Question 1

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

Accepted Answer

A)  the unwillingness of the federal government to run budget deficits 
B)  the heavy indebtedness of American households 
C)  a high level of household spending on big-ticket items such as houses and cars, which do not promote economic growth 
D)  the continuation of the high saving rates on the part of Americans 
A)  the unwillingness of the federal government to run budget deficits 
B)  the heavy indebtedness of American households 
C)  a high level of household spending on big-ticket items such as houses and cars, which do not promote economic growth 
D)  the continuation of the high saving rates on the part of Americans

Question 2

When the Social Security surplus is used to cover the current operating expenses of the federal government, it will

Accepted Answer

A)  make it easier for future taxpayers to provide promised Social Security benefits to baby boomers. 
B)  reduce the outstanding debt of the federal government. 
C)  make it possible for Congress and the president to spend more without raising current taxes or borrowing from the general public. 
D)  increase the credibility of the Social Security benefits promised to future retirees. 
A)  make it easier for future taxpayers to provide promised Social Security benefits to baby boomers. 
B)  reduce the outstanding debt of the federal government. 
C)  make it possible for Congress and the president to spend more without raising current taxes or borrowing from the general public. 
D)  increase the credibility of the Social Security benefits promised to future retirees.

Question 3

Which of the following is an example of a deficiency caused by a regulatory approach to pollution?

Accepted Answer

A)  ignored information provided by market signals 
B)  special interests 
C)  lack of accountability 
D)  all of the above 
A)  ignored information provided by market signals 
B)  special interests 
C)  lack of accountability 
D)  all of the above

Question 4

In approximately what year will Social Security outlays begin to exceed revenues?

Accepted Answer

A)  2008 
B)  2017 
C)  2050 
D)  3030 
A)  2008 
B)  2017 
C)  2050 
D)  3030

Question 5

During the Great Depression, fiscal policy focused primarily on

Accepted Answer

A)  keeping taxes low. 
B)  raising taxes during an economic expansion and lowering taxes during a recession. 
C)  trying to balance the federal budget. 
D)  running budget deficits in order to stimulate real output and GDP. 
A)  keeping taxes low. 
B)  raising taxes during an economic expansion and lowering taxes during a recession. 
C)  trying to balance the federal budget. 
D)  running budget deficits in order to stimulate real output and GDP.

Question 6

The supply of oil for users in the United States

Accepted Answer

A)  was never an issue of serious public concern until the 1970s. 
B)  has never been an issue of serious concern by political leaders. 
C)  has often been a topic for dire warnings and forecasts of oil depletion. 
D)  has been more and more in doubt since the early 1980s. 
A)  was never an issue of serious public concern until the 1970s. 
B)  has never been an issue of serious concern by political leaders. 
C)  has often been a topic for dire warnings and forecasts of oil depletion. 
D)  has been more and more in doubt since the early 1980s.

Question 7

Which of the following statements is true for the U.S. economy?

Accepted Answer

A)  Higher wages in the unionized sectors of the economy push up wages in the nonunion sectors as well. 
B)  Inflation tends to accelerate when the proportion of the labor force that is unionized increases. 
C)  Union workers currently receive wages that are 15 to 20 percent higher, on average, than similar nonunion workers. 
D)  When we compare similar union and nonunion workers, we find virtually no difference in the wages they receive. 
A)  Higher wages in the unionized sectors of the economy push up wages in the nonunion sectors as well. 
B)  Inflation tends to accelerate when the proportion of the labor force that is unionized increases. 
C)  Union workers currently receive wages that are 15 to 20 percent higher, on average, than similar nonunion workers. 
D)  When we compare similar union and nonunion workers, we find virtually no difference in the wages they receive.

Question 8

Which of the following did not contribute to the severity of the Great Depression?

Accepted Answer

A)  a sharp reduction in the money supply during the early 1930s 
B)  a large tax increase (to balance the budget) in the early 1930s 
C)  substantial increases in the tariff rates on imported goods 
D)  a reduction in government expenditures and a substantial cut in personal income tax rates during 1932 and again in 1936 
A)  a sharp reduction in the money supply during the early 1930s 
B)  a large tax increase (to balance the budget) in the early 1930s 
C)  substantial increases in the tariff rates on imported goods 
D)  a reduction in government expenditures and a substantial cut in personal income tax rates during 1932 and again in 1936

Question 9

Empirical evidence suggests that the relative scarcity of most resources is

Accepted Answer

A)  declining. 
B)  increasing slowly. 
C)  increasing rapidly. 
D)  largely unchanged. 
A)  declining. 
B)  increasing slowly. 
C)  increasing rapidly. 
D)  largely unchanged.

