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 (A)</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 (C)</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 (A)</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 (B)</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 (D)</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 (C)</p> Signup and view all the answers

Which of the following statements is true about minimum wage?

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

Which of the following statements is true?

<p>All of the above (D)</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 (D)</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 (B)</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 (B)</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 (D)</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 (A)</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 (A)</p> Signup and view all the answers

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