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

National defense is considered a public good because there appears to be no limits to the nonrivalry-in-consumption characteristic, and exclusion of nonpayers is impossible. Are there any other goods that so perfectly meet both public goods criteria?

The increase in the share of loans extended to borrowers with little or no down payment contributed to the financial crisis of 2008 because these loans

A good is considered nonrival-in-consumption if

A sound legal system that protects individuals and their property,

In 2008-2009, which of the following weakened the demand stimulus effects of expansionary fiscal policy?

Which of the following was the result of Fannie Mae and Freddie Mac being both privately-owned and government-sponsored enterprises?

If consumption of education creates an external benefit, then in order to increase efficiency relative to the outcome determined by private decisions,

Use the figure below to answer the following question(s). Figure 5-3 -Figure 5-3 illustrates the market for a product that generates an external benefit. D₁ is the private market demand curve, while D₂ is the demand curve including the external benefit. Which of the following is true?

After new HUD guidelines were issued in 1999, Freddie Mac and Fannie Mae

Between 2001 and 2005, sub-prime (including Atl-A) mortgages ____________ as a share of the total.

Economic efficiency requires that

A car sells at different prices at different dealerships in a local market. If a consumer has imperfect information about the price of a car at each dealership, he should

Suppose the actions of the producers of a good impose an external cost which results in the actual market price of $18 and market output of 400 units. How does this outcome compare to the efficient, ideal equilibrium?

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

A good for which it is impossible or at least very costly to exclude nonpaying customers from receiving the good and for which many individuals can share in the consumption of the same unit of the good is called a

A college has found that during every home football game, a group of students sits on a hillside next to the stadium and watches the game without purchasing tickets. In economics, the problem that this college is facing is referred to as a

In a market that lacks sufficient competition,

Fannie Mae and Freddie Mac's dominance of the secondary mortgage market during 1995-2008 encouraged mortgage originators to

When housing prices fell during 2007, the mortgage default rate

When economists say that an activity meets the criterion for economic efficiency, they mean