Question 1

A political function of government is to

Accepted Answer

A) encourage the consumption of government-sponsored goods. 
B) provide public goods. 
C) correct for externalities. 
D) encourage the workings of the price system. 
A) encourage the consumption of government-sponsored goods. 
B) provide public goods. 
C) correct for externalities. 
D) encourage the workings of the price system.

Question 2

The difference between the economic and political functions of government is that

Accepted Answer

A) the economic function is concerned with the Federal Taxation system while the political function is not. 
B) the economic function is concerned with correcting for market failures while the political function is not. 
C) the economic function is concerned with the reallocation of income while the political function is not. 
D) the economic function encourages merit goods while the political function discourages demerit goods. 
A) the economic function is concerned with the Federal Taxation system while the political function is not. 
B) the economic function is concerned with correcting for market failures while the political function is not. 
C) the economic function is concerned with the reallocation of income while the political function is not. 
D) the economic function encourages merit goods while the political function discourages demerit goods.

Question 3

The largest spending category for state governments is

Accepted Answer

A) welfare. 
B) health care. 
C) education. 
D) highway construction. 
A) welfare. 
B) health care. 
C) education. 
D) highway construction.

Question 4

As a share of total national income, government spending generally has

Accepted Answer

A) been constant over the last fifty years. 
B) increased over the last fifty years. 
C) decreased over the last fifty years. 
D) increased until ten years ago, and then decreased steadily. 
A) been constant over the last fifty years. 
B) increased over the last fifty years. 
C) decreased over the last fifty years. 
D) increased until ten years ago, and then decreased steadily.

Question 5

If the government pays a per-unit subsidy to the producer of a service, we would expect to see a(n) I. increase in the quantity demanded.
II. decrease in the out-of-pocket price paid by consumers.
III. increase in the quantity supplied by producers.

Accepted Answer

A) I only 
B) both I and II only 
C) both II and III only 
D) I, II, and III 
A) I only 
B) both I and II only 
C) both II and III only 
D) I, II, and III

Question 6

Orchards provide services to beekeepers because the bees use the pollen to make honey. This is an example of

Accepted Answer

A) a positive externality, and too many orchards exist in society. 
B) a positive externality, and too few orchards exist in society. 
C) a negative externality, and too many orchards exist in society. 
D) a negative externality, and too few orchards exist in society. 
A) a positive externality, and too many orchards exist in society. 
B) a positive externality, and too few orchards exist in society. 
C) a negative externality, and too many orchards exist in society. 
D) a negative externality, and too few orchards exist in society.

Question 7

A shift from S1 to S2 reflects the change that happens when a negative externality is taken into account. A shift from D1 to D2 reflects the change that happens when a positive externality is taken into account.
-Refer to the above figures. A positive externality exists that has not been corrected. Price and quantity will be

Accepted Answer

A)    and   . 
B)    and   . 
C)    and   . 
D)    and   . 
A)    and   . 
B)    and   . 
C)    and   . 
D)    and   .

Question 8

By definition, a government-sponsored good

Accepted Answer

A) is a good that is deemed socially desirable. 
B) is a good that should be available only to upper-income groups. 
C) is always provided at a zero price. 
D) does not affect society's general welfare. 
A) is a good that is deemed socially desirable. 
B) is a good that should be available only to upper-income groups. 
C) is always provided at a zero price. 
D) does not affect society's general welfare.

Question 9

Which of the following is a political function of government but is not a central economic function?

Accepted Answer

A) Determining who has a right to vote 
B) Determining government-sponsored and government-inhibited goods 
C) Providing a legal system to adjudicate property rights 
D) Redistributing income from some individuals to others 
A) Determining who has a right to vote 
B) Determining government-sponsored and government-inhibited goods 
C) Providing a legal system to adjudicate property rights 
D) Redistributing income from some individuals to others

Question 10

A government-sponsored good is often

Accepted Answer

A) produced by the government. 
B) subsidized. 
C) taxed. 
D) advertised. 
A) produced by the government. 
B) subsidized. 
C) taxed. 
D) advertised.

Question 11

Which of the following legal subjects is most concerned with the economic function of the legal system?

Accepted Answer

A) Criminal law 
B) Public goods 
C) Antitrust legislation 
D) Civil rights 
A) Criminal law 
B) Public goods 
C) Antitrust legislation 
D) Civil rights

Question 12

Compared with the market clearing price of a health care service covered by Medicare, the Medicare program pays a ________ price to health care providers and charges a ________ price to consumers.

Accepted Answer

A) lower, lower 
B) lower, higher 
C) higher, lower 
D) higher, higher 
A) lower, lower 
B) lower, higher 
C) higher, lower 
D) higher, higher

Question 13

A shift from S1 to S2 reflects the change that happens when a negative externality is taken into account. A shift from D1 to D2 reflects the change that happens when a positive externality is taken into account.
-Refer to the above figures. Which of the panels would be consistent with the situation in which external benefits exist?

