Question 1

Have market forces failed in keeping healthcare costs under control?

Accepted Answer

A)  Yes; in most high-income countries healthcare is a socialized industry and costs have been kept low. 
B)  Yes; the government has allowed market forces to determine costs, yet healthcare spending continues to rise rapidly. 
C)  No; government regulations have undermined the operation of markets and created perverse incentives that have led to rising prices and soaring healthcare expenditures. 
D)  No; market forces have been allowed to determine costs and those costs have remained low relative to the consumer price index. 
A)  Yes; in most high-income countries healthcare is a socialized industry and costs have been kept low. 
B)  Yes; the government has allowed market forces to determine costs, yet healthcare spending continues to rise rapidly. 
C)  No; government regulations have undermined the operation of markets and created perverse incentives that have led to rising prices and soaring healthcare expenditures. 
D)  No; market forces have been allowed to determine costs and those costs have remained low relative to the consumer price index.

Question 2

Which of the following types of mutual funds best describes one in which an "expert" seeks to pick the stock holdings in a way that maximizes the rate of return?

Accepted Answer

A)  indexed equity mutual fund 
B)  managed equity mutual fund 
C)  supervised equity mutual fund 
D)  marked equity mutual fund 
A)  indexed equity mutual fund 
B)  managed equity mutual fund 
C)  supervised equity mutual fund 
D)  marked equity mutual fund

Question 3

Which of the following is true?

Accepted Answer

A)  The stock market provides investors with an opportunity to own a fractional share of the firm's future profits. 
B)  A new stock issue is often an excellent way for a firm to raise funds for future expansion. 
C)  Changes in stock prices provide information about what investors think of various business decisions. 
D)  All of the above are true. 
A)  The stock market provides investors with an opportunity to own a fractional share of the firm's future profits. 
B)  A new stock issue is often an excellent way for a firm to raise funds for future expansion. 
C)  Changes in stock prices provide information about what investors think of various business decisions. 
D)  All of the above are true.

Question 4

Total government spending (federal, state, and local) sums to approximately

Accepted Answer

A)  10 percent of the U.S. economy. 
B)  20 percent of the U.S. economy. 
C)  40 percent of the U.S. economy. 
D)  50 percent of the U.S. economy. 
A)  10 percent of the U.S. economy. 
B)  20 percent of the U.S. economy. 
C)  40 percent of the U.S. economy. 
D)  50 percent of the U.S. economy.

Question 5

Historically, when a diverse set of stocks are held over a lengthy time period, stocks have yielded a ____ rate of return and the variation in the rate of return has been ____. (Fill in the blanks.)

Accepted Answer

A)  low; low 
B)  low; high 
C)  high; low 
D)  high; high 
A)  low; low 
B)  low; high 
C)  high; low 
D)  high; high

Question 6

Technological advances in agriculture (such as chemical fertilizers and harvesting equipment) have helped to preserve and grow forest land because they

Accepted Answer

A)  reduce the amount of land needed to grow food. 
B)  result in a larger population. 
C)  are made from timber. 
D)  None of the above. 
A)  reduce the amount of land needed to grow food. 
B)  result in a larger population. 
C)  are made from timber. 
D)  None of the above.

Question 7

Real expenditures on Medicare and Medicaid

Accepted Answer

A)  rose during the 1970s and 1980s, but they have been declining since 1990. 
B)  fell during the 1970s and 1980s, but they have been increasing since 1990. 
C)  increased at about the same rate as real GDP during the last three decades. 
D)  have approximately doubled during each of the last three decades. 
A)  rose during the 1970s and 1980s, but they have been declining since 1990. 
B)  fell during the 1970s and 1980s, but they have been increasing since 1990. 
C)  increased at about the same rate as real GDP during the last three decades. 
D)  have approximately doubled during each of the last three decades.

Question 8

Special savings accounts that individuals could pay into directly and then use to pay medical bills or purchase a catastrophic health insurance plan are known as

Accepted Answer

A)  flexible benefit accounts. 
B)  health savings accounts. 
C)  health-care savings bonds. 
D)  HMOs. 
A)  flexible benefit accounts. 
B)  health savings accounts. 
C)  health-care savings bonds. 
D)  HMOs.

Question 9

Most of our environmental problems exist because of

Accepted Answer

A)  a lack of enforced and easily traded property rights. 
B)  consumer ignorance. 
C)  profit maximization on the part of business firms. 
D)  the failure of political officials to regulate business activities. 
A)  a lack of enforced and easily traded property rights. 
B)  consumer ignorance. 
C)  profit maximization on the part of business firms. 
D)  the failure of political officials to regulate business activities.

Question 10

The Fed's low short-term interest rate policy from 2002-2004, along with housing regulations promoting low down-payment loans to sub-prime borrowers, encouraged

Accepted Answer

A)  conventional 30-year, fixed rate mortgages which have relatively high default and foreclosure rates. 
B)  conventional 30-year, fixed rate mortgages which have relatively low default and foreclosure rates. 
C)  adjustable rate mortgages which have relatively low default and foreclosure rates. 
D)  adjustable rate mortgages which have relatively high default and foreclosure rates. 
A)  conventional 30-year, fixed rate mortgages which have relatively high default and foreclosure rates. 
B)  conventional 30-year, fixed rate mortgages which have relatively low default and foreclosure rates. 
C)  adjustable rate mortgages which have relatively low default and foreclosure rates. 
D)  adjustable rate mortgages which have relatively high default and foreclosure rates.

