Question

honors economics: chapters 2 - 3 test
multiple choice
identify the choice that best completes the statement or answers the question.

1. the purpose of government in a command economy is to

a. ensure the availability of consumer products.
b. encourage entrepreneurs.
c. make major economic decisions.
d. promote economic freedom.

1. in its role as protector of the american free - enterprise system, one of the issues the government must deal with is

a. environmental hazards. c. weeding out corruption.
b. helping businesses get started. d. overseeing communications.

1. all of the following benefit when an entrepreneur is successful except

a. the government c. workers
b. consumers d. the unemployed

1. in which of these systems is the government most likely to provide people with goods and services they could not otherwise afford?

a. free - enterprise economy c. command economy
b. traditional economy d. market economy

1. which of the following explains why products made under a command economy are more likely to be low quality?

a. the workers who make them are left to manage production facilities on their own.
b. the workers who make them are not given quality - control guidelines.
c. the workers who make them have little incentive to make them well.
d. the workers who make them are forced by tradition to use old - fashioned methods.

1. inflation causes people to

a. work more to pay for basic necessities.
b. spend less for the same amount of goods and services.
c. work the same hours for the same pay.
d. but more goods and services.

1. all of the following are weaknesses of a command economy except that it

a. requires a large decision - making bureaucracy
b. can change direction drastically in a short time.
c. lacks the flexibility to deal with minor problems.
d. provides few incentives for people to work hard.

Explanation:

1. In a command economy, the government makes major economic decisions, so c is correct.
2. As a protector of the free - enterprise system, the government deals with environmental hazards, so a is correct.
3. When an entrepreneur is successful, the unemployed are not a direct beneficiary in the same way as the government, consumers, and workers, so d is correct.
4. The government is most likely to provide goods and services people can't afford in a command economy, so c is correct.
5. Workers in a command economy have little incentive to make products well, which can lead to lower - quality products, so c is correct.
6. Inflation makes people work more to pay for basic necessities, so a is correct.
7. The ability to change direction drastically in a short time is not a weakness of a command economy; rather, it is often difficult to change direction quickly due to bureaucracy. So b is the answer as it is not a weakness.

Answer:

1. c. make major economic decisions.
2. a. environmental hazards.
3. d. the unemployed.
4. c. command economy
5. c. The workers who make them have little incentive to make them well.
6. a. work more to pay for basic necessities.
7. b. can change direction drastically in a short time.