Chapter 4 Multiple Choice Quiz

1		_________ have mixed economies.
			A)	Virtually none of the countries in the world
			B)	A few of the countries in the world
			C)	Most of the countries in the world
			D)	Virtually all of the countries in the world
2		Compared to Norway and Sweden, the our government plays a ________ economic role.
			A)	much larger
			B)	slightly larger
			C)	slightly smaller
			D)	much smaller
3		The best description for the American economy would be ______
			A)	communist.
			B)	fascist.
			C)	socialist.
			D)	capitalist.
4		China has an economy with
			A)	a large and growing government sector.
			B)	a small and growing government sector.
			C)	a large and growing private sector.
			D)	a small and growing private sector.
5		Most of the economic resources in the United States are owned by
			A)	business firms.
			B)	private households.
			C)	the government.
			D)	foreigners.
6		Fascism was/is the economic system prevalent in
			A)	the Soviet Union.
			B)	Nazi Germany.
			C)	the United States today.
			D)	China today.
7		Resource payments flow from
			A)	households to business firms.
			B)	business firms to households.
			C)	households to the government.
			D)	the government to households.
8		If Adam Smith were alive today, he would favor a _______ economy.
			A)	fascist
			B)	socialist
			C)	capitalist
			D)	communist
9		The invisible hand would play its greatest role in
			A)	Nazi Germany.
			B)	the Soviet Union.
			C)	Sweden today.
			D)	the United States today.
10		Which would be the most accurate statement?
			A)	The market system leads to a very efficient allocation of resources.
			B)	The market system leads to a fair, or equitable, distribution of income.
			C)	There is basically no problem having a market system getting equitable and efficient results.
			D)	The market system is neither equitable nor efficient.
11		Which is the most accurate statement?
			A)	There is no such thing as market failure under capitalism.
			B)	When our resources are not allocated efficiently, we have market failure.
			C)	Market failure is more likely to occur under socialism than under capitalism.
			D)	The United States produces virtually no public goods.
12		Shipbreaking in Pakistan, India, and Bangladesh is an example of
			A)	a public good.
			B)	an external benefit.
			C)	an external cost.
			D)	a public service.
13		Lobster fishing in Rhode Island is illustrates
			A)	negative externalities.
			B)	external benefits.
			C)	the invisible hand.
			D)	inefficiencies caused by government regulation.
14		Karl Marx believed the crucial element in every economic system was
			A)	land.
			B)	labor.
			C)	capital.
			D)	entrepreneurial ability.
15		An advanced economy is based largely on
			A)	labor.
			B)	public goods.
			C)	a market system.
			D)	specialization and exchange.