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Davis D270|181 Final Revision End Of
Year Exams
- Communism primarily relies on a system of ________.
A) private business ownership
B) competitive pricing and marketing
C) market-generated supply and demand
D) government controlled economic activity - ✔ ✔ D) government controlled economic activity
- In a market economy, the patterns of resource allocation are most directly influenced by ________.
A) government administrators who monitor the equilibrium of supply and demand
B) industry coalitions that strive to improve the efficiency of production and service
C) consumer group alliances that negotiate with firms to improve product quality
D) consumers who "vote" by their personal decision to buy or not buy products - ✔ ✔ D) consumers who "vote" by their personal decision to buy or not buy products
- A system in which individuals, rather than the government, make the majority of economic decisions is commonly referred to as a ________.
A) command economy
B) market economy
C) private economy
D) mixed economy - ✔ ✔ B) market economy
- Market economies are primarily characterized by ________.
A) formal cooperation among government, companies, and workers to achieve stable growth
B) the government sets goals and determines the price and quantity of what is produced
C) different economic sectors coordinate the activities of the federal government
D) each enterprise sets its goals before making reports to
the central government - ✔ ✔ B) the government sets goals and determines the price and quantity of what is produced
- In Country X, all dimensions of economic activity, including pricing and production decisions, are determined by the central government. Which term best describes Country X?
A) market economy
B) mixed economy
C) command economy
D) democratic economy - ✔ ✔ C) command economy
- Which of the following is most typical of a command economy?
A) Consumers have choices of many substitutes for any given product.
B) Quality of products and services tends to be consistent.
C) The prices of goods and services frequently change.
D) Many products are usually in short supply. - ✔ ✔ D) Many products are usually in short supply.
- In a ________ economy, certain sectors of the economy are left to private ownership and free market mechanisms, while other sectors have significant state ownership and government planning.
A) state-directed
B) market
C) command
D) mixed - ✔ ✔ D) mixed
- Some countries opt for a mixed economic system in the belief that although an economic system should
- Which of the following countries is the best example of a mixed economic model?
A) United States
B) France
C) United Kingdom
D) Australia - ✔ ✔ B) France
- Country X is in the process of transforming from a command economy to a market economy. This process most likely involves ________.
A) standardized procedures implemented by the state
B) high economic growth rates for the long-term
C) privatization of many factors of production
D) violent political and legal upheaval - ✔ ✔ C) privatization of many factors of production
- In a country that practices state capitalism, all of the following are most likely to be handled by the state EXCEPT ________.
A) leveraging control of the financial system
B) developing national corporations
C) supporting the local activities of foreign competitors
D) systematically managing trade relations - ✔ ✔ C) supporting the local activities of foreign competitors
- Gross national income (GNI), the broadest measure of economic activity for a country, is defined as the ________.
A) total of all consumption and investment that takes place in a national economy
B) income generated in one country, regardless of who owns the productive assets
D) be added to the GNI of the United States but not the GNI of Mexico - ✔ ✔ D) be added to the GNI of the United States but not the GNI of Mexico
- The measure of the value of production that occurs within a country's borders without regard to whether the production is done by domestic or foreign factors of production is its________.
A) net national product (NNP)
B) gross national product (GNP)
C) gross domestic product (GDP)
D) gross national income (GNI) - ✔ ✔ C) gross domestic product (GDP)
- To determine whether the standard of living within a country is rising or falling, economists would most likely use which of the following measures?
A) per capita GNI
B) GNI growth rate
C) purchasing power parity
D) degree of human development - ✔ ✔ B) GNI growth rate
- Eileen, a manager at an international restaurant chain, wants to know if it will be most cost effective to buy 1,000 pounds of sugar in Country X or in Country Y using U.S. dollars. Which of the following is Eileen most likely trying to determine?
A) purchasing power parity
B) economic growth rate
C) gross domestic income
D) gross national product - ✔ ✔ A) purchasing power parity
- The United Nations' ________ measures life expectancy, educational attainment, and the standard of living in a given country.
A) Human Development Index
B) Net National Product
C) Genuine Progress Indicator
D) Human Development Index - ✔ ✔ C) Genuine Progress Indicator
- ________ is a general, sustained rise in prices measured against a standard level of purchasing power.
A) Deflation
B) Inflation
C) Expansion
D) Reflation - ✔ ✔ B) Inflation
- What is the most likely reason that a universal scheme for assessing the performance and potential of a country's economic environment does NOT exist?
A) difficulties of identifying a definitive set of predictive economic indicators
B) a lack of reliable economic data from most developed economies
C) the isolation of most markets from each other
D) static nature of the marketplace - ✔ ✔ A) difficulties of identifying a definitive set of predictive economic indicators
- A worrisome outcome of chronic inflation is that it tends to ________.
A) erode confidence in a country's currency
B) give central banking officials excessive flexibility to manage monetary policy
C) increase the real income of people, thereby inflating their spending and borrowing levels
D) lower consumer demand for foreign goods, which triggers lower prices and eventually lower employment - ✔ ✔ A) erode confidence in a country's currency
- In most cases, governments ________ in order to regulate inflation.
B) number of people who have stopped looking for work because full-time jobs are unavailable
C) percentage of unemployed workers seeking paid work relative to the total labor force
D) number of workers eligible for government services
and unemployment benefits - ✔ ✔ C) percentage of unemployed workers seeking paid work relative to the total labor force
- The so-called "misery index" is the sum of a country's ________.
A) foreign and national debt
B) inflation and unemployment rates
C) unemployment level and total debt
D) trade deficit and long-term inflation rate - ✔ ✔ B) inflation and unemployment rates
- A government increases its internal debt for all of the following reasons EXCEPT which of the following reasons EXCEPT ________.
A) The tax system is so poorly run that the government cannot collect all the revenues it expects.
B) Government costs such as security and social programs exceed total tax revenues.
C) The government borrows money from international financial institutions.
D) State-owned enterprises run large deficits. - ✔ ✔ C) The government borrows money from international financial institutions.
- Country X has a significant amount of external debt. Which of the following is the most likely cause?
A) The government of Country X borrowed money from local banks.
B) The government of Country X borrowed money from other governments.
C) The government of Country X spent more than it collected in revenues.
D) Income inequality between metropolitan and rural areas threatens a country's social stability. - ✔ ✔ B) GNI is the most effective tool for estimating the relative wealth of a nation's citizens.
- The World Bank reports that approximately ________ percent of the world's population is poor.
A) 50
B) 75
C) 80
D) 95 - ✔ ✔ C) 80
- The Gini coefficient estimates a country's ________.
A) gross national product
B) economic development
C) political and legal risk
D) income inequality - ✔ ✔ D) income inequality
- The ________ view calls for companies to develop low-cost, high-powered, resource-minimizing innovations that can be marketed to the billions of people living on less than a few dollars a day.
A) Base of the Pyramid
B) Hierarchy of Needs
C) Happy Planet Index
D) Gini coefficient - ✔ ✔ A) Base of the Pyramid
- Which of the following is a statement that summarizes all economic transactions between a country and the rest of the world during a given period of time?
A) trade deficit
B) Gini coefficient
C) balance of payments
D) purchasing power parity - ✔ ✔ C) balance of payments
