Download UNIT TEST and STUDY GUIDE INTRODUCTION TO ECONOMICS

1.Define economics
2.Define literacy rate.
3.Define tradition-based economy.
4.The government sets prices and decides what will be produced in a(n) _________________
5.People, rather than the government, control the factors of production in__________________
6.What would be a problem for a community with a traditional economy?
7.What would be a problem in a command economy?
8.Who takes on the financial risk in starting a new business in a market economy?
9.Why are most modern economies referred to as mixed economies?
10. Why do most economies in the world today operate somewhere in between a market economy and a command
economy?
11.How does voluntary trade help the economy?
12.Why is specialization so valuable in international trade today?
13.What is a tariff?
14.What is a quota?
15.What is an embargo?
16.How could a high tariff on imported grain help the people in the country charging the tariff?
17.What events could cause a country to be placed under a trade embargo?
18.How does a country invest in human capital?
19.What is the gross domestic product (GDP)?
20.If a country does not invest in its human capital, how can it affect the country’s gross domestic product (GDP)?
21.How does a country invest in capital goods?
22.In a unitary government system, who holds most of the power?
23.In an autocracy, who makes most of the important government decisions?
24.Why do the individual voters have more power in a democracy than they do in an autocracy or an oligarchy?
25.What is the main difference between a president and a prime minister?
26. Which branch of government is responsible for making and carrying out the laws in a parliamentary system of
government?
27.What are the two predominant forms of a democratic government?
28.What is the leader of a parliamentary system of often called?
29.Who chooses the country’s leader in a parliamentary form of government?
30.Which branch of government passes laws in a presidential system of government?
31.What is one main difference between a president and a rime minister?
32.What is the role of the president regarding the laws passed by the legislature?
33.What power does the head of state in a parliamentary government system have?
34.In a presidential system of government how is a president chosen?
35.What is a weakness of a confederation government system?
36.Describe the balance of power in a federal system of government?
37.In a market economy, how are economic decisions made?
38.The entrepreneur benefits the economy in what ways?
39.What do both a democracy and a republic have in common?
40.In what ways do most leaders gain power in an autocratic system of government?
41.How do governments distribute power under a unitary system?
42.What are the 3 basic economic questions that all economic systems must answer?
43. Where would MOST of the world economies be placed on this graphic?
44. South Africa generates more than 50% of Africa's electricity. Based on the idea of specialization, how can
other countries in Africa benefit from South Africa's electricity production?
45.How are embargos different than tariffs and quotas ?
46. In which form of government is the role of the citizen the highest?
47. In which form of government will you find citizen participation limited to a select group of people?
48. What are the characteristics of an industrialized country?
49. What are the characteristics of a developing country?
Multiple Choice
Identify the letter of the choice that BEST completes the statement or answers the question. Mark your answers on your notebook
paper.
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1. The study of production, distribution, and uses of goods is called
a. aesthetics.
b. anthropology.
c. politics.
d. economics.
2. The percentage of people who can read and write is
a. about 80 percent.
c. the literacy rate.
b. difficult to determine.
d. the GDP.
3. When economic activities are based on laws, rituals, religious beliefs, or old habits, we call it
a. a tradition-based economy.
c. superstition.
b. socialism.
d. unfair competition.
4. The government sets prices and decides what will be produced in a(n)
a. oligarchy.
b. democracy.
c. command economy. d. free market society.
5. People, rather than the government, control the factors of production in
a. socialist states.
c. a free enterprise system.
b. a mutual fund.
d. a tyranny.
6. Which would be a problem for a community with a traditional economy?
a. People in the village find ways to make their products more efficiently.
b. The price of advanced electronics, like computers, begins to rise rapidly.
c. People in the country begin to want and need products that cannot be made or traded locally.
d. Older villagers take on younger workers to learn to make the products they have been producing.
7. Which would be a problem in a command economy?
a. People would get rich.
b. Local crafts would be produced before manufactured goods.
c. A worker trying to start a new business on his or her own would need permission.
d. Individual business people would risk their own money to produce good.
8. Who takes on the financial risk in starting a new business in a market economy?
a. consumers
b. individual business people
c. government planners
d. combination of planners and investors.
9. Why are most modern economies referred to as mixed economies?
a. Poverty is always highest in countries with market economies.
b. Government planners do not know how to handle economic problems.
c. Products made by traditional economies have no markets in the modern world.
d. Most countries have aspects of all three economics types at work in their economies.
