Question 1

What is the central tool of coordination in a market economy?

Accepted Answer

The central tool of ...

Question 2

Households do all of the following except:

Accepted Answer

A)  receive income that is redistributed by the government.
B)  demand labor services from businesses in the factor market.
C)  demand goods and services from businesses in the goods market.
D)  supply labor services to the government in the factor market.

Question 3

In a market economy, society relies on the self-interest of individuals to determine what, how, and for whom to produce.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is the best example of a macroeconomic externality?

Accepted Answer

A)  One person saving less without considering the effect on their retirement needs
B)  Many people saving more without considering the effect on unemployment
C)  One person starting a business without knowing whether the goods will sell
D)  One person spending more in order to help stimulate the economy

Question 5

The difference between capitalism and mercantilism is that under capitalism:

Accepted Answer

A)  craft guilds rather than merchants own capital.
B)  the invisible hand is more important than the government.
C)  industrialists' views are represented by craft guild organizations.
D)  the state plays a more active role in coordinating economic activity.

Question 6

Enron executives were charged with numerous counts of corporate fraud and corruption. Among the charges was insider trading, which involves the trading of a corporation's stock by insiders who may have access to information that the public does not. Which role is the government playing when it makes insider trading illegal?

Accepted Answer

A)  Providing for public goods
B)  Promoting effective and workable competition
C)  Correcting for externalities
D)  Adjusting for undesirable market results

Question 7

When a government intervenes in an economy in a way that influences the relationship between households and businesses, it is:

Accepted Answer

A)  serving as an economic actor.
B)  serving as an economic referee.
C)  serving the public good.
D)  reducing social welfare by interfering with the invisible hand.

Question 8

Businesses are on the:

Accepted Answer

A)  supply side of factor markets and the demand side of goods markets.
B)  demand side of factor markets and the supply side of goods markets.
C)  supply side of both factor markets and goods markets.
D)  demand side of both factor markets and goods markets.

Question 9

In the mercantilist system:

Accepted Answer

A)  markets, rather than political forces, make the central economic decisions.
B)  serfs make the central economic decisions.
C)  governments let the market decide what to produce.
D)  governments distributed the rights to produce.

Question 10

Private property rights:

Accepted Answer

A)  are essential elements of a market economy.
B)  do not need to be enforced in market economies.
C)  must be established before a socialist economy can function properly.
D)  ensure an equitable distribution of income in market economies.

Question 11

In principle, households ultimately control:

Accepted Answer

A)  businesses.
B)  the government.
C)  both businesses and the government.
D)  neither businesses nor the government.

Question 12

A business is most likely to be characterized as a corporation if:

Accepted Answer

A)  it has two or more owners, with each owner liable for every other owner's actions.
B)  it has only one owner.
C)  it is legally treated as a person and owned by stockholders who are liable for the actions of the corporate "person" regardless of their investment.
D)  each owner is liable only to the extent of his or her own investment.

Question 13

List four ways in which the decisions of households are important to the economy.

Accepted Answer

Households decide what is produced throu...

Question 14

Capitalism and socialism have not existed forever. Capitalism came into existence in the:

Accepted Answer

A)  mid-1800s and socialism came into existence in the early 1900s.
B)  early 1900s and socialism came into existence in the mid-1800s.
C)  mid-1700s and socialism came into existence in the early 1900s.
D)  early 1900s and socialism came into existence in the mid-1700s.

Question 15

A market economy:

Accepted Answer

A)  requires government to set prices.
B)  allocates according to need.
C)  distributes property rights.
D)  relies on the invisible hand to coordinate supply and demand.

Question 16

In the United States, government performs all of the following functions except:

Accepted Answer

A)  redistributing income.
B)  purchasing goods and services.
C)  regulating the economy.
D)  determining production levels.

Question 17

The largest source of household income in the United States is:

Accepted Answer

A)  stock dividends.
B)  wages and salaries.
C)  interest earnings.
D)  rental income.

Question 18

Private property rights are essential to market economies.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is one of the macroeconomic goals established by the 1946 Employment Act?

