Name Date Score

IEST 5 Econornics : Work and. Prosperity

MULTIPLE CHOICE: Choose the word or phrase that will best complete the statement or
answerthe question. F2 points each)
1. The two primary responsibilities of any government should be to punish evil
-0- and ?
a. keepthepeace c. make responsible laws
b. discourage crime d. reward good
c2. In a free market society, most economic choices are made by _?_.
a. private businesses re. the private seetor
b. government offieials d. the public sector
Cs. ? believed that government should pump money into an economy during
recessions by funding massive public works projects.
a. David Ricardo c. John Maynard Keynes
b. IGrl Marx d. Adam Smith
4. The expansion of the American bureaucracy during the 20th century is
-L primarily the result of ?
a. population growth c. a strong economy
b. militar5r activity d. increased govemmental activity

3 5. That part of the business cycle at which a receding

lowest point is called what?
economy reaches its

a. arecessron c. the base period

b. a trough d. a trench
L 6. The conect name for the boom part of the business
a. expanglon c. extension
cycle is a(n) ?

b. enlargement d. recession

J ?. Economists often compare past and present prices to those of-?-.

a. business cycles ro. equilibrium
b. GNP d. a base period
& 8. When a government dumps massive emounts of created money into a
nation's money supply, the likely result will be ?
a. dellation c. debasement
b. inflation d. stagnation

Copyright O 1999 Pensacola Christian C,ollege . Not to br reproduced- 23

Tbst 5, page 2 Economi.cs : Work and, Prosperity

!* 9. In his attempt to lift the Americaneeonomy out of its slump, President ?

implemented policies based upon supply-side economics.
a" Franlrlin Roosevelt c. Ronald Reagan
b. Lyndon Johnson d. Jimmy Carter
,/
/ tO. IGrl Malx outlined the steps he felt were needed to establish Communism
in his oamohlet ?
- c. Tlrc Carnrnunist Manifesto
a. Dos Kapital
b. Humanist Manifesto d- Thp Cornrnunist Leagrc
D
A f f . Welfare capitolisn ardmanryed capitali.sm are different terms for the
economic system of ?
a- soeialism c. Communism
b. nationalism d. free enterprise capitalism

k:.:.. The Canadian health care system is an saample of ?

a. socialism c. Communism
b. nationalism d. free enterprise capitalism

COHPLETION: Write the word(s) that will best complete the statement. Ge points each)

'LuV.cn nen{ 13. A(n) ? is an established system of political administration

by which a nation, state, society, or organization is ruled.

K QniL n 4 L4. One of the best ways to judge the prosperity of a nation is by
{* comparing consumer wages with consumer ?

Ksce*{{ tOft lb. A(n) ? is t}rat phase of the business cycle that directly
follows a boom.

f ffaE, Ut 16., A(n) ?

is a recession that is unusually severe and long-
-fu lasting.

F *v.,f|- 1?. When state planne.rs in a command economy underestimate

or overestimate the demand for various g@&, shortages
and ? usually result.

24
UATCHING: Match the term with the correct definition or description. Fl point each)
( 18. socialism / Kr"oreferred to as Marxism
f,T- /"'
L9. bureaucracy ./,E ,/tlyct;rlrates up and down
r 20. IGynesianism / basedupon collective ownership and
B 21. business cycle
/ control of many or most national
resources
11 22. Ieading indicator
/{. "r*ed
when the supply becomes
p 23. demand-pull inflation greater than the demand

._T 24. cost-pushinflation

,/dmadeup
of appointed officials and
their numeroun agencies and
6 25. supply-side economics
,. departments
rt 26. Communism
,F. rejects the idea that "supply crreates
its own demand"

/ S.
advocatns reducing taxes to make
more money available for private
investment in capital and
research
,/
,,rt. tnnds to change before the rest of
/ the economy

/ caused by rising production costs

' that result in businesses pushing
up prices
J. caused when the demand becomes
greater than the supply

MODIFIEDTRUE-FALSE: lf the statement is true, write true. ll it is fialse, replace the

italicized word(s) with the word(s) that will'make the statement lrue. G2 points eaclt)

LlT el o*aa€4. lhe subject of government's role in an economy is part of the

field of rnicreconornies, the study of national and
international economies and how they are affected by
large-scale choices and public policies.

lc,, e 28. In the United States, t}ae priuafe sector is the larger of the
two sectors.

