Exam 5: Difficult Cases for the Market, and the Role of Government

Regulatory policies requiring lenders to extend more low down-payment loans to higher-risk borrowers along with the Fed's low short-term interest rate policy during 2002-2004 caused

Which of the following was an underlying cause of the economic crisis of 2008?

Which of the following most clearly indicates why the franchiser of a product has a strong incentive to monitor the quality of the product among all of the franchised sellers?

When externalities are present,

The share of new loans with a down payment of 5 percent or less extended by Freddie Mac and Fannie Mae

Residential mortgages historically carried a capital requirement of 4 percent. Why did these mortgages, bundled as part of the mortgage-backed securities issued by investment banks, turn out to be far more risky than historically indicated?

Relative to a competitive situation, if a market lacks competition, economic theory suggests that

From the viewpoint of economic efficiency, when competitive forces in an industry are weak, market allocation will often lead to

Suppose that the producers of copper are permitted to emit harmful pollutants, free of charge, into the air. How will the price and output of copper products in a competitive market compare with their values under conditions of ideal economic efficiency?

How does the text define economic efficiency? Is this an absolute or a relative definition? Would another type of definition be preferable? Why or why not?

After a period of price stability in the 1990s, housing prices increased dramatically during 2002-2005 because

Which of the following is the best example of a public good?

Which of the following best explains why making automobiles completely safe is not efficient?

Which of the following is true of regulation?

Market failure will most likely arise from poor information when the product is

Since 1995, federal regulations have

There is substantial agreement among scholars that at least two functions of government are legitimate. These two functions are the

Which of the following provides the most accurate explanation of what is meant by "government failure"?

Figure 5-4 -Refer to Figure 5-4. The efficient price and quantity are

Is your economics textbook a public or private good? If you conclude that it is a private good, why do we have copyright laws?