Reference no: EM13316369

1. for an economy to function, which best describes the appropriate sequence of activities?

a) Spending, wants and needs, production, income

b) wants and needs, production, income, spending

c) production, income, spending, wants and needs

d) income, spending, wants and needs, production

2. Which of the following is/are potential failure(s) of the free market economic system?

a) the breakdown of competitive markets.

b) the failure of the market system to deal with equity (fairness issues)

c) the failure of the market system to address externalities

d) the failure of the market system to provide public goods

e) all of the above

3. According to your author, which of the following are examples of government failure?

a) the U.S. income tax code.

b) agricultural price support programs.

c) the public school education programs

d) failure of the U.S. government to keep its financial house in order.

e) All the above.

4. The price mechanism would be least important under which kind of economic system?

a) capitalism

b) socialism

c) communism

d) fascism

5. An economy's investment in capital is crucial because ___________________.

a) capital is basic factor of production and without it production cannot occur

b) new capital investment is "the engine that drives economic growth"

c) capital investment improves labor productivity and raises a nation's standard of living

d) all of the above are correct.

e) none of the above are correct.