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American Free Enterprise

Matching
 
 
Identifying Key Terms
Match each term with the correct statement below.
a.
gross domestic product
f.
macroeconomics
b.
free rider
g.
poverty threshold
c.
public interest
h.
market failure
d.
private sector
i.
welfare
e.
in-kind benefits
j.
public disclosure laws
 

 1. 

the study of the behavior and decision making of entire economies
 

 2. 

an income level below that which is needed to support families or households
 

 3. 

the part of the economy that involves the transactions of individuals and businesses
 

 4. 

goods and services provided by the government for free or at greatly reduced prices
 

 5. 

someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway if it were provided as a public good
 

 6. 

requirements for companies to provide full information about their products
 

 7. 

the concerns of the people as a whole
 

 8. 

the total value of all final goods and services produced in a particular economy
 

Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 9. 

Which of the following is a private organization that attempts to influence public officials to act or vote in ways that will benefit the group’s members?
a.
market research group
c.
public policy group
b.
free enterprise group
d.
interest group
 

 10. 

What is the most effective way for consumers to make their desires known to businesses?
a.
through mail and phone surveys
b.
by protesting and boycotting products
c.
by the purchases they make
d.
by hiring lobbyists and joining consumer groups
 

 11. 

Why does the government use its powers to make sure that businesses disclose so much information to the public?
a.
to make buyers more knowledgeable and safer
b.
to make it hard for businesses to make an excess profit
c.
to make it easier for consumers to save money
d.
to make it easy for businesses to have good information
 

 12. 

What is a positive externality?
a.
a way to generate trade that will benefit people who are from other countries
b.
an economic side effect that generates unexpected benefits
c.
a cash flow that will benefit both the government and the businesses who interact with it
d.
an extra payment to welfare recipients
 

 13. 

What does the Temporary Assistance for Needy Families program provide?
a.
retirement income for the elderly
b.
cash to the states to help run their welfare programs
c.
compensation to all who lose jobs
d.
cash to workers injured on the job
 

 14. 

What is the difference between a business cycle and the day-to-day ups and downs of the market?
a.
The day-to-day ups and downs of the market can be much more extreme than a business cycle.
b.
The day-to-day fluctuations are more likely to have an impact on people’s finances.
c.
A business cycle is usually more restricted, whereas market fluctuations are worldwide.
d.
A business cycle is a major, prolonged fluctuation rather than a day-to-day movement.
 

 15. 

When did U.S. government become more and more involved in economic matters of public interest?
a.
1930s
c.
1980s
b.
1960s
d.
1990s
 

 16. 

What effect does new technology usually have on an economy?
a.
It makes the economy stronger and more efficient.
b.
It reduces the dependence of the economy on business.
c.
It slows an economy down for at least a while.
d.
It reduces the available jobs.
 

 17. 

Which of the following is a critical rule for determining whether something is a public good?
a.
The benefit to each individual who uses the facility is greater than the cost.
b.
The benefits of the facility are greater for the society than for the individuals using it.
c.
The total benefits to society are greater than the total cost.
d.
The total cost is small for each individual taxpayer.
 

 18. 

Which of the following is NOT an example of a public good?
a.
shopping malls
c.
highways
b.
national parks
d.
municipal libraries
 

Short Answer
 
 
Reading a Table

Federal ProgramPurpose
Temporary Assistance for Needy FamiliesProvides welfare programs
Unemployment insuranceProvides payments to the unemployed
Consumer Product Safety CommissionRegulates consumer products
Environmental Protection AgencyProtects human health and environment
Equal Employment Opportunity CommissionPromotes equal job opportunities
Social Security AdministrationProvides payments to the elderly
 

 19. 

Which program helps support people who have retired?
 

 20. 

Which programs provide short-term safety nets for people in direct need?
 

 21. 

Which programs provide indirect safety for all residents?
 

Essay
 
 
Critical Thinking
 

 22. 

Identifying Central Issues What is the difference between a positive and a negative externality? Give an example of each.
 

 23. 

Synthesizing Information How might the changes brought about by the influence of interest groups affect the public?
 

 24. 

Identifying Assumptions What kinds of intervention or protection have U.S. residents come to expect from the government that a totally free market would not provide?
 



 
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