10. Why do most economies in the world today operate somewhere in between a market economy and a command
economy?
a. Government control always makes a market economy profitable.
b. Most consumers prefer government control to a free market system.
c. Government control of some aspects of the economy has never been successful in the modern
world.
d. Most economies have found they need a mix of free market and some government control to be
successful and to protect consumers.
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11. How does voluntary trade help the economy?
a. Voluntary trade means prices will always be low.
b. It encourages specialization and usually means more profit.
c. This sort of trade involves many government regulations.
d. Voluntary trade only works when tariffs are in place.
12. Why is specialization so valuable in international trade today?
a. Most countries can only make one product very well.
b. Specialization limits the amount of agriculture a country allows.
c. Specialization allows people to do a more efficient job at producing what they make best and trade
for the things they want.
d. Specialization always keeps the prices low on goods that are imported into a country.
13. What is a tariff?
a. A tax placed on goods coming into one country from another.
b. A tax paid by the purchaser when goods are sold.
c. a tax placed on goods made by local craftsmen or manufacturers.
d. a fee paid when goods are shipped from one state to another in the United States.
14. What is a quota?
a. a limit on the amount of foreign goods allowed into a country.
b. a tax placed on imported goods when they enter the country.
c. a decision to prevent certain goods from being imported at all.
d. a tax placed on goods when they are purchased in the market place.
15. What is an embargo?
a. a tax placed on goods coming into the country from overseas.
b. a limit on the amount of certain goods allowed into the country.
c. a halt to trade with a particular country for economic or political reasons.
d. a tax paid by the producer before he can sell his goods in another country.
16. How could a high tariff on imported grain help the people in the country charging the tariff?
a. The grain process would be lower if tariffs were in place.
b. Local farmers would be able to sell their grain since it would be cheaper than imported grain.
c. Local grain would always be of a higher quality than grain from other countries.
d. Local grain would be more plentiful because it was grown closer to the markets.
17. All of the following could lead to a country being placed under a trade embargo EXCEPT ...
a. human rights issues
b. trading unhealthy products
c. a natural disaster
d. government corruption
18. Which is part of a country’s human capital?
a. skills and knowledge workers have
b. taxes collected from a country’s workers
c. money paid to workers for producing goods
d. the amount of goods sold in foreign trade in year.
19. What is the gross domestic product (GDP)?
a. total value of goods and services produced by a country in a year.
b. the amount collected in taxes from the people of a country in a year
c. the value of all the products a country buys from foreign nations in a year
d. the value of all goods and services produced by small shops and individually owned businesses in a
country.
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20. If a country does not invest in its human capital, how can it affect the country’s gross domestic product (GDP)?
a. Investment in human capital has little effect on a country’s GDP
b. GDP may go down because poorly trained workers will not be able to do their jobs as well.
c. GDP is only affected if workers pay for the investment out of their own pockets.
d. Most workers want to keep their jobs as they are and do not care about GDP.
21. All of the following are examples of investment in human capital EXCEPT ...
a. money spent on healthcare
b. the factories and machines used to make goods
c. money available for scholarships to graduate schools.
d. money spent to train workers to use new technology
22. In a unitary government system who holds most of the power?
a. the individual voters
b. the local governments
c. the central governments
d. both the central and local governments.
23. In an autocracy, who makes most of the important government decisions?
a. the courts
b. the people
c. the individual ruler
d. an elected legislature
24. Why do the individual voters have more power in a democracy than they do in an autocracy or an oligarchy?
a. Kings are always cruel rulers
b. The people play a role in deciding who rules.
c. All of the power stays in the hands of the local governments.
d. Voters in democratic countries always choose qualified leaders.
25. What is the main difference between a president and a prime minister?
a. A prime minister has more power than a president..
b. A prime minister has to be elected while a president does not.
c. A prime minister does not belong to a particular political party, while a president always does.
d. A president is separate from the legislature, while a prime minister answers directly to the
legislature.
26. Which branch of government is responsible for making and carrying our the laws in a parliamentary system of
government?
a. courts
b. monarch
c. president
d. legislature
27. Which BEST describes the two predominant forms of a democratic government?
a. dictatorship and republican
b. presidential and dictatorship
c. presidential and parliamentary
d. presidential and confederation
28. What is the leader of a parliamentary system of government often called?
a. king
b. prime minister
c. president
d. dictator
29. Who chooses the country’s leader in a parliamentary form of government?
a. the monarch
b. popular vote of the people
c. decision by the national courts
d. the party with the most representatives in the legislature.
