alternatives, and Choices

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

Financial Economics

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

Exam 2: The Market System and the Circular Flow

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

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

Today, China's economy most closely approximates:

The competitive market system:

As opposed to the market system, in command economies:

Specialization may be conducive to an expansion of total output even though the individuals involved may have identical abilities.

"The 'dollar votes' of consumers ultimately determine the composition of output and the allocation of resources in a market economy." This statement best describes the concept of:

The economy of the former Soviet Union was best described as:

The market system is an economic system that:

In terms of the circular flow diagram households make expenditures in the _____ market and receive income through the _____ market.

-Refer to the diagram. Arrows (3) and (4) represent:

A characteristic of the market system is:

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

A purely competitive economy assumes the existence in each industry of a:

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

What to produce in a market economy is ultimately determined by the:

The development of new technology and capital goods are essential elements for the market system. This is because:

The division of labour means that:

The use of money for exchange:

Assume the demand for product Y increases and the subsequent market system responses result in the production of more Y. This illustrates:

Limits, Alternatives, and Choices

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

Financial Economics

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

In terms of the circular flow diagram households make expenditures in the _ market and receive income through the _ market.