Question 1

An increase in demand for strawberries is most likely to:

Accepted Answer

A)  increase the demand for strawberry pickers.
B)  reduce the supply of strawberry pickers.
C)  reduce the supply of strawberries.
D)  reduce the demand for strawberry pickers.E) A) and B)
F) A) and C)

Question 2

Which is characteristic of the capitalistic ideology?

Accepted Answer

A)  unselfish individuals
B)  centralized decision-making
C)  free enterprise and choice
D)  government ownership of the means of productionE) A) and C)
F) A) and B)

Question 3

Given the information provided and assuming trade does occur between the provinces, we can expect:

Accepted Answer

A)  that there is no means by which British Columbia can obtain lettuce while specializing in the production of autos.
B)  that money will not be needed to accomplish the desired exchanges.
C)  money to flow counterclockwise from British Columbia to Ontario to Alberta.
D)  money to flow clockwise from British Columbia to Alberta to Ontario.E) A) and C)
F) None of the above

Question 4

The economy of the former Soviet Union was best described as:

Accepted Answer

A)  authoritarian capitalism.
B)  mixed capitalism.
C)  a command economy.
D)  market socialism.E) C) and D)
F) None of the above

Question 5

On the basis of the information provided and assuming trade occurs between the three provinces we can expect:

Accepted Answer

A)  Alberta to exchange apples with Ontario and receive money in return.
B)  Alberta to exchange apples with British Columbia and receive money in return.
C)  Ontario to exchange lettuce with British Columbia and receive autos in return.
D)  none of the above to occur.E) A) and B)
F) A) and C)

Question 6

Which statement is correct?

Accepted Answer

A)  The operation of a market system eventually results in an equal distribution of income.
B)  Producers are "kings" in a market economy because they determine what is produced.
C)  The market system is efficient at allocation of resources, but not consumer goods to their most valued uses.
D)  Freedom of choice and enterprise are essential elements of the market system.E) C) and D)
F) All of the above

Question 7

The term "laissez faire" suggests that:

Accepted Answer

A)  land and other natural resources should be privately owned, but capital should be publicly owned.
B)  land and other natural resources should be publicly owned, but capital equipment should be privately owned.
C)  government should not interfere with the operation of the economy.
D)  government action is necessary if the economy is to achieve full employment and full production.E) A) and B)
F) A) and C)

Question 8

Consider a barter situation where you have pens and you want pencils.To achieve your objective there must be a(n) :

Accepted Answer

A)  use of capital goods.
B)  entry and exit from the market.
C)  large number of sellers.
D)  coincidence of wants.E) B) and C)
F) None of the above

Question 9

In the circular flow diagram, revenues and goods and services flow:

Accepted Answer

A)  in opposite directions but are on the same side of the diagram.
B)  in the same direction but are on the same side of the diagram.
C)  in either direction as they are not correlated.
D)  in opposite directions and are on opposite sides of the diagram.E) A) and B)
F) A) and C)

Question 10

The "invisible hand" concept suggests that:

Accepted Answer

A)  market failures imply the need for a national economic plan.
B)  big businesses are inherently more efficient than small businesses.
C)  the competitiveness of a capitalistic market economy invariably diminishes over time.
D)  given competition, private and public interests will tend to coincide.E) C) and D)
F) A) and B)

Question 11

The coordination problem in command economies became more difficult as:

Accepted Answer

A)  the number of industries expanded.
B)  less quantitative targets were assigned to each industry.
C)  planning techniques improved.
D)  production cost decreased.E) B) and C)
F) A) and D)

Question 12

Specialization and trade are beneficial to society because:

Accepted Answer

A)  the output of economic goods may be increased with no increase in resources.
B)  scarce resources are utilized more efficiently.
C)  a division of labour lowers prices for products.
D)  all of the above are correct.E) B) and C)
F) A) and D)

Question 13

Which fundamental question about a competitive market system primarily focuses on technological progress and capital accumulation?

Accepted Answer

A)  What will be produced?
B)  How will the goods and services be produced?
C)  How will the system accommodate change?
D)  Who is to receive the output?E) A) and D)
F) None of the above

Question 14

The simple circular flow model shows that:

Accepted Answer

A)  households are on the demand side of both product and factor markets.
B)  businesses are on the supply side of both product and factor markets.
C)  households are on the supply side of the factor market and on the demand side of the product market.
D)  businesses are on the demand side of the product market and on the supply side of the factor market.E) A) and D)
F) A) and C)

Question 15

Which is not one of the Five Fundamental Questions?

Accepted Answer

A)  How will the goods and services be produced?
B)  How will the system accommodate change?
C)  Who will get the goods and services?
D)  What goods and services should be produced by government?E) B) and D)
F) All of the above

Question 16

Which of the following economic systems are polar opposites of each other?

Accepted Answer

A)  The market system and laissez-faire capitalism
B)  The market system and the command system
C)  The command system and laissez-faire capitalism
D)  Mixed market and the market systemE) A) and D)
F) A) and C)

Question 17

Which of the following best describes the "guiding function" of competitive prices?

Accepted Answer

A)  Profitable industries tend to contract and unprofitable industries tend to expand.
B)  The market system will always generate economic profits for firms which use the least costly production technology.
C)  The market system can negotiate reallocations of resources which are appropriate to changes in consumer tastes, technology, and resource supplies.
D)  When prices are in equilibrium, product shortages or surpluses cannot occur.E) A) and C)
F) B) and C)

Question 18

Refer to the diagram.Arrows (3)  and (4)  represent:

Accepted Answer

A)  goods and services respectively.
B)  money incomes and consumer expenditures respectively.
C)  resources and goods respectively.
D)  consumer expenditures and money income respectively.E) A) and D)
F) None of the above

Question 19

Which fundamental question about a competitive market system primarily focuses on the cost of producing the good and services?

Accepted Answer

A)  What will be produced?
B)  How will the goods and services be produced?
C)  How will the system accommodate change?
D)  Who is to receive the output?E) A) and B)
F) B) and C)

Question 20

Consumer sovereignty and "dollar votes" are most related to which fundamental question about a competitive market system?

Accepted Answer

A)  What will be produced?
B)  How is the output to be produced?
C)  How can the system accommodate change?
D)  Who is to receive the output?E) B) and D)
F) A) and B)

Exam 2: Part B: The Market System and the Circular Flow

The coordination problem in command economies became more difficult as:

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Which is characteristic of the capitalistic ideology?

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Which statement is correct?

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On the basis of the information provided and assuming trade occurs between the three provinces we can expect:

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Refer to the diagram.Arrows (3) and (4) represent:

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Which fundamental question about a competitive market system primarily focuses on the cost of producing the good and services?

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Which is not one of the Five Fundamental Questions?

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An increase in demand for strawberries is most likely to:

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Consumer sovereignty and "dollar votes" are most related to which fundamental question about a competitive market system?

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The economy of the former Soviet Union was best described as:

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Which fundamental question about a competitive market system primarily focuses on technological progress and capital accumulation?

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Specialization and trade are beneficial to society because:

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The term "laissez faire" suggests that:

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Which of the following best describes the "guiding function" of competitive prices?

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The "invisible hand" concept suggests that:

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Given the information provided and assuming trade does occur between the provinces, we can expect:

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The simple circular flow model shows that:

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In the circular flow diagram, revenues and goods and services flow:

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Consider a barter situation where you have pens and you want pencils.To achieve your objective there must be a(n) :

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Which of the following economic systems are polar opposites of each other?

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