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Chapter 1 and 2 Practice
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
1. Which involves making economic choices based on customs?
a. command economy
b. traditional economy
c. mixed economy
d. market economy
____
2. Which involves having the government make most economic decisions?
a. command economy
b. traditional economy
c. mixed economy
d. market economy
____
3. Which is based mainly on individual choice?
a. command economy
b. traditional economy
c. mixed economy
d. market economy
____
4. Which is an advantage of a traditional economy?
a. very flexible and open to change
b. efficient use of resources
c. little disagreement over economic goals
d. people do jobs best suited to them
____
5. Which is a disadvantage of a traditional economy?
a. does not ensure maximum productivity
b. does not clearly answer economic questions
c. does not always use same production methods
d. does not produce what ensures survival
____
6. A need is fulfilled by
a. video games
b. food
c. jewelry
d. movie tickets
____
7. The study of how people choose to use scarce resources to satisfy their wants is called
a. choice
b. economics
c. entrepreneurship
d. scarcity
____
8. The ongoing tension of not having enough resources to meet human wants is called
a. need
b. scarcity
c. shortage
d. surplus
____
9. Physical products that can be purchased are called
a. bonds
b. services
c. goods
d. stocks
____ 10. The human time, effort, and talent that go into the making of products is called
a. capital
b. labor
c. knowledge
d. scarcity
____ 11. Which is another term for a command economy?
a. traditional economy
b. centrally-planned economy
c. mixed economy
d. bureaucratic economy
____ 12. Which allows no private ownership of property?
a. socialism
b. monarchy
c. communism
d. capitalism
____ 13. Who wrote an economic study called Capital ?
a. Karl Marx
b. Vladimir Lenin
c. Adam Smith
d. Friedrich Engels
____ 14. Which of the following statements is an advantage of a command economy?
a. Economic decisions are well guided.
b. The economy attempts to provide for everyone.
c. The economy is rarely short of needed goods
d. Economic decisions do not cause much suffering.
____ 15. Benefits offered to encourage people to act in certain ways are
a. incentives
b. motives
c. utilities
d. wants
____ 16. The benefit or satisfaction gained from the use of a good or service is called a(n)
a. cost
b. incentive
c. utility
d. desire
____ 17. The alternative you give up when you make an economic choice is a(n)
a. compromise
b. option
c. trade-off
d. utility
____ 18. The value of what you give up by choosing one alternative over another is called
a. marginal benefit
b. marginal cost
c. opportunity benefit
d. opportunity cost
____ 19. Simplified representations of complex economic activities are called economic
a. curves
b. models
c. prototypes
d. templates
____ 20. When creating a PPC, economists assume that
a. resources are not fixed
b. resources are inefficiently used
c. only three things can be produced
d. technology is fixed
____ 21. The condition in which economic resources are not being used to their full potential is called
a. efficiency
b. scarcity
c. utilization
d. underutilization
____ 22. Any point outside the curve of a PPC represents a goal that is
a. impossible to meet because resources are fixed
b. impossible to meet because resources are not fixed
c. possible to meet because resources are fixed
d. possible to meet because resources are not fixed
____ 23. The most common economic system is a
a. traditional economy
b. command economy
c. market economy
d. mixed economy
____ 24. The process of changing from private ownership to government ownership is called
a. privatizing
b. nationalizing
c. economizing
d. downsizing
Matching
Select the letter of the term, name, or phrase that best matches each description.
a. specialization
b. product market
c. profit
d. competition
e. laissez faire
f. consumer sovereignty
g. factor market
____ 25. means "leave things alone"
____ 26. the idea that consumers are free to buy what they want
____ 27. market for goods and services
____ 28. market for factors of production
____ 29. financial gain from a business transaction
____ 30. involves concentrating efforts in a certain area
____ 31. the foundation of market economies
Select the letter of the term, name, or phrase that best matches each description.
a. microeconomics
b. line graph
c. statistics
d. mercantilism
e. chart
f. macroeconomics
g. pie graph
____ 32. study of the behavior of individuals in an economy
____ 33. study of the behavior of the economy as a whole
Essay
B: Extended Response
Answer the following question on the back of this paper or on a separate sheet of paper.
