Deck 22: Economies in Transition

Question 1

The father of modern economics who wrote The Wealth of Nations is:

A) Karl Marx
B) John Maynard Keynes
C) Adam Smith
D) Thorstein Veblen

Answer 1

C

Question 2

Which of the following is not an idea advocated by Adam Smith?

A) Producers must compete with one another to win customer's business.
B) Pursuit of private self interest with an invisible hand is the best way to promote the public interest.
C) Government should control the economy.
D) The government should provide for national defense and little else.

Answer 2

C

Question 3

Which of the following societies is the most likely to have a traditional economy?

A) United States
B) the Inuit (native people of Northern Canada)
C) Cuba under Castro's rule
D) modern-day Hong Kong

Answer 3

B

Question 4

Who was one of the first proponents of employing market economies instead of command economies?

A) Robert Heilbroner.
B) Karl Marx.
C) Jeffrey Sachs.
D) Adam Smith.

Question 5

What type of economic system is commonly described as being controlled by an "invisible hand"?

A) a traditional economy
B) a command economy
C) a market economy
D) a communist economy

Question 6

According to Adam Smith, what is the primary source of a nation's wealth?

A) the amount of gold and silver in the government's possession
B) a spirit of cooperation in which people share according to their means
C) strong central planning authorities
D) the people's ability to produce products and trade in free markets

Question 7

Which of the following statements best describes the role played by prices in a command economy such as the former Soviet Union?

A) Prices were used to allocate resources.
B) Prices played the same role as in a market economy.
C) Prices were used to ration final goods and services but not to allocate resources.
D) Prices were not used at all.

Question 8

In a market economy, buyers and sellers communicate their intentions to one another through:

A) government planners.
B) negotiations overseen by government agencies.
C) elected officials.
D) prices.

Question 9

Proponents of a command economy argue that it promotes:

A) efficiency.
B) equity.
C) consumer sovereignty.
D) economic growth.

Question 10

According to Adam Smith's invisible hand doctrine:

A) self-interest best serves the interests of society.
B) laissez faire must be improved by government intervention.
C) producers should serve the best interests of society.
D) only laissez faire mercantilism best serves the interests of society.

Question 11

A strength of the market economy is that:

A) it results in an equal distribution of wealth.
B) resources are used efficiently.
C) planners rather than consumers determine answers to the basic economic questions.
D) information for production and distribution decisions passes directly from the government to buyers.

Question 12

Which of the following is true in a market economy?

A) Central planners determine answers to the basic economic questions.
B) Resources are used efficiently.
C) The distribution of wealth is equal.
D) Information for production and distribution decisions pass directly to buyers from the government.

Question 13

In the former Soviet economy, the supreme planning board that transmitted economic decisions down to producing and consuming units was called the:

A) Soviet Ministry.
B) Polit Bureau.
C) Gosplan.
D) Soviet Central Committee for Economic Planning.

Question 14

The economic system that is generally considered to be the most efficient at answering the What to produce and the How to produce questions is the:

A) market economy.
B) command economy
C) soviet economy.
D) traditional economy.

Question 15

The economic system that answers the What , How and For Whom questions using prices determined by the interaction of supply and demand is a:

A) market economy.
B) command economy
C) soviet economy.
D) traditional economy.

Question 16

The economic system in which the basic economic questions are answered through markets with some government intervention is a:

A) command economy.
B) mixed economy.
C) market economy.
D) planned economy.

Question 17

The economic system that has the benefit of cooperation among individuals but suffers from a lack of individual initiative that leads to greater production describes the:

A) market economy.
B) command economy
C) soviet economy.
D) traditional economy.

Question 18

Discuss the three basic types of economic systems.

Question 19

In a market economy:

A) collective decision-making is more important than individual decision-making.
B) goods and services are distributed as if by an "invisible hand" to those who can not afford them.
C) profit provides an incentive to be productive.
D) the distribution of wealth is equitably distributed.

Question 20

Which of the following statements is true ?

A) The doctrine of laissez-faire advocates an economic system with extensive government intervention and little individual decision-making.
B) In capitalism income is distributed on the basis of need.
C) Adam Smith was the father of socialism.
D) Most real-world economies are mixed economic systems.

Question 21

Describe the differences between capitalism and socialism.

Question 22

Which of the following is a correct characterization of socialism?

A) Tradition answers the basic economic questions.
B) Markets are used exclusively to answer the basic economic questions.
C) Central planning is seldom used to answer the basic economic questions.
D) Government ownership of many resources and centralized decision-making answers the basic economic questions.

Question 23

Which of the following is not a characteristic of capitalism?

