Economic Basics Trivia Quiz

Answer: By imposing taxes on exports

The US government promotes competition in order to encourage lower prices, higher quality, and more choices. Anti-trust laws prevent monopolies. Supporting business start-ups helps to create more businesses that may compete for the same consumers. Trading with foreign nations creates competition in the global market.

Answer: Decreases the discount rate

The Federal Reserve stimulates the economy by a combination of lowering the reserve requirement, lowering the discount rate, and buying government securities. Conversely, it may choose to slow down the economy by raising the reserve requirement, raising the discount rate, and selling government securities.

Answer: The amount of government involvement in decision making.

Little to no government involvement is a free market economy.

Some government involvement combined with supply and demand is a mixed market economy.

High level of government involvement, not allowing the economy operate by supply and demand, is a command economy (also known as centrally planned).

Answer: Government controlled prices

Competition is primarily prevalent in both free market and mixed market economies. Command economies lack competition, often resulting in lower prices, few or no choices, and high prices.

Answer: Establish guidelines for public health and safety

Federal agencies are put into place to help regulate business practices with the goal of protecting public health and safety.

Answer: Government ownership of resources

A free market economy is based on supply and demand with very little government involvement.

Answer: Private financial institutions

Private financial institutions encourage saving and investing by providing incentives to consumers.

Answer: Mixed Market

The United States has a combination of government involvement and allowing supply and demand to influence the economy.

Of the other options, a tradition economy is based on traditions and culture. A Free Market economy involves little to no government control and is based on supply and demand (the "invisible hand").

In a command economy, the government controls what to produce, who produces it, and who gets it.

Answer: Kenny sells cookies at a bake sale

Consumption is the buying and using of goods and services.

Please note: other prolific chains of hot-drinks vendors are available.

Answer: individuals, businesses, government

Economic circular flow is the constant flow of money between individuals, businesses, and the government. The government gains revenue primarily through taxing individuals and businesses and spends the money on public goods and services and expenses. Businesses gain revenue through sales of goods and services and spend the money on expenses (often giving money back to other businesses) and human labor (individuals).

Individuals provide services through human labor to businesses and gain revenue in the form of income.