34. What three economic questions does scarcity require every society to address?
35. What is the law of increasing opportunity costs?
36. What are some of the disadvantages of a pure market economy?
37. What did Adam Smith mean by the term "invisible hand?"
Chapter 1 and 2 Practice
Answer Section
MULTIPLE CHOICE
1. ANS:
NAT:
STA:
NOT:
2. ANS:
NAT:
STA:
NOT:
3. ANS:
NAT:
STA:
TOP:
4. ANS:
NAT:
TOP:
5. ANS:
NAT:
TOP:
6. ANS:
TOP:
7. ANS:
TOP:
8. ANS:
NAT:
TOP:
9. ANS:
TOP:
10. ANS:
NAT:
NOT:
11. ANS:
NAT:
STA:
NOT:
12. ANS:
TOP:
13. ANS:
TOP:
14. ANS:
NAT:
STA:
NOT:
B
PTS: 1
REF: APS_act0976aaf1800656a6_87
NCEE.VCSE.SST.05.5-8.3.1 | NCEE.VCSE.SST.05.9-12.4.1
MI.MICF.SST.96.9-12.IV.4.5
TOP: Section: 1, Introduction to Economic Systems
economics_2007
A
PTS: 1
REF: APS_act0976aaf1800656a6_95
NCEE.VCSE.SST.05.5-8.3.2 | NCEE.VCSE.SST.05.5-8.3.4 | NCEE.VCSE.SST.05.9-12.4.1
MI.MICF.SST.96.9-12.IV.4.5
TOP: Section: 1, Introduction to Economic Systems
economics_2007
D
PTS: 1
REF: APS_act0976aaf1800656a6_103
NCEE.VCSE.SST.05.5-8.3.2 | NCEE.VCSE.SST.05.9-12.4.1
MI.MICF.SST.96.9-12.IV.4.3 | MI.MICF.SST.96.9-12.IV.4.5
Section: 1, Introduction to Economic Systems
NOT: economics_2007
C
PTS: 1
REF: APS_act0976aaf1800656a6_111
NCEE.VCSE.SST.05.5-8.3.1
STA: MI.MICF.SST.96.9-12.IV.4.5
Section: 1, Introduction to Economic Systems
NOT: economics_2007
A
PTS: 1
REF: APS_act0976aaf1800656a6_119
NCEE.VCSE.SST.05.5-8.3.1
STA: MI.MICF.SST.96.9-12.IV.4.5
Section: 1, Introduction to Economic Systems
NOT: economics_2007
B
PTS: 1
REF: APS_act0976aaf18006569a_185
Section: 1, Scarcity: The Basic Economic Problem
NOT: economics_2007
B
PTS: 1
REF: APS_act0976aaf18006569a_193
Section: 1, Scarcity: The Basic Economic Problem
NOT: economics_2007
B
PTS: 1
REF: APS_act0976aaf18006569a_201
NCEE.VCSE.SST.05.5-8.1.1 | NCEE.VCSE.SST.05.9-12.4.1
Section: 1, Scarcity: The Basic Economic Problem
NOT: economics_2007
C
PTS: 1
REF: APS_act0976aaf18006569a_209
Section: 1, Scarcity: The Basic Economic Problem
NOT: economics_2007
B
PTS: 1
REF: APS_act0976aaf18006569a_217
NCEE.VCSE.SST.05.9-12.15.7
TOP: Section: 1, Scarcity: The Basic Economic Problem
economics_2007
B
PTS: 1
REF: APS_act0976aaf1800656a8_87
NCEE.VCSE.SST.05.5-8.3.2 | NCEE.VCSE.SST.05.5-8.3.4
MI.MICF.SST.96.9-12.IV.4.5
TOP: Section: 2, Command Economies
economics_2007
C
PTS: 1
REF: APS_act0976aaf1800656a8_95
Section: 2, Command Economies
NOT: economics_2007
A
PTS: 1
REF: APS_act0976aaf1800656a8_103
Section: 2, Command Economies
NOT: economics_2007
B
PTS: 1
REF: APS_act0976aaf1800656a8_111
NCEE.VCSE.SST.05.5-8.3.2 | NCEE.VCSE.SST.05.5-8.3.4