Question 10

The net value to the federal government of the bonds currently held in the Social Security Trust Fund is

Accepted Answer

A)  approximately $1 trillion. 
B)  now approaching $2 trillion. 
C)  greater than $2.5 trillion. 
D)  zero, because the federal government is both the payee and recipient of the interest and principal represented by these bonds. 
A)  approximately $1 trillion. 
B)  now approaching $2 trillion. 
C)  greater than $2.5 trillion. 
D)  zero, because the federal government is both the payee and recipient of the interest and principal represented by these bonds.

Question 11

Which of the following would illustrate an example that leads to high transaction costs when dealing with pollution?

Accepted Answer

A)  air quality in New York City 
B)  water pollution caused by a large number of firms at a location near the same river 
C)  noise pollution from aircraft near a busy airport 
D)  all of the above 
A)  air quality in New York City 
B)  water pollution caused by a large number of firms at a location near the same river 
C)  noise pollution from aircraft near a busy airport 
D)  all of the above

Question 12

How do high tariffs and other restraints on international trade affect a nation's prosperity?

Accepted Answer

A)  They increase employment and thereby promote the growth of GDP. 
B)  They prevent a nation from fully realizing the potential gains from specialization, exchange, and competition. 
C)  They protect domestic producers and thereby promote economic growth. 
D)  Both a and c are correct. 
A)  They increase employment and thereby promote the growth of GDP. 
B)  They prevent a nation from fully realizing the potential gains from specialization, exchange, and competition. 
C)  They protect domestic producers and thereby promote economic growth. 
D)  Both a and c are correct.

Question 13

Which of the following is true regarding employer-provided health insurance?

Accepted Answer

A)  About two-thirds of nonelderly adults have health insurance through group plans offered by their employers. 
B)  Employee compensation in the form of health insurance is not subject to taxation, which makes it particularly attractive for people to purchase it through their employers rather than privately, and also to demand policies with small co-payment rates and a low deductible. 
C)  The linking of health insurance to employment reduces employee mobility and creates a situation where employees lose their health insurance when they lose their job or change jobs. 
D)  All of the above are true. 
A)  About two-thirds of nonelderly adults have health insurance through group plans offered by their employers. 
B)  Employee compensation in the form of health insurance is not subject to taxation, which makes it particularly attractive for people to purchase it through their employers rather than privately, and also to demand policies with small co-payment rates and a low deductible. 
C)  The linking of health insurance to employment reduces employee mobility and creates a situation where employees lose their health insurance when they lose their job or change jobs. 
D)  All of the above are true.

Question 14

In 2006, the income tax payments of the richest 1 percent of Americans accounted for approximately what percent of all federal income tax revenue?

Accepted Answer

A)  1 percent 
B)  17 percent 
C)  40 percent 
D)  57 percent 
A)  1 percent 
B)  17 percent 
C)  40 percent 
D)  57 percent

Question 15

If a firm refuses to hire any females due to a personal prejudice, its profits will

Accepted Answer

A)  increase markedly. 
B)  decrease. 
C)  not be affected. 
D)  increase slightly. 
A)  increase markedly. 
B)  decrease. 
C)  not be affected. 
D)  increase slightly.

Question 16

If a third party pays for an individual to consume a good, how is the decision making of consumers affected? How does this affect the actions of suppliers?

Accepted Answer

When spending their own money, consumers

Question 17

During the last three decades, the real (adjusted for inflation) expenditures

Accepted Answer

A)  on Medicare have grown rapidly, but the real expenditures on Medicaid have been virtually constant. 
B)  on the Medicare program have been virtually constant but the real expenditures on Medicaid have increased substantially. 
C)  on both Medicare and Medicaid have increased substantially. 
D)  on both Medicare and Medicaid have been virtually constant. 
A)  on Medicare have grown rapidly, but the real expenditures on Medicaid have been virtually constant. 
B)  on the Medicare program have been virtually constant but the real expenditures on Medicaid have increased substantially. 
C)  on both Medicare and Medicaid have increased substantially. 
D)  on both Medicare and Medicaid have been virtually constant.

