True/False
Indicate whether the
sentence or statement is true or false.
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1.
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Capitalism is a competitive economic system in which private citizens own the
factors of production.
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2.
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Voluntary exchange is a characteristic of command economies.
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3.
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The entrepreneur organizes land, capital, and labor for production in hopes of
earning a profit.
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4.
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A country’s wealth and its economic freedom are generally inversely
related.
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5.
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In 2006 the United States had the highest per capita GDP in the world.
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6.
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Entrepreneurs invest more in economically free countries than in those
that value economic equity.
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7.
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The U.S. has the largest economy in the world.
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8.
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Command economies are more efficient than market economies.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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9.
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The purpose of government in a command economy is to
a. | ensure the availability of consumer products. | b. | encourage
entrepreneurs. | c. | make major economic decisions. | d. | promote economic
freedom. |
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10.
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An example of a market economy is
a. | the Inuit. | c. | the United States. | b. | the former Soviet Union. | d. | North Korea. |
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11.
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Which of the following is NOT considered an economic and social goal?
a. | economic efficiency | c. | price stability | b. | economic growth | d. | entrepreneurship |
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12.
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The United States can best be described as having a
a. | modified private enterprise system. | c. | command
economy. | b. | traditional system. | d. | pure free enterprise system. |
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13.
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The minimum wage is an example of a federal law that supports
a. | economic growth. | c. | full employment. | b. | economic equity. | d. | economic
efficiency. |
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14.
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The concept of voluntary exchange means
a. | that no money was exchanged. | b. | people freely and willingly engage in market
transactions. | c. | only workers will benefit from the exchange. | d. | neither buyer nor
seller has made a profit. |
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15.
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Wealthy countries are characterized by:
a. | guaranteeing economic freedom | c. | high dependency on natural
resources such as oil | b. | guaranteeing economic
security | d. | geopolitical
conflict |
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16.
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Which is not characteristic of wealthy counties?
a. | high mobility of the factors of production | c. | individual economic
freedom | b. | relatively low tax rates | d. | numerous labor laws |
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17.
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Which country is the economically freest in the world?
a. | The United States | c. | China | b. | North Korea | d. | Hong Kong |
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18.
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Entrepreneurship is strongest where a country protects:
a. | worker rights | c. | property rights | b. | personal rights | d. | retirement
pensions |
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19.
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All of the following determine a country’s wealth EXCEPT:
a. | government guarantees of security | c. | protection of property
rights | b. | economic freedom | d. | quantity and quality of the factor of production |
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Matching
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Match each statement with the correct item below. a. | act of buyers and sellers freely and willingly engaging in market
transactions | b. | driving force that encourages people and organizations to improve their material
well-being | c. | no answer | d. | no answer | e. | economic system in
which people carry on their economic affairs freely but are subject to some government
intervention | f. | privilege that entitles people to own their possessions | g. | market economy in
which private citizens own the factors of production | h. | no answer | i. | economy in which a
central authority makes most of the WHAT, HOW, and FOR WHOM decisions | j. | no
answer |
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20.
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profit motive
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21.
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capitalism
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22.
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command economy
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23.
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mixed economy
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24.
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voluntary exchange
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25.
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private property rights
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