MI.MICF.SST.96.9-12.IV.4.5
TOP: Section: 2, Command Economies
economics_2007
15. ANS: A
PTS: 1
REF: APS_act0976aaf18006569c_185
NAT: NCEE.VCSE.SST.05.5-8.4.3 | NCEE.VCSE.SST.05.9-12.4.1 | NCEE.VCSE.SST.05.9-12.10.1 |
NCEE.VCSE.SST.05.9-12.12.4 | NCEE.VCSE.SST.05.9-12.15.7 | NCEE.VCSE.SST.05.9-12.17.2 |
NCEE.VCSE.SST.05.9-12.17.3
STA: MI.MICF.SST.96.9-12.IV.4.1
TOP: Section: 2, Economic Choice Today: Opportunity Cost
NOT: economics_2007
16. ANS: C
PTS: 1
REF: APS_act0976aaf18006569c_193
NAT: NCEE.VCSE.SST.05.5-8.2.1 | NCEE.VCSE.SST.05.9-12.2.1
TOP: Section: 2, Economic Choice Today: Opportunity Cost
NOT: economics_2007
17. ANS: C
PTS: 1
REF: APS_act0976aaf18006569c_201
NAT: NCEE.VCSE.SST.05.5-8.1.3
TOP: Section: 2, Economic Choice Today: Opportunity Cost
NOT: economics_2007
18. ANS: D
PTS: 1
REF: APS_act0976aaf18006569c_217
NAT: NCEE.VCSE.SST.05.5-8.1.3 | NCEE.VCSE.SST.05.5-8.1.5 | NCEE.VCSE.SST.05.5-8.2.1 |
NCEE.VCSE.SST.05.5-8.5.1 | NCEE.VCSE.SST.05.9-12.2.1
TOP: Section: 2, Economic Choice Today: Opportunity Cost
NOT: economics_2007
19. ANS: B
PTS: 1
REF: APS_act0976aaf18006569e_87
TOP: Section: 3, Analyzing Production Possibilities
NOT: economics_2007
20. ANS: D
PTS: 1
REF: APS_act0976aaf18006569e_103
NAT: NCEE.VCSE.SST.05.5-8.15.3 | NCEE.VCSE.SST.05.9-12.8.2 | NCEE.VCSE.SST.05.9-12.15.1 |
NCEE.VCSE.SST.05.9-12.15.3 | NCEE.VCSE.SST.05.9-12.15.7
TOP: Section: 3, Analyzing Production Possibilities
NOT: economics_2007
21. ANS: D
PTS: 1
REF: APS_act0976aaf18006569e_111
TOP: Section: 3, Analyzing Production Possibilities
NOT: economics_2007
22. ANS: A
PTS: 1
REF: APS_act0976aaf18006569e_119
TOP: Section: 3, Analyzing Production Possibilities
NOT: economics_2007
23. ANS: D
PTS: 1
REF: APS_act0976aaf1800656ac_87
NAT: NCEE.VCSE.SST.05.5-8.3.4 | NCEE.VCSE.SST.05.9-12.4.2
STA: MI.MICF.SST.96.9-12.IV.4.3 | MI.MICF.SST.96.9-12.IV.4.5
TOP: Section: 4, Modern Economies in a Global Age
NOT: economics_2007
24. ANS: B
PTS: 1
REF: APS_act0976aaf1800656ac_103
NAT: NCEE.VCSE.SST.05.5-8.3.2 | NCEE.VCSE.SST.05.5-8.3.4 | NCEE.VCSE.SST.05.9-12.13.1
STA: MI.MICF.SST.96.9-12.IV.4.5
TOP: Section: 4, Modern Economies in a Global Age
NOT: economics_2007
MATCHING
25. ANS:
TOP:
26. ANS:
STA:
NOT:
27. ANS:
NAT:
STA:
NOT:
28. ANS:
NAT:
STA:
NOT:
E
PTS: 1
REF: APS_act0976aaf1800656aa_41
Section: 3, Market Economies
NOT: economics_2007
F
PTS: 1
REF: APS_act0976aaf1800656aa_45
MI.MICF.SST.96.9-12.IV.1.3
TOP: Section: 3, Market Economies
economics_2007
B
PTS: 1
REF: APS_act0976aaf1800656aa_49
NCEE.VCSE.SST.05.5-8.18.3 | NCEE.VCSE.SST.05.9-12.10.1 | NCEE.VCSE.SST.05.9-12.18.3
