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Economics EOC Quiz Answer Key
Fundamental Economic Concepts - (SSEF4) Economic Systems, (SSEF5) Roles Of Government, (SSEF6) Productivity
Student Name:
_______________________
Teacher Name: Heather Creamer
_________
Score: _________
Date:
1) In a command economy, how are the prices of goods and services determined?
A)
business owners
B)
the central government
C)
market forces of supply and demand
D)
independent agencies and independent regulators
Explanation:
In a command economy the central government determines the prices of goods and services. Business owners and supply and
demand play roles in market economies.
2) In a command economy, how is it determined what goods and services will be produced?
A)
Businesses decide what to produce on the basis of market conditions.
B)
Consumers decide through their behavior in the marketplace.
C)
Central government planning decides what will be produced.
D)
Supply and demand control production and price.
Explanation:
In a command economy central government planning decides what will be produced as well as how it will be produced.
3) In a market economy, prices are established by
A)
consumers and labor unions.
B)
decree of government agencies.
C)
the interaction of supply and demand.
D)
businesses which buy and sell the products.
Explanation:
This interaction of supply and demand and the effect it has on price is a basic characteristic of a market economy. Government does
not set price requirements in a market economy.
4) Why is the consumer considered "king" in a capitalist economy?
A)
consumers own the productive resources
B)
consumers contribute to the factor market
C)
consumers vote for elected government officals
D)
consumers determine what products will be produced
Explanation:
In a capitalist economy, the consumer is king since consumers determine what products will be produced. In other words, the
choices exhibited by consumers through their willingness or unwillingness to purchase a product results, eventually, in certain
goods being produced more often or some goods whose production is ended. This concept is referred to as consumer sovereignty.
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5) Communism and socialism are usually found in what type of economic system?
A)
command
B)
traditional
C)
pure market
D)
mixed market
Explanation:
Due to the degree of government involvement in answering the basic economic questions, communism and socialism are forms of
command economies. However, there is a small degree of socialism in the United States economy, too, such as minimum wage laws,
safety standards on cars and baby clothing, and many others.
6) In this type of economic system, the production of goods and services is controlled solely by the concept of supply and demand,
businesses are operated for profit, and the government is not involved.
A)
command
B)
communism
C)
market
D)
mixed
Explanation:
In a true market economy, the government has no control over the nation's economy. Decisions about what will be produced, who
will produce it, and how it will be produced are all made by inidividual citizens and businesses. Supply and demand and the
incentive of profit drive this type of economy. It should be noted, of course, that in the real world all economies are, to some level,
"mixed" economies and there is some government involvement.
7) In capitalist economies, prices are
A)
usually unfair.
B)
set by the central government.
C)
used to ensure social equality.
D)
determined by supply and demand.
Explanation:
One of the defining characteristics of a capitalist system is an open market where prices are determined by supply and demand.
8) Which of these is a correct description of one of the ways in which a command economy differs from a market economy?
A)
Market economies discourage free enterprise.
B)
In a market economy, the government sets prices.
C)
Command economies tend to have a higher per capita GDP.
D)
In a command economy, individuals have less economic freedom.
Explanation:
In a command economy, individuals have less economic freedom since the government makes the major economic decisions.
Typically, command economies are less efficient than market economies resulting in a lower per capita GDP.
9) In this type of economic system, the government controls all aspects of the economy and makes all decisions about what goods
will be produced, who will produce them, and how they will be produced.
A)
command
B)
market
C)
mixed
D)
traditional
Explanation:
In a command economy, the govenment controls every aspect of the nation's economy. Decisions about what will be produced, who
will produce it, and how it will be produced are all made by the government. There are very few command economies still in
existence today, though Saudi Arabia is one.
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10)
· Decentralized decision making.
· Adjusts to changes in the market place.
· Producers and consumers have control of the economy.
All of these are characteristics of a ___ economy.
A)
command
B)
market
C)
socialist
D)
traditional
Explanation:
A market economy emphasizes freedom of producers and consumers in the marketplace rather than equal distribution of wealth.
11) Rationing is a system under which an agency such as the government decides everyone's "fair" share. Rationing has often been
used during wartime. If people receive a set ration regardless of the amount of work completed, how would this affect peoples'
incentive to work?
A)
The incentive to work will not change.
B)
People might feel more inclined to work.
C)
People might feel less inclined to work.
D)
There is no effect on the incentive to work.
Explanation:
Under the ration system, people might feel less inclined to work because additional work does not yield additional rations.