T-rt€[a-t,"rt 29. \{hen too much money is placed in the money supply, the
result is deflatian.

25
 Tbst 6, page 4 Eeonomies: work and Prwperity

, , td f t^J 80. During the midst of the Great Depression, Americans

accepted increased governmental control of the economy
under the leadership of Franklin Roosevelt and his Great
Soei,etY-
{
l(u7. 31. l{he opportunlty costs of obtaining goods are normally much
higher in a country with a command economy than in one
with a free enterPrise economy.

LcoSS Dox<sri P'od'gt. Gross national prd,uct is the value of atl finished goods and
senrices produced within a country during a year's time-

35. Stagletinnisthe economic condition in which high inflation

is combined with high unemployment, resulting in little
or no inc:rease in ProductivitY.

T? --, €- 34. Ttre promotion of one's own count4r and government

regardless of moral considerations is a philosophy known
as nationalisrn.
-.r
I C- L-, 35. Karl Max, the Father of communism, advocated the violent
overthrow of the bourgeois.
I
f- c,- S* BG. During the Cold War, West Berlin displayed the poverty and
lack of freedom typically found in command economies.

S rrCi lis a( gT. One of the main dangers af Communismis its deceptiveness'
a quality which allows it to creep into an economy
without people realizing what is happening'

SHORT ANSWER: Write the correct answer in the blank. (-3 points each)
t^-#]fr"-"
EX C. S, ; ,re. three of the five ways discussed in the text by which
governments can damage their economies'
a ert}' CI€ /-{c'4<?'
rn{,,ut nrd-!fu?:t"
p6b+,!al
Pl -naz7,nT,'+ 146.
"
<dr** f-
L, '!b,< 41. For what common economic tool do the letters cPl stand?

lR,S1r< 42. Ttre 1g1? Bolshevik Revolution ocsurred in which eountry?

 Name
Tbst 5, page 5 Ecotwmi.es: Work and. Prosperity

ESSAY: Answer the following questions clearly and completely.

(4 points total per questiorz,) /
4{}. Explain how excessive taxation can seriously harm or eyen destroy an

?irf{;,q9 r'[ lt:ltt a:? .#:4Y

in .flr,z Frec Aa(ke-*. Anoi', OVIY h's*6t1- ^1t
* ;" v<s+
t+ S'toaf
*r-+ t.lhert ce* &{vct'trte-r"t+ i*XeS lcss l'heY
\;L*A*<a tnY
Y^ ittc^-v{ *t'ora '''t"(}4(
fuzrcF.?c , *I'tu Aore- the- ^*&es,!e l<-<S
SPz4c/-irtr4. inves+'np onC- hr<f?'n eS5 {}a -'z +h <
Pr,rr^-t/ Seclor"a-nL .{ke {, ) sg' AarT c4-tro(- c-
4r- flav<rLr:e-nt

44. Discuss some of the problems inherent in socialism. Why do people continue
to accept socialistic policies in spite of the dangers? 36 rI L o F
+t4 e- Ppg bteprs t,;t,1h 6o C,a-( i<1 q_ (<_ -th(e_y
)- 5+ Ao |sc-q-*a (Prertc!- UJ ea'l+h e-Ven/tt
f-tatt55 &.t{p're" lA.}a-.{- fDa"l. aoal* <-v/er1 ,{ C
>r- Lo,.> t ot,-i n S 11h ere +l { , rtfu / /} atfu C<
--
-hto.loe d-eL,n k^/)rc/tc4 Jatu<nr € e-i {ulte{S.
le.P|- (on|,r,, t -rc) on€r+ '+h'5 $.c<'- f e 4h <v
'n-"+*,a14-e-t5€.
*,1{ *a.{c *r,c&edd in*6 L'ffio.,d--
i+S +t, { be :-i *ll,,ng* tve( .

27