1. The high economic growth from the Industrial Revolution was characterized by
a. new opportunities to settle empty areas, particularly North America.
b. rapid technological and scientific innovation.
c. the expansion of national governments in Europe and North America.
d. a rapid increase in the accumulation of human and physical capital.
e. none of the above.
2. Periods of economic growth and prosperity can often be explained by
a. political paradigm shifts.
b. technological innovation
c. movement of capital
d. both a and b
e. both b and c
3. Prior to the onset of economic reform in the late 1980s, the Soviet Union and
most Eastern European countries allocated resources primarily by means of
a. markets.
b. national economic plans.
c. neither a nor b.
d. both a and b.
4. A major theme in the 1980s in the governments of England and the U.S.was
a. the appropriate role of government in the economy.
b. the pressure for expanding trade with former socialist block countries.
c. repressing inflation.
d. increasing employment opportunities.
e. none of the above.
5. One example of the expansion of internationalism in the 1990s was the development of a trade agreement between Canada, Mexico, and the United States. This agreement is known as
a. the GATT (General Agreement on Tariffs and Trade).
b. the IMF (International Monetary Fund).
c. the NAFTA (North American Free Trade Agreement).
d. the CMEA (Council for Mutual Economic Assistance).
6. The contemporary Chinese economy is of interest because
a. it combines central planning with a multiparty democratic political system.
b. it combines the market with a multiparty democratic political system.
c. it combines the market with a single-party political system.
d. none of the above.
7. In the analysis of the planned socialist economic systems, the concept of economic reform is usually referred to as
a. the replacement of the plan by the market after the collapse of the planning system.
b. the attempt to improve the operation of the planned economy without a significant shift toward market arrangements.
c. the frequent attempt, in the planned socialist economic systems, to introduce the industrial policy.
d. none of the above.
8. The modern approach to defining economic systems
a. is based on the €isms€ of capitalism and socialism.
b. emphasizes resource allocation arrangements over incentive systems.
c. defines economic systems according to a number of characteristics.
d. recognizes that defining economic systems is impossible.
e. none of the above.
9. Which of the following is not a major attribute of an economic system (Based on the textbook)?
a. Organization of decision-making arrangements.
b. Mechanisms for providing information and coordination.
c. Economic policies.
d. The system's physical and human capital.
e. Both c and d are correct.
10. A planned economy is one in which
a. subunits are coordinated by directives formulated by a superior agency.
b. subunits are not induced by appropriate incentives to carry out plan directives.
c. market allocation is combined with planned allocation.
d. a ministerial system prevails.
e. none of the above.
11. Property ownership rights include
a. disposition and utilization.
b. disposition, utilization, and the right to use the products and services generated.
c. disposition, utilization, and team production.
d. disposition, utilization, and economic incentives.
e. none of the above.
12. Consumer sovereignty means that
a. central planning is absent.
b. consumers elect public officials.
c. consumers make the basic decisions on what is to be produced.
d. consumers are not affected by advertising.
e. none of the above.
13. Which of the following is not a characteristic of market socialism?
a. Centralized decision-making.
b. Market allocation.
c. State or collective ownership.
d. Combination of moral and economic incentives.
e. All are characteristic of market socialism.
14. Two factors generally believed to be important in the analysis of levels of decision-making are
a. incentives and ownership.
b. authority and information.
c. level of economic development and ideological focus.
d. all of the above.
e. none of the above
15. Moral incentives generally refer to
a. direct money payments made to participants.
b. supplements to direct money payments, such as bonuses.
c. rewards that do not give the recipient greater command over goods and services but rather serve to reward desirable behavior.
d. all of the above.
e. none of the above
16. Principals and agents are different people. An agent is a party
a. who has controlling authority in an organization.
b. who acts on behalf of a principal.
c. with equity rights in the organization.
d. a and b are correct.
e. none of the above.
17. According to the text, opportunistic behavior occurs when a lower-level unit of an organization can use its information advantage against the interests of its superiors. This form of behavior, it is argued, can take two forms:
a. indicative planning and directive planning.
b. planners' preferences and consumer sovereignty.
c. moral hazard and adverse selection.
d. a and b are correct.
e. none of the above.
18. According to the text, there are two extremes of organizational structure. These extremes are termed
a. planned or market
b. corporate or individual proprietorship.
c. association based or hierarchy based.
d. a and c are correct.
e. none of the above.
19. It is often assumed that individuals who participate in the organized activity do so within the constraints of bounded rationality. The concept of bounded rationality
means that
a. individuals may not in fact pursue self-interest.
b. individuals face a variety of limitations, for example, in the ability to process information.
c. agents will never pursue goals or objectives set by principals.
d. b and c are correct
e. none of the above.
20. Modern comparative economists would object to the definition of economic systems only in terms of property ownership arrangements, because
a. they recognize that ownership arrangements are not important.
b. there is some private ownership of property in every economic system.
c. ownership arrangements are only one aspect of the economic system.
d. resource allocation procedures are much more important than property ownership.
e. all of the above.
