Econ Test 1

Question 1

Who is the Father of Economics and wrote “The Wealth of Nations”?

Answer 1

Adam Smith

Question 2

The nations of Europe followed the economic policies of mercantilism during the ____________ century.

Answer 2

17th

Question 3

An economic ________ seeks to show the relationships among the various components of an economy.

Answer 3

Model

Question 4

The _________ of a good refers to the quantity of a good for sale at a certain price under certain conditions.

Answer 4

Supply

Question 5

Lumber is an example of a _________ good.

Answer 5

Scarce

Question 6

When economists use the term _________ they are referring to material items or services that are valuable to people.

Answer 6

Goods

Question 7

Laissez-faire, a French phrase often used in connection with economics, means _____________?

Answer 7

Let things alone

Question 8

A forklift used to transport imported goods within a warehouse would be a ________ good.

Answer 8

Capital

Question 9

A Communist-controlled country would most likely have a _____________ economy.

Answer 9

Command

Question 10

The capitalism of the former Soviet Union was _________ capitalism because the government controlled most of the capital.

Answer 10

State

Question 11

This gentleman used his resources wisely to make gunpowder for President Jefferson.

Answer 11

E. I. du Pont

Question 12

The prosperity and efficiency of the free market economy is owed to its foundation of limited government, freedom of enterprise and competition, and ___________?

Answer 12

Property of Rights

Question 13

If a grocery store owner were to talk about the amount of bananas consumers were buying, he would be referring to that fruit’s __________?

Answer 13

Demand

Question 14

When a country finds ways to produce more goods from existing resources, the prosperity of the national economy _______.

Answer 14

Increases

Question 15

After trying what was called the “common course and condition”, the __________ abandoned this economic system.

Answer 15

Pilgrims

Question 16

According to economists, the factors of production are ________ even in the most prosperous countries

Answer 16

Scarce

Question 17

All people are said to be _________, or people who use goods.

Answer 17

Consumers

Question 18

Adam Smith stressed the importance of separating complex jobs into individualized tasks, an idea known as _______________.

Answer 18

Division of Labor

Question 19

Finding new resources to satisfy existing wants is one way to ___________ an economy’s prosperity.

Answer 19

Increase

Question 20

Some people believe that ___________ should be listed along with the traditional factors of production.

Answer 20

Information

Question 21

Work done by people in a free society is usually _________ productive than that done by people in a command economy.

Answer 21

More

Question 22

The study of national economics.

Answer 22

Macroeconomics

Question 23

The study of specific components within a major economy.

Answer 23

Microeconomics

Question 24

An intangible good for which people expect to pay.

Answer 24

Service

Question 25

Mechanism through which people exchange goods.

Answer 25

Market

Question 26

Economic system which advocates the gathering of gold.

Answer 26

Mercantilism

Question 27

The establishment of colonies to benefit a mother country.

Answer 27

Imperialism

Question 28

Directed by customs and habits.

Answer 28

Traditional Economy

Question 28

Governed by an "invisible hand."

Answer 28

Free Market Economy

Question 29

Directed by the government.

Answer 29

Command Economy

Question 30

Provides barely enough to keep a society alive.

Answer 30

Subsistence Economy

Question 31

The _____________ were a French group of 18th-century economists who believed the market should be guided by "the rule of nature."

Answer 31

Physiocrats

Question 32

Economics is the study of the choices that individuals and societies make concerning the production, ____________, and consumption of goods.

Answer 32

Distribution

Question 33

__________ was the founder of the Austrian School of Economics.

Answer 33

Karl Menger

Question 34

The value associated with any good is directly related to it _____________ and ____________.

Answer 34

Scarcity and Utility

Question 35

What are the four factors of production.

Answer 35

Natural resources, labor, capital, and entrepreneurship.

Question 36

A society in which each child is expected to grow up to become whatever his parents were would have a _____________ economy

Answer 36

Traditional

Question 37

As seen in a circular flow model, private households and private ___________ make the majority of decisions in a free market economy.

Answer 37

Businesses

Question 38

Explain how the free market principles found in Adam Smith's work have helped to shape American history.

