Chapter 5: What Is the Economic Problem? (44 Pts)

Name ______Economics Unit II: Economics of the Nation Date ______Blk. ______(105 pts.)

Answer the following questions using your textbook and lecture notes. (Type all answers.) (71 pts.)

Chapter 5: What Is The Economic Problem? (44 pts) 1. State the economic problem of a society and list the four primary objectives. (5 pt.) 2. Explain how unemployment is a problem for any so ciety. (1 pt.) 3. In your own words, what is the difference between extensive and intensive economic growth? (2 pts.) 4. List the three critical questions that every society must answer as it seeks to meet its economic goals. (3 pts.) 5. Define consumer goods and capital goods. (2 pts)

6. List five consumer goods and five capital goods, then briefly describe the consumer goods/capital goods tradeoff. (12 pts)

7. Compare the difference between a labor intensive business and a capital intensive business. (2 pts.)

8. List the advantages and disadvantages of labor intensive and capital intensive business firms. (11 pts.)

9. According to Karl Marx, how would his new society bring about the betterment of all people? (1 pt.)

a. What would his society then overcome, and how? (1 pt.)

b. What did he call his new utopia? (1 pt.)

10. In a free market, what do rising and falling interest rates indicate? (2 pts.)

11. Why would a nation’s government favor a labor intensive economy? (1 pt)

12. The distribution question asks, “Who will receive what the nation produces?” but the real question is… (1 pt)

13. What should be the standard that Christians use to answer the distribution question? (1 pt.)

Chapter 6: Economic Systems (27 pts)

14. What economic system prevailed in Europe from the 1500s to the 1700s? (1 pt.)

15. Why did mercantilism promote colonization? (1 pt)

16. Who is the father of laissez-faire liberalism? (1 pt.)

17. According to Adam Smith,

a. What were the flaws of mercantilist economic policy? (1 pt.)

b. Why would a laissez-faire economic policy work? (1 pt.)

c. What are the three principal functions of government? (3 pts)

18. Name the three forms of capitalism. (3 pts.) Unit II Economics of the Nation

19. Name four forms of socialism. (4 pts.)

20. List three potential problems of capitalism. (3 pts.)

21. Socialism is marked by the government’s nationalizing of which vital industries? (5 pts.)

22. In your own words, define a public good and give an example of one. Why do public goods often become the responsibility of the government? (2 pts)

23. Why is radical capitalism unscriptural? (1 pt)

24. In the eighteenth century, what did the word liberal mean? (1 pt)

Complete the chart of using the following Economic Systems: Radical Capitalism, Classic Liberal Capitalism, State Capitalism, Social Democracy, Centralized Socialism, Communism (18 pts.) (The first one has been completed for you.)

Who answers the Who owns the three key Economic System factors of economic production? questions? Radical Capitalism Individuals Individuals

Fill in the blanks with the word or phrase that best completes the sentence. (6 pts.)

1. ______exists when someone who wishes to work cannot find a job. 2. The term ______refers to an increase in the quantity of goods and services a nation can produce. 3. ______is the modern program governments arrange for poor people who are willing to work to receive financial assistance. 4. ______is the modern program governments arrange for poor people to receive financial help without working for it. 5. In his book ______, Adam Smith refuted the economic policies of mercantilism. 6. According to Karl Marx, “The history of all hitherto existing society is the history of ______.

Matching (10 pts.)

A. Classic Liberal Capitalism F. Capitalism B. Communism G. Socialism C. Social Democracy H. State Capitalism D. Mercantilism I. Nationalization E. Welfare State J. Privatization

2 Unit II Economics of the Nation

1. Transitional economic system between free markets and governmental ownership. 2. The government sells businesses back to private individuals. 3. Economic system characterized by private ownership and decision making. 4. Adam Smith’s ideal economic system. 5. Government is no longer necessary since everyone is acting in the best interest of others. 6. Economic system that leans toward capitalism but has extremely high taxes. 7. Gold and silver in the government’s treasury are what is important. 8. The government takes possession of key industries. 9. A central authority controls resources and makes economic decisions. 10. Private ownership of businesses but with frequent governmental interventions.