Question 18

Which of the following is true?

Accepted Answer

A)  All types of environmental problems can be solved merely by the enforcement of individual property rights. 
B)  Environmental regulation cannot improve environmental quality. 
C)  Income levels exert little impact on the demand for environmental quality. 
D)  Markets often result in outcomes that are inefficient when it is difficult to assign and enforce property rights. 
A)  All types of environmental problems can be solved merely by the enforcement of individual property rights. 
B)  Environmental regulation cannot improve environmental quality. 
C)  Income levels exert little impact on the demand for environmental quality. 
D)  Markets often result in outcomes that are inefficient when it is difficult to assign and enforce property rights.

Question 19

Pollution charges will be efficient if

Accepted Answer

A)  the charge is just equal to the cost borne by others from the pollution. 
B)  the charge is greater than the cost borne by others from the pollution. 
C)  the charge is less than the cost borne by others from the pollution. 
D)  none of the above. 
A)  the charge is just equal to the cost borne by others from the pollution. 
B)  the charge is greater than the cost borne by others from the pollution. 
C)  the charge is less than the cost borne by others from the pollution. 
D)  none of the above.

Question 20

The primary objective of the monetary policy of the Fed should be

Accepted Answer

A)  low rates of unemployment. 
B)  the growth rate of real GDP. 
C)  the achievement of price stability. 
D)  the regulation of financial institutions. 
A)  low rates of unemployment. 
B)  the growth rate of real GDP. 
C)  the achievement of price stability. 
D)  the regulation of financial institutions.

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

When the Social Security surplus is used to cover the current operating expenses of the federal government, it will

Which of the following is an example of a deficiency caused by a regulatory approach to pollution?

In approximately what year will Social Security outlays begin to exceed revenues?

During the Great Depression, fiscal policy focused primarily on

The supply of oil for users in the United States

Which of the following statements is true for the U.S. economy?

Which of the following did not contribute to the severity of the Great Depression?

Empirical evidence suggests that the relative scarcity of most resources is

The net value to the federal government of the bonds currently held in the Social Security Trust Fund is

Which of the following would illustrate an example that leads to high transaction costs when dealing with pollution?

How do high tariffs and other restraints on international trade affect a nation's prosperity?

Which of the following is true regarding employer-provided health insurance?

In 2006, the income tax payments of the richest 1 percent of Americans accounted for approximately what percent of all federal income tax revenue?

If a firm refuses to hire any females due to a personal prejudice, its profits will

If a third party pays for an individual to consume a good, how is the decision making of consumers affected? How does this affect the actions of suppliers?

During the last three decades, the real (adjusted for inflation) expenditures

Which of the following is true?

Pollution charges will be efficient if

The primary objective of the monetary policy of the Fed should be

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Filters

Exam 16: Applying the Basics: Special Topics in Economics

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

When the Social Security surplus is used to cover the current operating expenses of the federal government, it will

Which of the following is an example of a deficiency caused by a regulatory approach to pollution?

In approximately what year will Social Security outlays begin to exceed revenues?

During the Great Depression, fiscal policy focused primarily on

The supply of oil for users in the United States

Which of the following statements is true for the U.S. economy?

Which of the following did not contribute to the severity of the Great Depression?

Empirical evidence suggests that the relative scarcity of most resources is

The net value to the federal government of the bonds currently held in the Social Security Trust Fund is

Which of the following would illustrate an example that leads to high transaction costs when dealing with pollution?

How do high tariffs and other restraints on international trade affect a nation's prosperity?

Which of the following is true regarding employer-provided health insurance?

In 2006, the income tax payments of the richest 1 percent of Americans accounted for approximately what percent of all federal income tax revenue?

If a firm refuses to hire any females due to a personal prejudice, its profits will

If a third party pays for an individual to consume a good, how is the decision making of consumers affected? How does this affect the actions of suppliers?

During the last three decades, the real (adjusted for inflation) expenditures

Which of the following is true?

Pollution charges will be efficient if

The primary objective of the monetary policy of the Fed should be

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Filters