Enter your answer to each of the questions in the blank to the left of the question. Be sure to use lowercase letters only!
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1. 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.
a. democratic state
b. communist state
c. welfare state
d. steady state
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2. As economists, we refer to the doctrine that holds that government should leave economic affairs primarily to the market as:
a. capitalism
b. laissez-faire
c. dormez-vous
d. communism
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3. A market is:
a. a mechanism through which buyers and sellers interact to set prices and exchange goods and services.
b. a place where goods are traded.
c. both a and b
d. neither a nor b
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4. _______ coordinate the decisions of producers and consumers in the market.
a. Ushers
b. Directors
c. Governments
d. Prices
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5. ______ and ______ provide incentives and disincentives to firms for them to produce the desired goods in an efficient manner.
a. Profits; losses
b. Prices; profits
c. Prices; losses
d. Profits; government
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6. Which of the following determine society's point on the production-possibility frontier (PPF)?
a. profits and losses
b. prices and profit
c. tastes and technology
d. tastes and profits
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7. _______, in his 1776 work _______, introduced the concept of the invisible hand.
a. Eli Hecksher; The Wealth of Nations
b. Adam Smith; The Wealth of Nations
c. Paul Samuelson; Economics
d. Karl Marx; The Wealth of Nations
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8. When different people specialize in the production of different goods, their interactions in the market will lead to _______.
a. anarchy
b. a welfare state
c. capitalism
d. gains from trade
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9. The recent growth in the flows of goods and services across national borders is described as:
a. globalization
b. capitalism
c. communism
d. marketism
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10. What do economists call the buildings, machinery, and other equipment used in production?
a. capital
b. land
c. money
d. none of the above
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11. The three primary factors of production are:
a. money, land, and labor.
b. capital, money, and labor.
c. land, labor, and capital.
d. capital, land, and capacity.
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12. _______ is the term that economists use to describe a market in which no firm is large enough to affect the market price.
a. Monopoly
b. Monopsony
c. Oligopoly
d. Pure competition.
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13. When market players impose costs or benefits on those outside the market _______ arise.
a. externalities
b. internalities
c. public goods
d. none of the above
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14. _______ are those goods for which the cost of extending the service to another person is zero and which it is impossible to exclude individuals from enjoying.
a. Private goods
b. Public goods
c. Free goods
d. Special goods
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15. Both fiscal and monetary policies are aimed at macroeconomic stabilization. Fiscal policy involves the use of ______ while monetary policy involves the use of _______.
a. changes in taxation and government spending; price and profit controls.
b. price and profit controls; taxation and government spending.
c. changes in taxation and government spending; changes in the supply of money and interest rates.
d. changes in the supply of money and interest rates; changes in taxation and government spending.
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