NAME _ CLASS _ DATE _

Se ction 1: QuizAnswering the Three Economic Ouestions

A. Key TermsM atch the descriprions in Co lumn I with the rerms in Column II. Writ e the letter of the correctan swer in the blan k provided .

Column I1. a system to protecr people exp eriencing unfavorable

economic conditions

2. an economy in which economic decisions are based on exchange, or trade

3. the income people receive for supplying facto rs of production

4 . an eco nomy that relies on habit , custom, or ritual to answer economicquestions

5. the method used by a society to produce and d istribute good s and services

Column IIa. economic system

b. facto r payment s

c. safet y net

d. traditiona l economy

e. market economy

B. Main IdeasWri te the letter of th e correct ending in the blank provided .

6. Each society determines who will consume what is produced based ona. its unique combination of soc ial values and goals.b. the amount of facto r pay ments .c. its need s and wants.d. economic equity.

7 . To improve its standard of living, a nat ion 's econo my musta. remain stable.b. grow .through innovation.c. reach economic equity.d. allow the central go vernmen t to ma ke eco nomic decisions.

8. Tradition al economies are usua llya. small, close communit ies that we lcome change and new technology.b. large, widespread communities that welcome change and new technology.c. large, wide spread communities that are able to deal effectively with

environme ntal disaster.d. sma ll, close communities that avoid cha nge and new technology.

9. An economy in wh ich only the government mak es economic decisions is aa. mixed economy.b. traditional eco nomy.c. centrally planned eco nomy.d. market econo my.

10. Pure market economies alwaysa. allow the central government to make economic decision s.b. ma ke fair or efficient decisions or allow for growth.c. base eco no mic decisions 0 11 exchange , or trade .d. divide work along gender lines.

( 14 Chapter 2 Section 1: Quiz

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NAME _ CLAS S _ DATE _

Section 2: QuizThe Free Market

A. Key TermsBriefly define or identify each of th e follow ing.1. mark et _

2. self-inte rest _

3. incen tive _

4. con sum er sovereignty _

B. Main IdeasWrite th e letter of the correct answer in the blank provided.

5. Wh y do peop le need to buy and sell products or services?a. People need to buy and sell products to ma ke a profit.b. We need to maintain a co mpetitive society.c. N o one is self-sufficient.d. People need to pro vide the mark et with goods and services.

6 . \X!ho owns the factors of production?a. ind ividu alsb. hou seholdsc. firmsd. the market

7. How will consumers react to the incentiv e of a higher price on a good or service?a. The negati ve incentive will cause consumers to purchase less of the good or service

if it is of lower quali ty.b. The pos itive incentive w ill cause consumers to purchase less of the good or service

if it is of lower qua lity.c. The negative incentive will cause cons umers to purchase less of the good or service

if it is of higher qua lity.d. The positive incentive will cause consumers to purchase less of the good or service

if it is of higher quality.

8. What "invisible hand" regulates the free market economy?a. incentives and efficiencyb. specializationc. competition between firmsd. competition and self-interest

9. \X!hy arc free market eco no mies able to attain economic growth?a. Cons umers can purchase all the goods they need, wh ich causes firms to produce more.b. Competition encourages inno vation , which causes growth.c. Everyo ne is acting in their own self-interest , w hich moti vates market growth.d. Firms keep prod ucing mo re incentives to encourage hou seholds to purchase

more goo ds.

10. Wh ich o f the following is N OT an advantage of a free market economy?3. eco nom ic eff iciencyb. economic freedomc. econom ic equityd. economic growth

( 16 Chapte r 2 Sec t ion 2: Quiz

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NAME _ CLASS _ DATE _

A. KeyTermsM atch the descri ptions in Column I with the terms in Column II. Write the let ter of the correctanswer in the blank pro vided . .

