Price Floor and Minimum Wage Consequences Quiz
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Questions and Answers

Which of the following best describes the mercantilist view on imports and exports?

  • Imports were considered good and exports were considered bad
  • Imports and exports were both considered good for the economy
  • Imports and exports were both considered bad for the economy
  • Imports were considered bad but exports were considered good (correct)

    • What is the main impact of free trade between a high wage country and a lower wage country according to the passage?

  • Wages in the low wage country will decrease (correct)
  • Wages in the high wage country will increase
  • Wages in both countries will increase
  • Wages in both countries will remain unchanged

    • Which of the following is NOT a way to invest money according to the passage?

  • Real Estate
  • Debt (lending)
  • Equity (ownership)
  • Spending (correct)

    • What is the key difference between passive equity investment and active equity investment?

    <p>Passive investment has no expectation of having a say in how the asset is used, while active investment does</p> Signup and view all the answers

    According to the passage, which of the following is true about the capital account?

    <p>A capital account surplus indicates an inflow of money into the country</p> Signup and view all the answers

    What is the relationship between a trade deficit and the capital account according to the passage?

    <p>A trade deficit is offset by a capital account surplus</p> Signup and view all the answers

    What is the primary consequence of a price floor (minimum price below equilibrium)?

    <p>It creates a surplus of the good or service</p> Signup and view all the answers

    Which of the following is NOT a consequence of a minimum wage?

    <p>It reduces the overall quality of labor</p> Signup and view all the answers

    Which of the following statements is true about prices?

    <p>Prices are not arbitrary and are not set by buyers or sellers</p> Signup and view all the answers

    Which of the following statements is true about minimum wage?

    <p>Most economists argue against minimum wage</p> Signup and view all the answers

    Which of the following goods or services can be legally given away or sold without price control, according to the text?

    <p>Most goods and services in our economy</p> Signup and view all the answers

    Which of the following statements is true?

    <p>All of the above</p> Signup and view all the answers

    What is the essence of the capitalist system described in the text?

    <p>Profit maximization through creative destruction</p> Signup and view all the answers

    What is the primary factor that determines the value of money in a fiat money system?

    <p>The purchasing power of the money</p> Signup and view all the answers

    Which of the following is NOT a feature of a private property system as described in the text?

    <p>Equal distribution of wealth among all citizens</p> Signup and view all the answers

    What is the impact of importing goods from other countries on a nation's economy?

    <p>It causes prices to fall and eliminates jobs</p> Signup and view all the answers

    Which of the following best describes the mercantilist view of international trade, as described in the text?

    <p>Money and wealth are synonymous, and economic activity is zero-sum</p> Signup and view all the answers

    What is the primary factor that determines whether a producer makes a profit or a loss in a capitalist system?

    <p>Consumer demand and preferences for their products</p> Signup and view all the answers

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