True/False
Indicate whether the
statement is true or false.
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1.
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People around the world typically work the same number of hours a year as
Americans.
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2.
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Under free enterprise and socialism, government decision makers write an
economic plan.
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3.
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One measure of globalization is the dollar amount of exports for a
country.
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4.
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All nations must decide how to answer three economic questions about the
production and distribution of goods.
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5.
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A command economy is one of the two major economic systems.
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6.
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Socialism is sometimes loosely referred to as a command
economy.
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7.
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Communism and socialism have similar characteristics.
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8.
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Taxes can have an impact on the number of hours that people choose to
work.
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9.
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Tax rates are basically similar in different countries around the world.
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10.
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In a free enterprise economic system, government plays a small role in the
economy.
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11.
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Some people seem to value leisure more than others.
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12.
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In a free enterprise economic system, government decision makers are more likely
to use government’s powers to redistribute income.
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13.
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It is critical to free enterprise for the government to create a plan that
specifies the direction economic activities are to take.
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14.
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A traditional economy is a form of socialism.
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15.
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Adam Smith and Karl Marx lived at the same time, but they had very different
ideas about the world.
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16.
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Free enterprise economies are the only systems that must decide how to answer
three economic questions about the production and distribution of goods.
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17.
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Any amount of government control indicates that an economy is socialist.
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18.
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Because they represent command economies, North Korea and Cuba are exempt from
answering what goods must be produced, since the government determines this.
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19.
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The first economic question every society has to answer concerns what goods to
produce.
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20.
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For all countries, more of one good leaves fewer resources to produce other
goods.
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21.
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Sometimes free enterprise is called a market or socialist
economy.
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22.
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In free enterprise economies, people who are willing and able to pay the price
for goods get them.
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23.
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Today in North Korea, the government owns almost all the resources in the
country.
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24.
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A traditional economy would fall into the socialism category.
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25.
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In their books, Adam Smith and Karl Marx both state that capitalists improve the
condition of workers.
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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26.
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The question of what goods will be produced must be answered because
a. | some countries are poor and must choose what to produce. | b. | consumers would like
to have these goods. | c. | scarcity exists. | d. | command economies
need to write a plan. |
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27.
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How a society answers the three economic questions defines
a. | its place in the global economy. | c. | its income
distribution. | b. | its economic system. | d. | whether it is a pure or mixed economy. |
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28.
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Resources are owned and controlled by private individuals in what type of
economic system?
a. | a free enterprise or market economic system | b. | a socialist economic
system | c. | a communist economic system | d. | a traditional economic
system |
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29.
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Income distribution refers to
a. | average income per person. | b. | welfare payments to the
poor. | c. | earnings of corporations. | d. | the way all of a country’s income is
divided among groups of earners. |
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30.
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In a traditional economy, people
a. | pass on customs, skills, and cultural beliefs from one generation to the
next. | b. | write very detailed economic plans for the future. | c. | have a mix of free
enterprise and socialism. | d. | set prices based on the labor theory of
value. |
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31.
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With globalization, the world is moving toward
a. | 50 dominant economies. | c. | three powerful economies. | b. | 10 major
economies. | d. | one large
economy. |
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32.
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Globalization has
a. | expanded everyone’s ability to potentially sell to more
people. | b. | reduced the variety of products available in the world. | c. | raised prices for
consumers. | d. | decreased people’s ability to communicate. |
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33.
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According to this textbook, there is a strong relationship between life
expectancy and
a. | outsourcing. | c. | climate. | b. | globalization. | d. | government
control. |
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34.
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Offshoring refers to
a. | work done by foreigners in their own country. | b. | work done for a
company by people other than the company’s employees. | c. | work done for a
company by people who live in other countries. | d. | work done by dock
workers. |
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35.
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Which of the following is not a result of globalization?
a. | Countries that never before communicated have become major trading
partners. | b. | The world has become “smaller.” | c. | Countries tend to
associate politically and economically with their “own kind.” | d. | Individuals and
businesses in any part of the world are affected by events elsewhere in the
world. |
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36.
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In a socialist economic system, the government
a. | owns and controls many of the resources. | b. | owns and controls
the people. | c. | pays little attention to income distribution. | d. | rents resources to
the people. |
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37.
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A command economy is
a. | like capitalism. | b. | run by individuals and
businesses. | c. | not concerned by the three economic questions. | d. | a particular type of
socialist economic system. |
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38.
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Which of the following is not one of the three economic questions?
a. | What goods will be produced? | c. | How will the goods be
produced? | b. | How much will be produced? | d. | For whom will the goods be produced? |
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39.
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Which of the following countries must decide what goods will be produced?
a. | United States | c. | Russia | b. | China | d. | All of the
above |
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40.
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The two major economic systems are
a. | free enterprise and socialism. | c. | free enterprise and
command. | b. | free enterprise and capitalism. | d. | socialism and
command. |
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41.
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Workers in different foreign countries don’t work the same number of hours
a year because
a. | taxes are higher in some countries. | b. | the social assistance given to the unemployed
is higher in some countries than others. | c. | some workers have a stronger preference for
leisure. | d. | All of the above |
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42.
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Which of the following can not be attributed to Adam Smith’s
beliefs?
a. | Self-interest causes people to work hard and take risks, which benefits
society. | b. | The division of labor creates greater productivity and wealth. | c. | All value in
produced goods comes from labor. | d. | Government should provide national defense, a
system of justice, and public works. |
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43.
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Karl Marx is best known for writing
a. | The Wealth of Nations. | c. | Das
Kapital. | b. | War and Peace. | d. | Globalization Facts. |
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44.
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Adam Smith believed
a. | in the labor theory of value. | b. | that people’s actions are led by
“an invisible hand.” | c. | that capitalists exploited
workers. | d. | that surplus value should go to the workers. |
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45.
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The major differences between free enterprise and socialism include
a. | ownership of resources and the government’s role in the
economy. | b. | economic planning and income distribution. | c. | controlling prices
and honoring private property. | d. | All of the
above |
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46.
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Globalization leads to
a. | increased tension between foreign countries. | b. | increased interest
rates. | c. | spread of socialism in the world. | d. | closer connections between countries through
trade. |
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47.
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Globalization began to occur
a. | two decades ago. | c. | during World War I. | b. | in the mid-1800s to the late
1920s. | d. | during the Great
Depression. |
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48.
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As a result of globalization, which of the following have increased?
a. | foreign exchange trading | b. | foreign direct investment | c. | membership in the
World Trade Organization (WTO) | d. | All of the
above |
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49.
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There is a strong correlation between globalization and
a. | life expectancy. | c. | income equality. | b. | international debt. | d. | American job
growth. |
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50.
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Critics of globalization argue that
a. | trade will increase too rapidly. | c. | large corporations will take
over. | b. | technology will lag. | d. | tariff rates will increase. |
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