1. Which one of the following is correct?

The South African economy is a:

A. pure market economy.
B. pure command economy.
C. pure traditional economy.
D. mixed economy.
E. multilateral economy.
2. What are the three mechanisms available to societies towards solving the three economic
questions?
a) 1. Tradition 2. Modern 3. Future
b) 1. Tradition 2. Command 3. Market
c) 1. Tradition 2. Demand 3. Supply
d) 1. Modern 2. Command 3. Market
e) 1. Modern 2. Command 3. Demand
3. Which of the following is an output question?
a) How much of the goods and services will people receive?
b) For whom will the goods and services be produced?
c) Who will receive the goods and services?
d) Where will the production occur?
e) What goods and services will be produced?
4. Which of the following is an input question?
a) What goods and services will be produced?
b) For whom will the goods and services be produced?
c) How much of the goods and services will people receive?
d) Where will the production occur?
e) How will each of the goods and services be produced?
5. Which of the following is a distribution question?
a) How will each of the goods and services be produced?
b) How much of the scarce resources will be used in the production of each
good?
c) Who will receive the goods and services?
d) What goods and services will be produced?
e) What quantities of goods and services will be produced?
6. Which one of the following is not a basic economic system?
a) Monetary system
b) Market system
c) Mixed system
d) Command system
e) Traditional system
7. Which of the following is a characteristic of the traditional system?
a) A central authority determines how the output is distributed.
b) It is often described as a socialist system.
c) It stubbornly resists innovation.
d) Most factors of production are privately owned.
e) Decisions are made based on self-interest
8. Which of the following is/are the characteristic(s) of the traditional system?
[I]: It is often called a capitalist system.
[II]: Goods are distributed in a different way by each successive generation.
[III]: It is quick to adapt to changing conditions and accepts innovation.
a) [I] and [II] only
b) [I] and [III] only
c) [II] and [III] only
d) [I], [II] and [III]
 e) None of the above
9. In a command-type economy, economic planners would be concerned with all but one of the
following areas. The exception is
a) an appropriate allocation of resources between the production of consumer
goods and capital goods.
b) the elimination of bottlenecks in the supply of key commodities.
c) the establishment of an effective chain of command to pass production
targets to producer units.
d) implementation of incentives to achieve output targets.
e) freedom of movement of capital to respond to profit signals throughout the
economy.
10. Which one of the following statements is correct?
a) Modern economic systems are largely based on tradition.
b) During the past few decades many countries have abandoned command as
the major coordinating mechanism of their economic systems.
c) A market can exist only if there is physical contact between prospective
buyers and prospective sellers of a good or a service.
d) Competition and negotiation is essentially the same thing.
e) In market capitalism each participant is acutely aware of the needs of
others.
11. Which one of the following is necessary for the existence of a market?
a) A particular building or market place.
b) A fixed price for the product that is traded.
c) Contact between prospective buyers and sellers.
d) Telephone or cellphone links.
12. In economics, the “how” or input question refers to:
a) the problem of allocating scarce resources among competing uses.
b) the ways in which factors of production may be combined to produce
output.
c) the way in which a firm decides on its profit-maximising rate of output.
d) the problem of how output is distributed among individuals and groups in
society.
e) the way in which the state sets output targets in a command economy.
13. In a market system, which of the following is incorrect?
a) Prices allocate resources equally among competing industries and sectors
in the economy.
b) Prices indicate relative scarcities and costs of production.
c) Relative price changes are a determinant of firms’ profits and therefore
encourage or discourage production.
d) Prices are measures of consumers’ willingness to pay for goods and
services.
e) Prices signal to consumers how much they must sacrifice to obtain a
commodity.
14. Which one of the following statements about economic systems is correct?
a) A traditional system is a dynamic system.
b) A command system is an efficient system.
c) A market system is a fair/equitable system.
d) Most economic systems are mixed systems.
e) There are many examples of pure market economies in the world.
15. In the South African economy, the problem of “what to produce” is solved primarily by:
a) the National Planning Commission.
b) the South African Reserve Bank.
c) people advertising their wants.
d) the pattern of consumers’ spending.
 e) direction by government.
16. Nationalisation:
a)means that government obtains assets from the private sector, with or
without compensation.
b) is a common feature of market economies.
c) tends to occur in capitalist economies.
d) means that the national government sells assets to private companies.
e) tends to boost the confidence of foreign investors in an economy.
17. Adam Smith’s concept of the invisible hand suggests that
a) the selfish actions of rational individuals will generate an efficient allocation
of scarce resources.
b) the public-spirited actions of individuals will generate an efficient allocation
of scarce resources.
c) the systematic but largely invisible intervention of government in the
operation of markets will generate an efficient allocation of scarce
resources.
d) market failure cannot arise, and there is therefore no economic role for the
state.
e) no overall efficient allocation of scarce resources is likely without
coordinated economic planning.