Chapter 2 Post Quiz
Markets and Government in a Modern Economy

Matching Questions:

Match the terms on the left with the definition in the column on the right. Enter the lowercase letter of that definition in the box to the left of the question number.

	1. Welfare state	a. A mechanism through which buyers and sellers interact to set prices and exchange goods and services.
	2. Laissez-faire	b. Determine society's point on the production-possibility frontier (PPF).
	3. Market	c. Coordinate the decisions of producers and consumers in the market.
	4. Prices	d. Government should leave economic affairs primarily to the market.
	5. Profits and losses	e. The result of specialization and trade.
	6. Tastes and technology	f. Provide incentives and disincentives to firms for them to produce the desired goods in an efficient manner.
	7. Adam Smith	g. An economic system in which markets are the governing force in day-to-day economic life while government regulates social conditions and provides health care and social programs.
	8. Gains from trade	h. Recent growth in the flows of goods and services across national borders.
	9. Globalization	i. Introduced the concept of the invisible hand.
	10. Capital	j. The buildings, machinery, and other equipment used in production.
	11. Land, labor, and capital	k. Goods for which the cost of extending the service to another person is zero and which it is impossible to exclude individuals from enjoying.
	12. Perfect competition	l. A market structure in which no firm is large enough to affect the market price.
	13. Externalities	m. The primary factors of production.
	14. Public goods	n. Costs or benefits imposed by market players on those outside the market.
	15. Monetary policy	o. Aimed at macroeconomic stabilization.