Unit 1 Test – Economic Systems

School _______________________ Teacher __________________

Student’s Name ______________________

1. Who is considered “the father of modern economic theory”?

a. John Locke

b. Adam Smith

c. Karl Marx

d. George Washington

2. The central theme of An Inquiry into the Nature and Causes of the Wealth of Nations is:

a. all economic power should go to consumers.

b. all economic power should be controlled by government

c. leading businesspersons know best and should control economic power

d. a free enterprise system strengthens an economy

3. An example of a world economic power with a “mixed economy” is

a. Switzerland.

b. Russia.

c. United States.

d. People’s Republic of China

4. Characteristics of a “mixed economy” are:

a. free enterprise system.

b. Some elements of control by government in economic planning and practices.

c. Competition is encouraged.

d. All of the above choices are correct.

5. The philosophical work that created a statement of beliefs for the economic and political system known as Communism was:

a. Power To The People.

b. A Guide to Communism.

c. The Red Book.

d. The Communist Manifesto.

6. Karl Marx would be in favor of an economic system that

a. shared wealth with all.

b. B. overthrew capitalism.

c. Allowing workers to perform to the best of their ability with rewards for performance.

d. All of the above choices are correct.

(Complete the following in well-organized paragraphs/essays)

7. For any product that you select made in the United States, discuss four (4) components of the manufacturing and/or sale of that product that would support recommendations presented by the economic theory of “an invisible hand” guiding the economy.

8. Citing examples from both An Inquiry into the Nature and Causes of the Wealth of Nations (1776) and The Communist Manifesto (1845). Discuss three (3) differences between the economic philosophies of Adam Smith and Karl Marx.

9. For an imaginary product that would be developed for sale throughout the world, crate an economic system that would focus on combining (discussing similarities) between theories of Adam Smith and Karl Marx.

10. What are three (3) factors of capitalism that result in the United States being considered the only “world economic superpower” at the end of the Twentieth Century?