MI.MICF.SST.96.9-12.IV.5.1
TOP: Section: 3, Market Economies
economics_2007
G
PTS: 1
REF: APS_act0976aaf1800656aa_53
NCEE.VCSE.SST.05.5-8.18.3 | NCEE.VCSE.SST.05.9-12.10.1 | NCEE.VCSE.SST.05.9-12.18.3
MI.MICF.SST.96.9-12.IV.5.1
TOP: Section: 3, Market Economies
economics_2007
29. ANS: C
PTS: 1
REF: APS_act0976aaf1800656aa_57
NAT: NCEE.VCSE.SST.05.9-12.4.1
TOP: Section: 3, Market Economies
NOT: economics_2007
30. ANS: A
PTS: 1
REF: APS_act0976aaf1800656aa_61
NAT: NCEE.VCSE.SST.05.9-12.3.1
STA: MI.MICF.SST.96.9-12.IV.5.3
TOP: Section: 3, Market Economies
NOT: economics_2007
31. ANS: D
PTS: 1
REF: APS_act0976aaf1800656aa_65
NAT: NCEE.VCSE.SST.05.5-8.9.1 | NCEE.VCSE.SST.05.5-8.9.3 | NCEE.VCSE.SST.05.9-12.4.1 |
NCEE.VCSE.SST.05.9-12.9.2
TOP: Section: 3, Market Economies
NOT: economics_2007
32. ANS:
NAT:
NOT:
33. ANS:
TOP:
A
PTS: 1
REF: APS_act0976aaf1800656a0_57
NCEE.VCSE.SST.05.5-8.9.3
TOP: Section: 4, The Economist's Toolbox
economics_2007
F
PTS: 1
REF: APS_act0976aaf1800656a0_61
Section: 4, The Economist's Toolbox
NOT: economics_2007
ESSAY
34. ANS:
What will be produced? How will it be produced? For whom will it be produced?
PTS: 1
REF: APS_act0976aaf18006569a_270
NAT: NCEE.VCSE.SST.05.5-8.1.1 | NCEE.VCSE.SST.05.5-8.3.3
STA: MI.MICF.SST.96.9-12.IV.4.5
TOP: Section: 1, Scarcity: The Basic Economic Problem
NOT: economics_2007
35. ANS:
As production switches from one product to another, increasingly more resources are needed to increase the
production of the second product, which causes opportunity costs to rise.
PTS: 1
REF: APS_act0976aaf18006569e_172
NAT: NCEE.VCSE.SST.05.5-8.1.3 | NCEE.VCSE.SST.05.5-8.1.5 | NCEE.VCSE.SST.05.5-8.2.1 |
NCEE.VCSE.SST.05.5-8.5.1 | NCEE.VCSE.SST.05.9-12.2.3
TOP: Section: 3, Analyzing Production Possibilities
NOT: economics_2007
36. ANS:
It has no mechanism for providing public goods and services. It cannot provide security to those who cannot
be economically productive. It cannot prevent the unequal distribution of wealth.
PTS: 1
REF: APS_act0976aaf1800656aa_172
NAT: NCEE.VCSE.SST.05.5-8.3.2
STA: MI.MICF.SST.96.9-12.IV.4.3 | MI.MICF.SST.96.9-12.IV.4.5
TOP: Section: 3, Market Economies
NOT: economics_2007
37. ANS:
A producer will make products as long as people will buy them at a price that satisfies him. If he makes more
products than customers wish to buy, he will cut back and make fewer until he finds the balance again. In this
way, an "invisible hand" guides the marketplace.
PTS: 1
REF: APS_act0976aaf1800656a0_172
NAT: NCEE.VCSE.SST.05.9-12.2.4 | NCEE.VCSE.SST.05.9-12.9.1
TOP: Section: 4, The Economist's Toolbox
NOT: economics_2007