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Introduction to Economics quiz #10

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  • What is an argument made by classical economists about markets?
    Markets are self-regulating.
  • Why are U.S. dollars considered money?
    They are accepted as a medium of exchange.
  • What is the primary cause of inflation?
    Excess demand over supply.
  • What country or region best exemplifies a traditional economy?
    Rural communities in Africa.
  • What is one advantage a command economy offers workers that a market economy does not?
    Job security.
  • What is an example of a production decision?
    Choosing how much of a product to make.
  • What would happen if banking didn’t exist?
    Economic transactions would be less efficient.
  • Why did many people come to oppose prohibition?
    It led to illegal markets and crime.
  • What is an example of the limited role of government in the economy?
    Setting basic safety standards.
  • What happens to the amount of money the government collects in taxes if unemployment is high?
    Tax revenue decreases.
  • What force would dictate economic decisions in a Marxist economy?
    Central planning by the government.
  • What is one way in which the economy of Singapore varies from the economy of Iran?
    Singapore has a more open market economy.
  • Which example defines an economic activity?
    Buying groceries.
  • Which area of economics studies issues such as ways to reduce teenage smoking?
    Microeconomics.
  • What two important functions does a market system perform?
    Resource allocation and coordination.
  • What is a reason to study economics?
    To make informed choices about resource use.
  • In which type of economic system does government play the smallest role?
    Market economy.
  • What is the goal of the firm?
    Profit maximization.
  • Which of these helps explain why mixed economies develop?
    Need for both efficiency and social welfare.
  • What is an economic system?
    A system for allocating resources and distributing goods.
  • What is an economy?
    An economy is the system of production and exchange.
  • What is a mixed economy?
    A mixed economy combines market and government elements.
  • What was collectivization?
    Collectivization was the consolidation of farms under government control.
  • What is frictional unemployment?
    Unemployment due to people changing jobs.
  • What term describes the ability to compete and participate in the global market?
    Global competitiveness.
  • What are the benefits of specialization in a free market?
    Increased efficiency and output.
  • What human activity uses the most water worldwide? a. industry b. wastewater c. wells d. agriculture
    d. agriculture
  • Which of these statements describes a disadvantage of a traditional economy?
    Limited innovation and growth.
  • What is an example of a microeconomic statement?
    A price increase reduces demand for a product.
  • What does vertical integration mean in a business context?
    A firm controls multiple stages of production.
  • What were the original intentions of government’s involvement with business?
    To protect consumers and ensure fair competition.
  • Why has much clothing manufacturing moved from the United States to other countries?
    Lower labor costs abroad.
  • What economic behaviors are more likely to occur during a good economy?
    Increased spending and investment.
  • What percentage of the American job market is made up of small businesses?
    About 50%.
  • What are four reasons why individuals become entrepreneurs?
    Desire for independence, profit, innovation, and opportunity.
  • How can simple models help us understand a complex economy?
    They clarify relationships and predict outcomes.