1. The text defines an economic system as

a. the set of institutional arrangement used to allocate scarce resources.

b. the movement of capital between countries.

c. how wealth is distributed and created in a country.

d. the natural resource available.

2. Dynamic efficiency measures

a. how much output is being produced from a fixed volume of inputs.

b. how efficiently inflation is being managed.

c. the tradeoff between inflation and unemployment.

d. none of the above.

3. Which of the following legal forms of business organization provides for limited liability?

a. The sole proprietorship.

b. The partnership.

c. The corporation.

d. None of the above.

4. In a “perfect market”

a. all buyers have the same income.

b. all buyers have gathered different amounts of information.

c. all buyers are identical.

d. all buyers pay the same price for the same product.

5. Privatization in transition economies is often justified on the grounds of increasing

a. efficiency.

b. attention to fiscal deficits.

c. expansion of the money supply.

d. none of the above.