______ 4. Market Economies promote growth by encouraging:

a. The following of tradition

b. Central planning of the economy

c. Equal wages and basic services for all

d. Innovation, choice, and risk-taking

______ 5. One reason to buy a used car instead of a new car is that:

a. Used cars usually have better warranties than new cars

b. A new car loses a lot of its value the minute it's driven off the lot

c. With used cars, you can order the car with the options and colors you want

d. All of the above

______ 6. For Economists, the value of an item is determined by:

a. The price tag a store puts on the product

b. The Manufacturer's Suggested Retail Price

c. A computerized algorithm

d. The amount someone is actually willing to pay for the item

______ 7. Until fairly recently, the Smi people of Scandinavia herded reindeer, lived within groups of families, and were semi-nomadic. They had a complex set of customs and rules for the ownership, pasturing, and movement of their reindeer herds; and they followed the traditions of their ancestors in using every part of the reindeer to sustain themselves. What type of economy did the Smi have?

a. Market

b. Socialist

c. Traditional

d. Command

______ 8. The Economic value of an item depends on:

a. The item's utility (usefulness)

b. The item's scarcity

c. Both A and B

d. Neither A nor B

______ 9. Socialist economies tend to have:

a. Some central planning of the economy and government ownership of resources,

but less than a Command Economy would have.

b. More equal distribution of basic necessities than a Market Economy

c. High taxation

d. All of the above

______ 10. One reason to buy a car instead of leasing it is:

a. If you lease a car, you may be surprised by a large fee at the end of the lease if

you use more mileage than you were allowed to or if you have damaged

the car

b. You will have a warranty the entire time you use the car

C. You get lower monthly payments when you buy a car

d. There is usually a lower down-payment to buy a car than to lease it

______ 11. A Production Possibilities Curve assumes that a producer can only produce

a. One product

b. Two products

c. Five products

d. Consumer goods

______ 12. One disadvantage of Command economies is that:

a. There is often very little economic growth, which leads to economic collapse.

b. Change happens gradually

c. There is a great deal of economic freedom

d. Low government involvement can lead to the formation of monopolies

______ 13. Which of the following is a possible cause of economic growth on a Production Possibilities Curve?

a. More education or training for workers

b. Higher prices for natural resources

c. More government regulations

d. All of the above

______ 14. Almost every country in the world today has a:

a. Command economy

b. Market economy

c. Mixed economy

d. Traditional economy

______ 15. Which type of financial aid is the best deal for a student?

a. Private Loans

b. Work Study

c. Government-subsidized Loans

d. Grants and scholarships

______ 16. One similarity between Command Economies and Traditional Economies is:

a. An income gap can grow between the wealthy and the poor

b. There is a high level of uncertainty and risk for individuals

c. There is little choice and innovation

d. Growth is sometimes uneven or happens in up and down cycles

______ 17. In a Market Economy, the Economic questions are answered by:

a. The producers and consumers who buy and sell goods

b. Tradition, habit, and custom

c. A Central Governmental Authority

d. The Central Bank

______ 18. When a Command Economy tries to transition to a Market Economy:

a. There are generally food shortages because Market Economies are less efficient

b. Business owners have to learn new ways of doing business so that they can

compete.

c. There is less crime

d. They are already used to the ups and downs of the business markets

______ 19. Some of the goals of the U.S. economic system are:

a. Doing things the same way they were done by our ancestors

b. Equal wages for all workers, regardless of what they do

c. Economic freedom, low inflation, and economic growth

d. High taxes and high unemployment

Matching (2 points each): Match the Factors of Production with the definitions

__B___ 20. Land A. The ideas and risk-taking of a business owner

___D__ 21. Capital B. Natural resources such as iron and timber

___C__ 22. Labor C. Tools and equipment used in producing consumer goods

__A___ 23. Entrepreneurship D. The skills and work of employees in a business

Matching (2 points each):

__B___ 24. Scarcity A. A basic necessity of life

_____ 25. Consumer Good B. Not enough resources for everyone to have what they want

_____ 26. Need C. Intended to last longer than 3 years

_____ 27. Market D. Intended for use by individuals or families, not businesses

_____ 28. Durable Good E. Place or mechanism for bringing buyers and sellers together

Refer to the Circular Flow Economic Model above and indicate which label fits in the spaces marked with letters:

__D___ 22. Selling Resources

__A___ 23. Households/Individuals

__C___ 24. Selling Finished Products

__B___ 25. Cash

Use the Production Possibilities Curve below to answer questions 31-34:

______ 31. How many XBox games can the producer make if they choose to make 500 Switch games every month?

a. 100 XBox games

b. 150 XBox games

c. 250 XBox games

d. 350 XBox games

______ 32. Which of the following is possible for this producer?

a. 600 Switch games and 200 XBox games in the same month

b. 300 Switch games and 300 XBox games in the same month

c. 200 Switch games and 300 XBox games in the same month

d. None of the above

______ 33. Which of the points on the chart represents an achievable point at which the producer is fully using all of its resources, with no unused resources?

a. Point A

b. Point B

c. Point C

d. Points A and C

_______ 34. Refer to the PPC above. If the producer buys a new machine that makes the manufacturing process go more quickly, which direction will the curve move?

a. In the direction of Arrow A

b. In the direction of Arrow B

c. In both directions

d. It won't move at all

35. Short Answer: (2 pts.) List the three economic questions all societies must answer:

1.

2.

3.