Name: ________________________ Class: ___________________ Date: __________
ID: A
Economics Chapter 2 Section 4 Review (This is NOT an assignment)
Matching
a.
b.
c.
d.
laissez-faire
free enterprise system
mixed economy
economic transition
e.
f.
g.
h.
privatization
government intervention
private property
economic freedom
____
1. the doctrine that government generally should not intervene in the marketplace
____
2. a market-based economic system with some government involvement
____
3. property owned by individuals or companies
____
4. period of change in which an economy moves from one economic system to another
____
5. an economic system in which private individuals or corporations own capital goods
____
6. the selling of state-run firms, which are then allowed to compete in the marketplace
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
7. Which of the following philosophers argued that a free market would regulate itself with little government
involvement?
a. Karl Marx
b. Adam Smith
c. Vladimir Lenin
d. Friedrich Engels
____
8. Government intervention in a modern economy is useful because
a. the needs and wants of a modern society are always met by the marketplace.
b. the marketplace has many incentives to create public works such as parks.
c. governments are more able to meet some needs and wants of modern society.
d. free market principles do not encourage growth.
____
9. The diagram shows money flowing to the government from firms and households in a mixed economy. How
would you label points a and c on the diagram?
a. labor
b. taxes
c. government-owned factors
d. government purchases
2
Name: ________________________
ID: A
____ 10. Which of the following would be part of the flow indicated by the arrow labeled “b”?
a. smoke alarms for senators’ offices
b. Secret Service salaries
c. import taxes paid by foreign firms
d. Social Security checks
____ 11. In which of the following lists of mixed economies does the free market system dominate?
a. France, Canada, South Africa, United Kingdom
b. United States, United Kingdom, Singapore, Hong Kong
c. Cuba, Greece, China, United States
d. Russia, Peru, France, Canada
____ 12. The United States economy is a mixed economy
a. based on a traditional economy, but allowing some government intervention.
b. based on a centrally planned economy, but limiting government intervention.
c. based on a free market, allowing no government intervention.
d. based on a free market, but allowing some government intervention.
____ 13. The main difference between the economies of China and North Korea is that
a. North Korea does not have a centrally-planned economy.
b. North Korea has begun to introduce free market practices.
c. China is privatizing state-run businesses.
d. China does not allow ownership of private property.
2
Name: ________________________
ID: A
____ 14. The United States government intervenes in the economy in order to
a. provide competition for private firms.
b. impose barriers on foreign trade.
c. promote the general welfare.
d. protect laissez-faire.
____ 15. Which of the following best describes the economy of the United States?
a. free market
b. centrally planned
c. mixed, but more centrally planned
d. mixed, but more like a free market
Short Answer : You MUST complete TWO QUESTIONS for FIVE POINTS EACH. Additional correct answers
are worth one point extra credit.
16. List the following countries in order, starting with the most centrally planned and ending with the most free
market: China, North Korea, Singapore, South Africa, United States. Name and give examples of two types of
government intervention that you considered as you compared these countries.
17. The economy of China is in transition. What does this mean?
3
ID: A
Economics Chapter 2 Section 4 Review (This is NOT an assignment)
Answer Section
MATCHING
1. ANS: A
PTS: 2
DIF: L3
REF: A.40
OBJ: 2.4.4 Describe the role of free enterprise in the United States economy.
STA: B.2
TOP: Economic Systems | Laissez-Faire
2. ANS: C
PTS: 2
DIF: L3
REF: A.41
OBJ: 2.4.1 Explain the rise of mixed economic systems.
TOP: Economic Systems | Mixed Economy
3. ANS: G
PTS: 2
DIF: L3
REF: A.41
OBJ: 2.4.1 Explain the rise of mixed economic systems.
TOP: Economic Systems | Private Property
4. ANS: D
PTS: 2
DIF: L3
REF: A.43
OBJ: 2.4.3 Compare the mixed economies of various nations along a continuum between centrally planned
and free market systems.