12)
Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can
be accomplished in part by direct recruiting by the Government itself, treating the task as we would treat the emergency of a
war, but at the same time, through this employment, accomplishing greatly needed projects to stimulate and reorganize the
use of our natural resources.
-Franklin D. Roosevelt, First Inaugural Address, 1933
Four years after the stock market crash, FDR became the thirty-second president. This portion of his speech MOST LIKELY illustrates
his belief that
A)
governments should go to war to increase the number of jobs in the military.
B)
governments should get actively involved in addressing unemployment.
C)
the natural resources of the U.S. were running out.
D)
the U.S. was on the brink of WWII.
Explanation:
This portion of FDR's speech MOST LIKELY illustrates his belief that governments should get actively involved in addressing
unemployment. FDR's view of the government's role in providing public goods and services is considered more "liberal" in that he
created the New Deal programs to address the problems of the Great Depression.
13) A government that operates a market economy MIGHT become involved in the economy
A)
to increase the profits of a specific company.
B)
to eliminate income inequality among its citizens.
C)
to make sure all products are produced the same way.
D)
to provide public goods and services to its citizens.
Explanation:
A government that operates a market economy MIGHT become involved in the economy to provide public goods and services to its
citizens. In a market economy, the role of the government is very limited; individuals answer the basic economic questions.
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14) The United States government is LEAST LIKELY involved in the nation's economy as a
A)
consumer of goods and services.
B)
planner deciding what to produce.
C)
protector against false advertising and environmental hazards.
D)
regulator charged with preserving competition in the marketplace.
Explanation:
The United States government does not act as a central planner deciding what to produce. In a market economy such as the United
States, decisions concerning what to produce are made by private producers in response to market conditions. Central planning is a
characteristic of socialist and communistic economies.
15) How do private property rights contribute to a capitalist system?
A)
The government owns most of the factors of production.
B)
High quality products and reasonable prices are guaranteed.
C)
Individuals are free to own the resources used to produce goods.
D)
Businesses can determine what to produce based on consumer demand.
Explanation:
Private property rights is a characteristic of capitalism. So as long as all laws are being followed, individuals are free to own the
resources used to produce goods. In a capitalist economy, individuals own the factors of production and can use resources to create
wealth.
16) Which of these is MOST LIKELY a result of a high unemployment rate in the United States?
A)
increased revenues
B)
increased demand for consumer goods
C)
increased production of capital goods
D)
greater government expenditures for transfer payments
Explanation:
When more people are unemployed, the government must provide more in the way of social services (transfer payments). Therefore
high unemployment usually results in greater government expenditures for transfer payments.
17) Which of these is an example of how the U.S. Constitution protects the free enterprise system?
A)
Congress is given the power to borrow money.
B)
Congress is given the authority to collect taxes.
C)
Congress is given the authority to raise and support armies.
D)
Congress is given the authority to grant patents and copyrights.
Explanation:
One way the U.S. Constitution protects free enterprise is by giving Congress the authority to grant patents and copyrights. Part of
Article I, Section 8 states that Congress will have the power to "promote the Progress of Science and useful Arts, by securing for
limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries...." Innovation is encouraged
by allowing creators of original works and inventions to be the sole producers or publishers of their works for a specified time,
allowing the authors and inventors to potentially obtain economic benefits for their ideas.
18) Which of these is the BEST example of how the free enterprise system of the United States promotes individual initiative?
A)
Men must register for selective service.
B)
A citizen may be called to serve on a jury.
C)
The legislative branch levies an income tax.
D)
Authors can have original works copyrighted.
Explanation:
One way that the free enterprise system of the United States promotes individual initiative is that authors can have their original
works copyrighted. A copyright is the exclusive right to publish, distribute, and adapt a particular work for a certain period of time.
This allows the creator of the work to potentially profit from his or her creation.
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19) In the mid-2000s problems with corporations such as Enron, Worldcom, and Tyco demonstrated renewed and growing public
concern about
A)
the volatile energy market.
B)
unchecked business practices.
C)
the depletion of America's natural resources.
D)
the effect of foreign competition in U.S. markets.
Explanation:
Each of the companies above had huge scandals that resulted from poor, deceptive, inaccurate, and unchecked business practices.
Leaders in these companies have been accused and many have been convicted for lying about their business’ profits and fiscal
health, resulting in either the entire collapse of the company and/or the loss of jobs for thousands of employees.
