question

Scarcity is the Key word in the study of economics

answer

True

question

The term "economics" derives its origin from a description of an orderly arrangement and management of production, exchange, and consumption in the household, business, communities, nations, or in the world

answer

True

question

The Scottish essayist, Thomas Carlyle, coined the term "dismal science" when describing the economics of his day in poverty stricken, factory slums of London.

answer

True

question

An economics system is a set of relations among decision-makers and between decision-makers and economic variables

answer

True

question

Economics has little relation to other academic disciplines

answer

False, they have much relationship

question

Economics is considered an exact science

answer

False; not exact

question

Economic policy is often modified by military, social, and political policies

answer

True

question

Today economists are in universal agreement that the study of economics should be limited to the realm of positive economics

answer

False; economists never agree

question

Economic decision-making leaves no room for value judgement

answer

False; does leave room

question

For best results, economic conditions should be studied and analyzed apart from the social and cultural environment of society

answer

False; should be studied with

question

Positive economics is concerned with value judgment regarding what economic policy ought to be

answer

False; Normative

question

Since prosperity always follows depression, it is evident that depressions cause prosperity

answer

False

question

What is good for individual members of the economy must necessarily be good for the economy as a whole

answer

False; might not be good for the whole

question

Concern with the level of employment in the economy is a macroeconomic issue

answer

True

question

Goods used to produce other goods and services are known as capital

answer

True

question

The relationship between the price of a book and the number of volumes purchased is a microeconomics issue

answer

True

question

Production is the creation or addition of utility

answer

True

question

Economic theory and economic policy are synonymous

answer

False; they are very different

question

Your decision to attend college was a microeconomic choice

answer

True

question

A positive economic statement is always true

answer

False; it is not always true

question

The study of economics is primarily theoretical and has very little practical application

answer

False

question

The four factors of production are land, labor, capital, and entrepreneurship

answer

True

question

The largest part of U.S. national income takes the form of profits

answer

False; wages

question

Consumption is the ultimate end of economic activity

answer

True

question

A free good may eventually become an economic good

answer

True

question

The U.S. is not forces to economize since its capacity to produce is greater that is capacity to consume

answer

False

question

The accumulation of capital involves the diversion of labor from the direct production of consumer goods

answer

True

question

The creation of capital usually involves saving

answer

True

question

Profit is the ultimate objective of economic activity

answer

False; wages

question

Consumer demand indirectly determines incomes to the various factors of production

answer

True

question

Economics is the process of allocating limited means in an effort to satisfy unlimited wants

answer

True

question

Macroeconomics deals with the problems of individuals and firms

answer

False; Microeconomics

question

Microeconomics is the study if aggregates in the economy

answer

False; Macroeconomics

question

Economic decisions are allocations decisions

answer

True

question

Individuals become more independent as our economy becomes more complex

answer

False; interdependent

question

Consumer demand implies a readiness to utilize purchasing power

answer

True

question

In order to be effective, a model must contain all the details of an economic situation of phenomenon

answer

False

question

A diagram can serve as an economic model

answer

True

question

The process of specialization and exchange can be carried out by business firms as well as by regions or nations

answer

True

question

In the long run, a nation cannot overcome a shortage of labor or land

answer

True

question

One cause of the uneven standard of living throughout the world is the inequitable distribution of resources among nations

answer

True

question

A free good is on that possesses utility but has no price

answer

True

question

Scarcity has no relevance to decision involving resource allocation

answer

False

question

Underdeveloped countries are often poor because their governments pursue destructive economic policies that depress free enterprise

answer

True

question

"Economics: is a term used to describe internal forces of the economy, such as production and employment variables

answer

False

question

Although economic rationality refers to the basic assumption made by economists about consumers and business people, the approach can not be applied to government

answer

False

question

The ability to produce a good or service at a lower opportunity cost than other goods and services is at the heart of the competitive advantage concept

answer

True

question

If a society is producing at a point on its production possibilities curve, it does not have a problem of scarce resources

answer

False, scarcity always exists

question

A production-possibilites curve relates input factors to output choices

answer

True

question

When the entire production possibilities curve shifts inward, the economy is growing

answer

False; shifts outward

question

A production possibilites curve shows the use of resources and the alternative combinations of goods that a society can produce

answer

True

question

The opportunity cost of a choice is defined as the value of all the alternative choices

answer

False; most of the choices

question

If a nation is producing a combination of goods inside its production possibilities curve, it is underutilizing its resources

answer

True

question

A nation's production possibilites curve can be shifted outward by technological development

answer

True

question

A production possibilites curve will shift outward when additional resources are found

answer

True

question

If a nation has an absolute advantage over another nation in the production of all commodities, it is not feasible to take advantage of the principle of comparative advantage

answer

False

question

Comparative advantage cannot be applied to activities of individuals

answer

False; can

question

The use of the law of comparative advantage frequently is limited by political and military considerations

answer

True

question

A nation needs an abundance of all productive resources in order to attain a high standard of living

answer

False

question

Government regulations which affect entrepreneurial activities within a nation also affects total output and the standard of living

answer

True

question

In our society which we call capitalistic, decisions are made at a rather high level and they are made tentatively. These decisions are either confirmed or rejected by the marketplace.