A) private ownership of the factors of production
B) businesses make their own product and price decisions
C) public ownership of the factors of production
D) decentralized decision-making using markets

Question 24

Which of the following is a characteristic of capitalism?

A) equality of income
B) government decision-making is preferred to decentralized decision-making
C) market determination of prices and quantity
D) government ownership of all capital

Question 25

Socialism is an economic system characterized by:

A) private ownership of resources and market decision-making.
B) government ownership of resources and centralized decision-making.
C) cooperation, sharing, and little central government.
D) a complex structure of rules and traditions that dictates decision-making.

Question 26

The economic system characterized by private ownership of resources and by markets is :

A) capitalism.
B) communism.
C) fascism.
D) socialism.

Question 27

Which of the following is a characteristic of capitalism?

A) government ownership of all capital
B) government decision-making is preferred to decentralized decision-making
C) market determination of prices and quantity
D) equality of income

Question 28

Under socialism, factories, farms, mines, and natural resources are owned by:

A) laborers.
B) government.
C) private stockholders.
D) no one.

Question 29

What is the difference between socialism and communism? What are some examples of countries that are largely socialistic and some that are communistic?

Question 30

Which of the following applies to a real-world socialistic economy?

A) private ownership of all factors of production
B) government ownership of all factors of production
C) government ownership of most of the factors of production
D) lack of central planning

Question 31

Which of the following is a characteristic of socialism?

A) rejection of central planning
B) consumer sovereignty
C) government ownership of most of the factors of production.
D) private ownership of all factors of production.

Question 32

In a socialistic system, most economic decisions are made by:

A) firms.
B) consumers.
C) stockholders.
D) government planners.

Question 33

Property rights allowing individuals to own goods, services, and factors of production are most important in:

A) socialistic economies.
B) planned economies.
C) capitalistic economies.
D) command economies.

Question 34

Which of the following is a common criticism of capitalism?

A) poor product quality and little product diversity
B) inefficiency of nationalized industries
C) inability to adjust quickly to changing economic conditions
D) inadequate environmental protection

Question 35

Which nation achieved the ideal communist society as described by Marx?

A) Castro's Cuba
B) Mao's China
C) Stalin's Soviet Union
D) No nation has achieved Marx's vision of communist society.

Question 36

Karl Marx published:

A) Das Kapital .
B) General Theory of Communism .
C) The Wealth of Nations .
D) Capitalist Manifesto .

Question 37

Socialism is correctly described by which of the following statements?

A) Central planning is never used  to answer the basic economic questions .
B) Markets are used exclusively to answer the basic economic questions.
C) Tradition is used exclusively to answer the basic economic questions.
D) Government ownership of many resources and centralized decision-making answers the basic economic questions.

Question 38

Which of the following statements is true ?

A) The United States today comes closer to the socialist form of economic organization than it does capitalism.
B) When central planners set prices above equilibrium for goods and services they create shortages.
C) According to Karl Marx, under capitalism, workers would be exploited and would revolt against the owners of capital.
D) Adam Smith argued that government's role in society would be to do absolutely nothing.

Question 39

The freedom of consumers to cast their dollar votes to buy, or not to buy, at prices determined in competitive markets describes:

A) socialism.
B) communism.
C) consumer sovereignty.
D) the aspirations of Karl Marx.

Question 40

A classless society and economic system where all the factors of production are owned by workers and people share production according to their needs describes:

A) capitalism.
B) communism.
C) the invisible hand.
D) a mixed economy.

Question 41

The process of turning a government enterprise into a private enterprise is:

A) marketization.
B) entrepreneurship.
C) nationalization.
D) privatization.

Question 42

Which of the following is not a problem in the People's Republic of China following the economy's rapid growth?

A) income inequality
B) labor issues
C) lack of potential for foreign trade because of China's comparative advantage in the production of all goods
D) pollution

Question 43

The economic systems of the former Soviet Union, the People's Republic of China, and Cuba are best classified as:

A) traditional economies.
B) command economies.
C) market economies.
D) decentralized economies.

Question 44

Which of the following statements correctly characterizes nationalization in the U.S.?

A) The U.S. does not ever follow a policy of nationalization because that would run counter to our capitalist economy.
B) The U.S. has a history of nationalization, much of which was temporary.
C) The U.S. has mostly nationalized industries, including Amtrak and the United States Postal Service.
D) In times of crisis, the U.S. government has nationalized certain industries and those industries have remained permanently nationalized for the protection of the workers and consumers.

Question 45

Which of the following statements is not one of the factors leading to the Russian economy transitioning toward capitalism?

A) allowing private ownership of factors of production
B) ability for individuals to earn profits
C) allowing supply and demand to set higher prices for basic consumer goods
D) restrictive regulations and licensing requirements for businesses