20)
To promote competition...in order to secure lower prices and higher quality services for American
telecommunications consumers and encourage the rapid deployment of new telecommunications
technologies.
-Telecommunications Act of 1996
The Telecommunications Act of 1996 is MOST LIKELY an example of
A)
regulation.
B)
divestiture.
C)
deregulation.
D)
market failure.
Explanation:
The Telecommunications Act of 1996 is MOST LIKELY an example of deregulation. "To promote competition"is the key to the
answer.
21) Investment in education, training, and skill development has been linked to
A)
declining job satisfaction.
B)
growing financial instability.
C)
increasing earnings for workers.
D)
decreasing political participation.
Explanation:
Investment in education, training, and skill development has been linked to increasing earnings for workers. Many national studies
along with the US Census point to a potential rise in lifetime earnings related to educational attainment.
22)
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According to the information from the U.S. Department of Labor, which factor has the GREATEST impact on raising labor
productivity?
A)
research & development
B)
education & skill
C)
profit sharing
D)
recruitment
Explanation:
According to the graph, education & skill are most important in raising labor productivity. See: your parents and teachers are right!
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23) Bob would like to increase his earnings. The option MOST LIKELY to increase his earnings potential in the long-term is to
A)
spend money to renew current training.
B)
take a similar position with a different company.
C)
spend money for additional training and education.
D)
laterally transfer to a different job within his company.
Explanation:
Bob will MOST LIKELY increase his earnings potential in the long-term if he spends money for additional training and education.
This might make his short-term finances difficult, but over time he will likely make much, much more money than if he had not gone
to school.
24) Increased education and training within a nation will most likely result in
A)
a decrease in entrepreneurship.
B)
a decrease in Gross Domestic Product (GDP).
C)
an increase in Gross Domestic Product (GDP).
D)
an increase in the presence of natural resources.
Explanation:
Increased education and training within a nation will most likely result in an increase in Gross Domestic Product (GDP). An increase
in a nation's literacy rate and a well-trained workforce will result in an increased ability to produce income and an increased GDP.
25)
What generalization about educational attainment and annual earnings can be made according to the graph?
A)
Investment in education can lead to higher annual earnings.
B)
Annual earnings remain constant for all educational degrees.
C)
A worker with some college earns more annually than a worker with an Associate's degree.
D)
Although a worker with a Professional degree earns more initially, the annual earnings decrease over time.
Explanation:
If you note that the lines represent education and the vertical axis represents income, then the answer is clear: Investment in
education can lead to higher annual earnings.
26) If a government wanted to improve the productivity of its human resources it could
A)
lower interest rates to make borrowing money easier.
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B)
C)
D)
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invest more money in developing solar and wind energy.
commit to drilling for oil in protected wildlife areas.
expand funding and opportunities for vocational training.
Explanation:
The productivity of humans is dependent on many things, but expertise and education are two very important things. Therefore, if a
government wanted to improve the productivity of its human resources it could expand funding and opportunities for vocational
training.
27) A measure of the amount of output produced by a given amount of inputs in a specific period of time is the definition of
A)
allocation.
B)
productivity.
C)
opportunity costs.
D)
equilibrium price.
Explanation:
Productivity is defined as a measure of the amount of output produced by a given amount of inputs in a specific period of time.
Labor- and the cost associated with it- plays an important role in determining this.
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28) Which of these is the MOST significant impact of the wide availability of computers and high-speed internet connections since
the start of the 21st century?
A)
an increase in television sales
B)
a decrease in college graduates
C)
more people teleworking from home
D)
renewed interest in the space program
Explanation:
As more people have gained access to computers and good internet connections, the business world has seen more people
teleworking from home. This causes less fuel consumption, less traffic, less smog, and, often, happier workers. Plus, you can wear
your pajamas and still get paid!
29) An investment in improving the skill level of labor is considered an investment in
A)
human capital.
B)
entrepreneurship.
C)
improved technology.
D)
capital improvements.
Explanation:
Any investment in labor training or education is considered an investment in human capital which is an improvement in the human
resourse, labor.
30) When the amount of output produced by a given amount of inputs increases, the MOST LIKELY result is
A)
overall productivity rises.
B)
economic interdependence rises.
C)
consumer spending on productive resources increases.
D)
business spending on productive resources increases.
Explanation:
When the amount of output produced by a given amount of inputs increases, the MOST LIKELY result isoverall productivity rises.
Other options could take place, but a rise in overall productivity would most assuredly.
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