Accepted Answer

A) Panel 1 
B) Panel 2 
C) Panels 1 and 2 
D) Neither panels 
A) Panel 1 
B) Panel 2 
C) Panels 1 and 2 
D) Neither panels

Question 14

According to the textbook, what are the two key political functions of government in a market economy?

Accepted Answer

The two functions of governmen

Question 15

All of the following illustrate how government can correct for positive externalities EXCEPT

Accepted Answer

A) subsidies. 
B) regulation. 
C) government financing and production. 
D) charging effluent fees. 
A) subsidies. 
B) regulation. 
C) government financing and production. 
D) charging effluent fees.

Question 16

When positive externalities exist, the private market equilibrium represents a

Accepted Answer

A) market price which is too low and a market quantity which is too low. 
B) market price which is too low and a market quantity which is too high. 
C) market price which is too high and a market quantity which is too low. 
D) market price which is too high and a market quantity which is too high. 
A) market price which is too low and a market quantity which is too low. 
B) market price which is too low and a market quantity which is too high. 
C) market price which is too high and a market quantity which is too low. 
D) market price which is too high and a market quantity which is too high.

Question 17

In the United States, the idea that the federal government should undertake actions to stabilize business activity

Accepted Answer

A) was established in the Declaration of Independence. 
B) is a relatively new idea that developed in the years during and after the Great Depression. 
C) has been around since the early 1700s. 
D) developed during World War I. 
A) was established in the Declaration of Independence. 
B) is a relatively new idea that developed in the years during and after the Great Depression. 
C) has been around since the early 1700s. 
D) developed during World War I.

Question 18

Under present U.S. law, which one of the following is a government-inhibited good?

Accepted Answer

A) Housing 
B) Medical care 
C) Heroin 
D) Education 
A) Housing 
B) Medical care 
C) Heroin 
D) Education

Question 19

Which of the following functions of government gives property owners the incentive to use their property efficiently?

Accepted Answer

A) making sure that courts are lenient on people who steal private property 
B) the protection of property rights 
C) the enforcement of antitrust legislation 
D) the financing of public goods 
A) making sure that courts are lenient on people who steal private property 
B) the protection of property rights 
C) the enforcement of antitrust legislation 
D) the financing of public goods

Question 20

Refer to the above figure. In the absence of a subsidy,

Accepted Answer

A) Qd would be demanded and   would be supplied. 
B) the price Pd would be charged and quantity   demanded. 
C) the quantity Qo and price Po would prevail in the market. 
D) None of the above is correct. 
A) Qd would be demanded and   would be supplied. 
B) the price Pd would be charged and quantity   demanded. 
C) the quantity Qo and price Po would prevail in the market. 
D) None of the above is correct.

A political function of government is to

The difference between the economic and political functions of government is that

The largest spending category for state governments is

As a share of total national income, government spending generally has

If the government pays a per-unit subsidy to the producer of a service, we would expect to see a(n) I. increase in the quantity demanded. II. decrease in the out-of-pocket price paid by consumers. III. increase in the quantity supplied by producers.

Orchards provide services to beekeepers because the bees use the pollen to make honey. This is an example of

By definition, a government-sponsored good

Which of the following is a political function of government but is not a central economic function?

A government-sponsored good is often

Which of the following legal subjects is most concerned with the economic function of the legal system?

Compared with the market clearing price of a health care service covered by Medicare, the Medicare program pays a price to health care providers and charges a price to consumers.

According to the textbook, what are the two key political functions of government in a market economy?

All of the following illustrate how government can correct for positive externalities EXCEPT

When positive externalities exist, the private market equilibrium represents a

In the United States, the idea that the federal government should undertake actions to stabilize business activity

Under present U.S. law, which one of the following is a government-inhibited good?

Which of the following functions of government gives property owners the incentive to use their property efficiently?

Refer to the above figure. In the absence of a subsidy,

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 5: Public Spending and Public Choice

A political function of government is to

The difference between the economic and political functions of government is that

The largest spending category for state governments is

As a share of total national income, government spending generally has

If the government pays a per-unit subsidy to the producer of a service, we would expect to see a(n) I. increase in the quantity demanded. II. decrease in the out-of-pocket price paid by consumers. III. increase in the quantity supplied by producers.

Orchards provide services to beekeepers because the bees use the pollen to make honey. This is an example of

By definition, a government-sponsored good

Which of the following is a political function of government but is not a central economic function?

A government-sponsored good is often

Which of the following legal subjects is most concerned with the economic function of the legal system?

Compared with the market clearing price of a health care service covered by Medicare, the Medicare program pays a ________ price to health care providers and charges a ________ price to consumers.

According to the textbook, what are the two key political functions of government in a market economy?

All of the following illustrate how government can correct for positive externalities EXCEPT

When positive externalities exist, the private market equilibrium represents a

In the United States, the idea that the federal government should undertake actions to stabilize business activity

Under present U.S. law, which one of the following is a government-inhibited good?

Which of the following functions of government gives property owners the incentive to use their property efficiently?

Refer to the above figure. In the absence of a subsidy,

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Compared with the market clearing price of a health care service covered by Medicare, the Medicare program pays a price to health care providers and charges a price to consumers.