Section 3: QuizCentrally Planned Economies

Column I1. requiring strict o bedience to an authority, such as a dictator

2. a political system characterized by a cent ra lly planned economy wit h allecono mic and polit ical pow er resting in the hand s of the central government

3. a large Soviet farm leased by the state to gro ups of peasant farmers

4. a socia l and po litica l ph ilosophy based on the belief th at democratic meanssho uld be used to evenly distribute wealth throughou t a so ciety

5 . requires a large capital inve stmen t and prod uces item s used by others

Column IIa. com m urusrn

b. authoritarian

c. socia lism

d. heavy industry

c. co llective

B. Main IdeasWrite the letter of the correc t answe r in the blan k prov id ed.

6. Wh y might a socialist soc iety have a less rigid comma nd econo my than a communistsoc iety?a. In a socialist soc iety, va rio us po litical systems may be combined with public co n-

trol of the economy.b. In a socialist socie ty, all economic and po litical po wer rests in the hands of the

central go vernment.c. In a socia list soc iety, an autho ritarian governmen t controls the economy.d. In a soc ialist soc iety, the centers of econo mic power are under private control.

7. Who decided wha t the far mers wou ld produce on Soviet collectives?a. the farme rs c. the gover nmentb. the military d. the consumers

8. H ow did co llect ives in the Soviet Union avoid the competition that drives a freemarket economy ?a. There were no incentives for competition because the governme nt determined

prices, wages, and prod ucts.b. The farmers we re not ab le to sell their own products.c. Heavy ind ustry wa s no t a direct co mpe tito r.d. It wa s illegal to buy pro d ucts fro m a com pe titor.

9 . Why might Soviet eco nom ic planners have fav ored heavy industry over the makers ofco nsumer goods?a. Th e products of heavy industr y bro ught in more money.b. There were more people trained to wor k in heavy industry.c. Consumer goods are no t good economic investments.d. Th e pro duc ts o f heavy industry provide material for many other industries.

10. Wh ich of the following is NOT a disa dvantage of a centrally planned economy ?a. It usually cannot meet consume rs' needs and wa nts.b. It tries to meet exp licitly stated go als.c. It does not rew ard innovation .d. It sacrifices individu al freedo ms.

( 18 Chapter 2 Section 3: Quiz

NAME _ CLASS _ DATE _

Section 4: Qu izModern Economies

A. KevTermsMa tch the descript ions in Co lumn I with the terms in Column II. Write the letter of th e correctanswer in the blank provided.

Column I1. period of change in which an economy moves away fro m a centra lly

planned economy to wa rd a ma rke t-bas ed system2. an economic system that permits the conduct of business with minimal

gover nment intervention3. to sell to individuals state- run firms, which are then allowed to compete

with one another in the marketplace4. the doctrine that governm ent genera lly sho uld not intervene in the marketplace5. a range w ith no clear divisions

Column IIa. laissez faire

b. free ente rp rise

c. continuum

d. transitione. privatize

B. Main IdeasWrite the letter of the correc t ending in the blank provided .

6 . The United States economy is a mixed econo mya. based on the principles of the traditional economy, but allowing some go vernment

intervention.b. based on the principles of the centra lly plann ed economy, but limiting government

interve nt ion.c. based on the principles of the free market, allowing no government intervention.d. based on the princip les of the free market, bur allowing some government intervention.

7. Government intervention in a modern econo my is useful becausea. the needs and want s of modern society ar e always met by the marketplace.h. the marketplace has many incentives [Q create public work s such as parks and libraries.c. gove rnments are mo re able [Q meet some needs and wants of modern society in a

way that ensures that all members of society can participate.d. the ma rketplace provides all of its own laws.

8. In mos t mixed economies, the government does N OTa. purchase land, labor, and capital from hou seholds in the factor market.b . own all th e property an d con fiscate all eco nomic output.c. purchase goods and services in the product market.d. redistrib ute wealth thro ugh taxes and other means.

9. Sweden's social benefit programsa. provide ma ny health care and other adva ntages but involve a very high tax burden

for the peo ple.b . provide ma ny heal th care and other advantages at no cost to the people.c. prov ide many health care and other advantages but cost the people three quarte rs

of th eir base sa lary.d. provide many advantages to businesses, ma king them highly profitable,

10. The United States government intervenes toa. prov ide co mpetition for private firms.b. impose barriers on foreign trade.c. keep order, provide vital services, and promote the general welfare.d. restrict the banking industry.

( 20 Cha pte r 2 Section 4: Quiz