Accepted Answer

A)  Preventing large fluctuations in exchange rates
B)  Maintaining a constant level of consumer expenditure
C)  Providing an economic environment conducive to growth
D)  Ensuring that employers pay workers a minimum wage sufficient to escape poverty

Question 20

A defining difference in what makes a firm a sole proprietorship, partnerships, or a corporation is the:

Accepted Answer

A)  size of each type of business.
B)  number of each type of business.
C)  nature of ownership and accountability for each type of business.
D)  profitability of each type of business.

Exam 3: Economic Institutions

Which of the following is one of the macroeconomic goals established by the 1946 Employment Act?

Correct Answer
verified

A defining difference in what makes a firm a sole proprietorship, partnerships, or a corporation is the:

Correct Answer
verified

Which of the following is the best example of a macroeconomic externality?

Correct Answer
verified

List four ways in which the decisions of households are important to the economy.

Correct Answer
verified
Households decide what is produced throu...
View Answer

Correct Answer
verified

In principle, households ultimately control:

Correct Answer
verified

In the United States, government performs all of the following functions except:

Correct Answer
verified

Capitalism and socialism have not existed forever. Capitalism came into existence in the:

Correct Answer
verified

Private property rights:

Correct Answer
verified

What is the central tool of coordination in a market economy?

Correct Answer
verified
The central tool of ...
View Answer

Businesses are on the:

Correct Answer
verified

Households do all of the following except:

Correct Answer
verified

Private property rights are essential to market economies.

Correct Answer
verified

A business is most likely to be characterized as a corporation if:

Correct Answer
verified

When a government intervenes in an economy in a way that influences the relationship between households and businesses, it is:

Correct Answer
verified

The largest source of household income in the United States is:

Correct Answer
verified

In the mercantilist system:

Correct Answer
verified

In a market economy, society relies on the self-interest of individuals to determine what, how, and for whom to produce.

Correct Answer
verified

A market economy:

Correct Answer
verified

The difference between capitalism and mercantilism is that under capitalism:

Correct Answer
verified

Exam 3: Economic Institutions

Which of the following is one of the macroeconomic goals established by the 1946 Employment Act?

Correct AnswerverifiedShow Answer

A defining difference in what makes a firm a sole proprietorship, partnerships, or a corporation is the:

Correct AnswerverifiedShow Answer

Which of the following is the best example of a macroeconomic externality?

Correct AnswerverifiedShow Answer

List four ways in which the decisions of households are important to the economy.

Correct AnswerverifiedHouseholds decide what is produced throu...View AnswerShow Answer

Correct AnswerverifiedShow Answer

In principle, households ultimately control:

Correct AnswerverifiedShow Answer

In the United States, government performs all of the following functions except:

Correct AnswerverifiedShow Answer

Capitalism and socialism have not existed forever. Capitalism came into existence in the:

Correct AnswerverifiedShow Answer

Private property rights:

Correct AnswerverifiedShow Answer

What is the central tool of coordination in a market economy?

Correct AnswerverifiedThe central tool of ...View AnswerShow Answer

Businesses are on the:

Correct AnswerverifiedShow Answer

Households do all of the following except:

Correct AnswerverifiedShow Answer

Private property rights are essential to market economies.

Correct AnswerverifiedShow Answer

A business is most likely to be characterized as a corporation if:

Correct AnswerverifiedShow Answer

When a government intervenes in an economy in a way that influences the relationship between households and businesses, it is:

Correct AnswerverifiedShow Answer

The largest source of household income in the United States is:

Correct AnswerverifiedShow Answer

In the mercantilist system:

Correct AnswerverifiedShow Answer

In a market economy, society relies on the self-interest of individuals to determine what, how, and for whom to produce.

Correct AnswerverifiedShow Answer

A market economy:

Correct AnswerverifiedShow Answer

The difference between capitalism and mercantilism is that under capitalism:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Households decide what is produced throu...
View Answer

Correct Answer
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Correct Answer
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The central tool of ...
View Answer

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Correct Answer
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