STA: F.3
TOP: Economic Systems | Economic Transitions
5. ANS: B
PTS: 2
DIF: L3
REF: A.43
OBJ: 2.4.4 Describe the role of free enterprise in the United States economy.
STA: B.2
TOP: Economic Systems | Free Enterprise
6. ANS: E
PTS: 2
DIF: L3
REF: A.43
OBJ: 2.4.1 Explain the rise of mixed economic systems.
TOP: Economic Systems | Privatization
MULTIPLE CHOICE
7. ANS: B
Early free market thinkers such as Adam Smith believed that, if left alone, the free market would provide the
greatest benefit for consumers.
PTS: 3
DIF: L3
REF: A.39
OBJ: 2.4.1 Explain the rise of mixed economic systems.
TOP: Economic Systems | Free Market Economy
8. ANS: C
Some needs of modern society would be difficult to meet in the marketplace.
PTS: 3
DIF: L3
REF: A.40
OBJ: 2.4.1 Explain the rise of mixed economic systems.
TOP: Economic Systems | Government Intervention
9. ANS: B
In a mixed economy, the government collects taxes from both households and firms.
PTS: 5
DIF: L4
REF: A.40
OBJ: 2.4.2 Interpret a circular flow model of a mixed economy.
TOP: Economic Systems | Mixed Economies
1
ID: A
10. ANS: A
The government purchases goods such as smoke alarms from businesses.
PTS: 5
DIF: L4
REF: A.41
OBJ: 2.4.2 Interpret a circular flow model of a mixed economy.
TOP: Economic Systems | Mixed Economies
11. ANS: B
On a continuum of mixed economies, the free market dominates in the United Kingdom, Canada, United
States, Hong Kong, and Singapore.
PTS: 3
DIF: L3
REF: A.41
OBJ: 2.4.3 Compare the mixed economies of various nations along a continuum between centrally planned
and free market systems.
STA: F.3
TOP: Economic Systems | Mixed Economies
12. ANS: D
The U.S. economy is a mixed economy with a free market system and limited government intervention.
PTS: 3
DIF: L3
REF: A.43
OBJ: 2.4.3 Compare the mixed economies of various nations along a continuum between centrally planned
and free market systems.
STA: F.3
TOP: Economic Systems | U.S. Economy
13. ANS: C
China is in economic transition and is privatizing state-run businesses.
PTS: 3
DIF: L3
REF: A.43
OBJ: 2.4.3 Compare the mixed economies of various nations along a continuum between centrally planned
and free market systems.
STA: F.3
TOP: Economic Systems | Privatization in China
14. ANS: C
The United States intervenes to promote the general welfare and provide vital services.
PTS: 3
DIF: L3
REF: A.43
OBJ: 2.4.3 Compare the mixed economies of various nations along a continuum between centrally planned
and free market systems.
STA: F.3
TOP: Economic Systems | Government
15. ANS: D
While the United States economy is a mixed system, the foundation of the economy is the free market, so the
resulting economy is mixed, on the side of the free market.
PTS: 3
DIF: L3
REF: A.43
OBJ: 2.4.4 Describe the role of free enterprise in the United States economy.
STA: B.2
TOP: Economic Systems | United States Economy
2
ID: A
SHORT ANSWER
16. ANS:
A list that goes from most to least centrally planned is North Korea, China, South Africa, United States, and
Singapore. Two types of government intervention are government ownership of the factors of production and
laws that protect the rights of private property owners. North Korea’s government, for example, owns all
property and all economic output. The United States has laws that protect private property.
PTS: 7
DIF: L4
REF: A.41
OBJ: 2.4.3 Compare the mixed economies of various nations along a continuum between centrally planned
and free market systems.
STA: F.3
TOP: Economic Systems | Mixed Economies
17. ANS:
China’s economy is undergoing a period of change as it moves from central planning toward a market-based
system.
PTS: 5
DIF: L3
REF: A.43
OBJ: 2.4.1 Explain the rise of mixed economic systems.
TOP: Economic Systems | Mixed Economies
3