30. Which branch of government passes laws in a presidential system of government?
a. judicial
b. executive
c. legislative
d. parliament
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31. What is one main difference between a president and a prime minister?
a. A prime minister has more power than a president
b. A president has to be elected while a prime minister does not.
c. A prime minister does not belong to a particular political party, while a president always does.
d. A president is separate from the legislature, while the prime minister answers directly to the
legislature.
32. What is the role of the president regarding the laws passed by the legislature?
a. The president is suppose to enforce the laws.
b. The president can change the laws he does not like.
c. The president sends the laws t the states for approval.
d. Laws passed by the legislature do not have to go to the president for approval.
33. Which BEST describes a head of state in a parliamentary government system?
a. person who has no role in government
b. ceremonial figure without much actual power
c. the most powerful person in the national government
d. one who can veto or cancel laws passed by the legislature.
34. In a presidential system of government how is a president chosen?
a. separately from the legislature
b. by a decision of the national courts
c. by a majority vote of the legislature
d. by the political party with the most representatives in the legislature.
35. What is a weakness of a confederation government system?
a. A confederation is very expensive
b. Confederations are too large to rule effectively.
c. The central government has only as much power as the local governments are willing to give.
d. A confederation does not share power with its members.
36. In a federal system of government ...
a. the central government has the most power.
b. the local governments have all of the power.
c. both the central and local governments have shared and separate powers.
d. the central government works separately from the local governments.
37. In a market economy, how are economic decisions made?
a. individuals
b. custom and habit
c. governmental planners
d. consumers and the market
38. The entrepreneur benefits the economy in all the ways below EXCEPT ...
a. creating jobs.
b. producing a tax base.
c. investing in health care.
d. introducing new products to the market.
39. What do both a democracy and a republic have in common?
a. Power is exercised by the people.
b. Power resides with the people.
c. Power exercised by representatives elected by the people.
d. People elect representatives to make laws to govern nation.
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40. In an autocratic system of government, the leader gets his power through
a. military take-over.
b. open and public elections.
c. the elections of a small group.
d. appointment by the legislature.
41. Which describes a government that distributes power under a unitary system?
a. There is a central authority that makes all major decisions.
b. The citizens of the country elect leaders at multiple levels that make decisions.
c. A group of separate countries or regions agree to join together for specific purposes.
d. Two or more countries form an alliance to make decisions.
42. What are the 3 basic economic questions that all economic systems must answer?
a. What to produce, how to produce it, and for whom to produce it
b. When to produce, why to produce, and how long to produce
c. to what extent to produce, how much to produce, why to produce
d. what to produce, why to produce, and how much to produce
43. Use the following graphic to answer question #43:
Which location identifies where MOST of the world economies would be placed on this graphic?
a. At point A
b. At point B
c. Between points A and B
d. Between points C and D
44. South Africa generates more than 50% of Africa's electricity. Based on the idea of specialization, how can
other countries in Africa benefit from South Africa's electricity production?
a. Learn from South Africa and produce their own electricity.
b. Produce electricity so South Africa can begin to produce other things
c. Try to produce everything on their own so they won't rely on South Africa at all.
d. Produce goods or services that South Africa needs and trade for electricity.
45. Embargos are different than tariffs and quotas mainly because they
a. completely eliminate trade between countries.
b. are used before any other trade barrier is tried.
c. increase taxes on imports rather than exports.
d. are only used by Asian countries.
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46. Use the following passage to answer question #46:
“As China stands at the brink of a new millennium,
entrepreneurship has been recognized as an integral element
of economic advancement. Foreign businessmen have created
a new pool of capital resources for Chinese talent that
previously had few monetary options beyond their family and
friends.”
- Debbie Lao, Author
According to this passage, what is the role of entrepreneurship in China in the future?
a. slow the production of capital resources
b. use the new capital resources to develop new products and ideas
c. reduce the need for money in the Chinese economy
d. increase the reliance on family and friends
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47. In which form of government is the role of the citizen the highest?
a. autocratic
b. democratic
c. oligarchic
d. republic
48. In which form of government will you find citizen participation amongst a select group of people?
a. democratic
b. republic
c. autocratic
d. oligarchic
49. Which type of government would you MOST LIKELY find associated with a command economy?
a. Oligarchic
b. Democratic
c. Republic
d. Autocratic
50. All of the following are characteristics of an industrialized country EXCEPT ....
a. emphasis on manufacturing
b. investment in human capital
c. development of secondary industries.
d. low GDP
Economics and Government
Answer Section
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