1. In the late 1700s the British government used the colony of Australia as: A. a location in which to build new factories. B. a prison to which criminals could be sent. C. a military base to replace the African colonies. D. a source of resources like coal and iron.

2. A market economy is very different from a command economy. Which of the following is found in a market economy? A. competition B. guaranteed yearly pay raises C. government control of industry D. government control of agriculture

3. Which of following best describes a market economy? A. A person can start any legal business and charge any price. B. The government provides food and housing to all workers. C. The government provides services, such as telephones and television. D. National businesses, such as airlines, are owned by the government.

4. Use the information in the box below to answer this question. In order to produce a good or a service, four factors of production are needed—natural resources (land), human resources (labor), capital resources (buildings and machinery), and entrepreneurship (organization). A sixth-grade class decides to open a popcorn stand. The stand and the popcorn popper are examples of which factor of production? A. natural resources B. human resources C. capital resources D. entrepreneurship

5. In which economic system are the production and distribution of goods owned by private individuals or corporations? A. traditional B. feudalism C. market D. command

6. Which term best describes an economic system in which the people—not the government—own land, factories, and businesses? A. communism B. market C. command D. traditional

7. Which word has the same meaning as the economic term "tariff"? A. tax B. savings C. debt D. money

8. You need to purchase a pair of sneakers since they are required for physical education class. Which is an example of effective decision making? A. You buy the first pair of sneakers you try on at the first store you visit. B. You use your money to buy a pair of jeans instead of a pair of sneakers. C. You buy a pair of sneakers after considering fit, appearance, and cost. D. You buy the most stylish and expensive pair of sneakers you find.

9. A country's parliament votes to increase tariffs upon goods from another country. This is an example of: A. a monarchy encouraging free trade. B. a representative democracy restricting trade. C. a socialist congress preventing free enterprise. D. a communist government allowing freedom of speech.

10. In a traditional economic system people usually exchange goods or services rather than use money. Which of the following is an example of this exchange process? A. charging goods on a credit card B. bartering with a seller C. paying for services by check D. using currency to pay

11. Why do items for sale have prices such as $2.99, $5.99, and $9.99 instead of $3.00, $6.00, and $10.00? A. The stores are trying to help their customers save money. B. Such prices make the items seem less expensive than they are. C. Computers set the prices, and these just happened to turn out this way. D. Such prices are used to cut down on the amount paid for taxes.

12. What is the purpose of a tariff, such as a protective tariff? A. to increase the prices of imported goods and protect a country's own industries from foreign competition B. to decrease the prices of imported goods so a country's people can buy what they need for the lowest cost C. to increase the prices of exported goods so a country's own businesses are less likely to send their products to other nations D. to decrease the prices of exported goods so people in other countries will buy the foreign nation's product over one from home

13. The economic system of communist countries is most closely related to which of the following? A. command B. market C. traditional D. supply and demand

14. Which economic term best describes using money to earn more money? A. selling B. borrowing C. trading D. investing

15. The North American Free Trade Agreement (NAFTA) was designed to promote free trade between the United States, A. Canada, and Mexico. B. the United Kingdom, and Russia. C. Canada, and the United Kingdom. D. Mexico, and the islands of the Caribbean.

16. Canada and Mexico are SIMILAR in that lowering trade barriers between these two nations has resulted in both nations experiencing A. growth in their economies. B. increases in unemployment. C. increases in the prices of consumer goods. D. decreases in the quality of consumer goods.

17. When a country has a market economy, which of these statements correctly defines this system? A. Workers are guaranteed a pay raise every year. B. The government controls most of the businesses in the country. C. Basic goods in the country are provided to all people without charge. D. Companies produce goods of their choice and consumers decide whether to buy the goods.

18. What is the purpose of free trade partnerships like the North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico? A. to increase trade by doing away with tariffs. B. to allow countries to get needed goods without having to pay for them C. to keep the countries from trading with Europe or Asia D. to help the countries produce everything they need for themselves