answer

False

question

The basic function of any economic system is to provide the framework for allocating scarce resources in a way that adequately satisfies unlimited wants.

answer

True

question

An exchange or market economy is distinguished by decentralization of most economic decisions

answer

True

question

In a free enterprise economic system, capital goods are owned and use primarily by individuals and firms in the economy.

answer

True

question

A free- enterprise economy depends largely on the operation of markets to prevent the development of unbalanced production

answer

True

question

In a free enterprise economy, labor is the essential contribution of the entrepreneur to production

answer

False; entrepreneur's main thing is to be the risk taker

question

Under a capitalistic system, capital goods are owned primarily by the state.

answer

False; individuals

question

The motivating force for production in a free enterprise economy is the response of businessmen to the profit motive

answer

True

question

In determining what and how much to produce, the market economy works in a democratic manner based on dollar votes.

answer

True

question

Free enterprise capitalism is a type of command economy

answer

False

question

The American economy could operate as a free-enterprise system without the profit motive

answer

False

question

In a market economy, resources are allocated by the government

answer

False; command economy

question

Private property is an essential feature of U.S. capitalism

answer

True

question

The price system serves as rationing mechanism in a market economy

answer

True

question

The former Soviet Union was an example of a traditional economy

answer

False; command economy

question

Prices help to determine incomes in the U.S. economy

answer

True

question

In a competitive, free enterprise economy consumer demand is the principle determinant of what and how much is produced

answer

True

question

The profit motive is one characteristic of a command economy

answer

False

question

The right to private property exists in a socialistic economy

answer

True

question

In a market economy, buyers and sellers are considered rational when they attempt to maximize their own self interest

answer

True

question

The price mechanism serves as a resource allocator in a capital economy

answer

True

question

Private property ownership entitles anyone to do whatever he or she wants with property in a capitalist economy

answer

False

question

A fundamental justification of competition is that it promotes efficiency and innovation on the part of business firms

answer

True

question

In a market economy, consumers exert considerable influence on economic affairs, but also are influenced by circumstances in the economy

answer

True

question

Culture has very little to do with a country's choice of economic systems

answer

False

question

In medieval Europe, the market was the main means by which individuals and other units influenced each other economically, although tradition, command, and altruism did exist as supplementary arrangements

answer

False

question

In a market system, the government enforces laws ensuring that private enterprise and conditions of competition will prevail

answer

True

question

In a market system, income is distributed among households in accordance with the need of each household

answer

False; communist system

question

Under communism and socialism, the people principally decide what is to be produced for the nations

answer

False

question

A considerable degree of government control of production and distribution exists in a command economy

answer

True

question

A big disadvantage of a sole proprietorship is the lack of distinction between the business and the owner

answer

True

question

In a communist society, economic decisions are made at the bottom of the political pyramid

answer

False; top

question

According the Marx, surplus value was the source of profit to capitalists

answer

True

question

According to Marx, crises and depressions would occur in capitalism as the capitalists attempt to wring more surplus value out of the workers

answer

True

question

The term socialism and communism describe the same system

answer

False; not the same

question

Deciding what to produce and allocating goods and services are functions of all types of economic systems

answer

True

question

A corporation is a legan entity separate and apart from the owners of the corporation

answer

True

question

The most common type of business in the United States is the corporation

answer

False

question

A corporation is owned by its bondholders

answer

False; shareholders

question

A major advantage of a corporation form is business organizations is unlimited liability of stockholders for corporate debt

answer

False; limited

question

Corporations produce and sell the largest dollar value of goods of any type of business enterprise

answer

True

question

In a corporate form of business enterprise, both profits and dividends are subject to income tax

answer

True

question

Unlimited liability is a disadvantage associated with he single proprietorship

answer

True

question

Both bondholders and stockholders are owners of the corporations

answer

False; stockholders

question

In a cooperative type of enterprise, a shareholder has only on vote regardless of the number of shares

answer

True

question

Government interventions in the U.S. economy includes legislation such as antitrust, laws, labor laws, and safety regulations

answer

True

question

In a market system, the government enforces laws ensuring that private enterprises and conditions of competition will prevail

answer

True

question

The federal government does not own or operate business enterprise in the United States

answer

False

question

The role of the government in a free society should be an absolute minimum

answer

True

question

The government is expected to protect individual and property rights in the free society

answer

True

question

There are no government-regulated markets in the U.S. economy

answer

False

True/False Chapters 1,2,3 review – Flashcards

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