Answer 38

The founding fathers applied his principles for a free market, division of labor, and establishing a foundation of freedom for the new country

Question 38

Why did the Pilgrims' original economic plan fail? What did they change and why did this change help them succeed?

Answer 38

The pilgrims were unable to work together with others in the common course and condition system. This failure led to changes in which each family was in charge of their separate holdings. The pilgrims then had pride in what they were building for their families and not for the community as a whole.

Question 39

The study of the choices that individuals and societies make in the production, distribution, and consumption of goods.

Answer 39

Economics

Question 40

Any system for the production, distribution, and consumption of goods and services.

Answer 40

Economy

Question 41

Scholars of the production, distribution, and consumption of goods.

Answer 41

Economists

Question 42

A prediction, based upon past observations and current trends, of what will happen in an economy in the future.

Answer 42

Economist Forecast

Question 42

A theory that seeks to show the relationships among the various components of an economy.

Answer 42

Economic Models

Question 43

The human desire to have and use a certain good.

Answer 43

Want

Question 43

Intangible goods produced by labor for which people expect to pay.

Answer 43

Services

Question 44

A very large number of people to whom very large quantities of products are sold.

Answer 44

Mass Market

Question 44

People who use goods.

Answer 44

Consumers

Question 45

People who work to provide goods.

Answer 45

Producers

Question 46

A limited supply of a good.

Answer 46

Scarcity

Question 47

A necessity-something that would be difficult to live without.

Answer 47

Need

Question 47

The industrial skills and scientific methods that make possible efficient production.

Answer 47

Technology

Question 48

The general rules or principles guiding the production, distribution, and consumption of goods.

Answer 48

Laws of Economics

Question 48

Things produced for direct use by consumers.

Answer 48

Consumer Goods

Question 49

Anything used in the production and distribution of goods and services.

Answer 49

Capital good, Investment Good, Capital.

Question 50

The economic riddle that asks why rareties, such as diamonds, normally command high prices while necessities, such as water, usually command low prices.

Answer 50

Diamond-Water Paradox

Question 50

Usefulness

Answer 50

Utility

Question 51

The difference in value of the goods that a country sells abroad compared to those it purchases from other countries.

Answer 51

Trade Balance

Question 52

Taxes that governments apply only to imported goods.

Answer 52

Tariffs

Question 53

The theories developed by economists of the 19th and early 20th centuries that stated that the free market was the best possible economic system.

Answer 53

Classical Economics

Question 54

The division of tasks among workers allow the production of goods by people doing the jobs they do best.

Answer 54

Specialization

Question 55

Economics success, or the condition of enjoying many goods, including services.

Answer 55

Prosperity

Question 56

The value of all the things that people own.

Answer 56

Wealth

Question 57

According to Adam Smith, this brings producers and consumers together when they pursue their personal interests.

Answer 57

Invisible Hand

Question 58

What are the Factors of Production?

Answer 58

Natural Resources, Labor, Capital, Entrepreneurship, and Information.

Question 59

A system in which decisions involving the production, distribution, and consumption of goods are based upon custom, heredity, and caste.

Answer 59

Traditional Economy

Question 60

Systems in which people are free to make their own economic choices.

Answer 60

Free Enterprise Economy, Private Capitalism, Market Economy.

Question 61

A system that combines a good measure of free enterprise in some areas with heavy state regulation in others.

Answer 61

Mixed Economy

Question 62

Includes land and other raw materials.

Answer 62

Natural Resources

Question 63

Any work, whether physical or mental, that contributes to the production of goods and services.

Answer 63

Labor

Question 64

The intelligent direction and supervision of natural and human economics resources.

Answer 64

Entrepreneurship, Management

Question 65

A person in effective control of starting or running a business or industrial undertaking.

Answer 65

Entrepreneurship

Question 66

What are capitalisms basic components?

Answer 66

Property Rights, Freedom of Enterprise and Competition in a Market Environment, and Limited Government.

Question 67

A simplified diagram that illustrates how resources and products move through the market.

Answer 67

Circular Flow Model