Question 11

(I) The Medicare program is financed by general tax revenue and provides low-income families with access to health care either free or at a low cost. (II) The Medicaid program covers the bulk of the health-care costs of the elderly and is financed mostly through a tax on the wages and salaries of current workers.

Accepted Answer

A)  I is true; II is false. 
B)  I is false; II is true. 
C)  Both I and II are true. 
D)  Both I and II are false. 
A)  I is true; II is false. 
B)  I is false; II is true. 
C)  Both I and II are true. 
D)  Both I and II are false.

Question 12

An economist would argue that global warming is

Accepted Answer

A)  unquestionably a human-generated problem that should be stopped immediately at all costs. 
B)  simply fear mongering, for there is no scientific evidence that the average temperature on earth is changing. 
C)  likely to cause massive starvation as temperatures on earth rise, reducing agricultural productivity. 
D)  a serious issue that may best be addressed primarily by making changes as problems occur in the future. 
A)  unquestionably a human-generated problem that should be stopped immediately at all costs. 
B)  simply fear mongering, for there is no scientific evidence that the average temperature on earth is changing. 
C)  likely to cause massive starvation as temperatures on earth rise, reducing agricultural productivity. 
D)  a serious issue that may best be addressed primarily by making changes as problems occur in the future.

Question 13

A firm's stock price will be higher when the interest rate is ____ and the value of the firm's expected future profits are ____.

Accepted Answer

A)  lower; larger 
B)  lower; smaller 
C)  higher; larger 
D)  higher; smaller 
A)  lower; larger 
B)  lower; smaller 
C)  higher; larger 
D)  higher; smaller

Question 14

Which of the following would help to avert a healthcare crisis?

Accepted Answer

A)  requiring employers to pick up 100 percent of the healthcare costs for their employees 
B)  discouraging medical savings accounts since these provide additional funds for medical care, and therefore, they are likely to drive up medical prices 
C)  discouraging the purchase of health insurance plans with small co-payments 
D)  structural changes that would increase the competitiveness of the health insurance and medical services markets 
A)  requiring employers to pick up 100 percent of the healthcare costs for their employees 
B)  discouraging medical savings accounts since these provide additional funds for medical care, and therefore, they are likely to drive up medical prices 
C)  discouraging the purchase of health insurance plans with small co-payments 
D)  structural changes that would increase the competitiveness of the health insurance and medical services markets

Question 15

Higher levels of carbon dioxide may have led, over the past century, to approximately a

Accepted Answer

A)  1 degree (F) warming of the earth. 
B)  10 degree (F) warming of the earth. 
C)  1 degree (F) cooling of the earth. 
D)  10 degree (F) cooling of the earth. 
A)  1 degree (F) warming of the earth. 
B)  10 degree (F) warming of the earth. 
C)  1 degree (F) cooling of the earth. 
D)  10 degree (F) cooling of the earth.

Question 16

In 2008, approximately what percent of the nonagricultural workforce belonged to a union?

Accepted Answer

A)  2 percent 
B)  12 percent 
C)  35 percent 
D)  98 percent 
A)  2 percent 
B)  12 percent 
C)  35 percent 
D)  98 percent

Question 17

As the share of healthcare expenditures paid for by third parties has grown, both healthcare prices and total expenditures have increased rapidly. Is this surprising?

Accepted Answer

A)  Yes; third-party payments provide healthcare consumers with a strong incentive to economize, and therefore, the growth of expenditures is particularly surprising. 
B)  No; third-party payments weaken the incentive of healthcare consumers to economize, and therefore, the rapid growth of expenditures is an expected result. 
C)  Yes; the price increases are surprising because healthcare suppliers have a strong incentive to provide the services at a low price when they are paid for by a third party. 
D)  No; the growth of third-party payments will reduce the demand for healthcare, which will lead to both higher prices and expenditure levels. 
A)  Yes; third-party payments provide healthcare consumers with a strong incentive to economize, and therefore, the growth of expenditures is particularly surprising. 
B)  No; third-party payments weaken the incentive of healthcare consumers to economize, and therefore, the rapid growth of expenditures is an expected result. 
C)  Yes; the price increases are surprising because healthcare suppliers have a strong incentive to provide the services at a low price when they are paid for by a third party. 
D)  No; the growth of third-party payments will reduce the demand for healthcare, which will lead to both higher prices and expenditure levels.

Question 18

Which of the following is true about a voucher system?

Accepted Answer

A)  A voucher system is one in which parents receive a certificate equal to the current value of educational expenditures per pupil at their school, and the parents may then use this voucher to finance their child's education at any school (public or private) of their choice. 
B)  Under a voucher system, competition would be greatly increased among schools as they compete for students. 
C)  Under a voucher system, the quality of teachers and the diversity of school program offerings would increase. 
D)  All of the above are true. 
A)  A voucher system is one in which parents receive a certificate equal to the current value of educational expenditures per pupil at their school, and the parents may then use this voucher to finance their child's education at any school (public or private) of their choice. 
B)  Under a voucher system, competition would be greatly increased among schools as they compete for students. 
C)  Under a voucher system, the quality of teachers and the diversity of school program offerings would increase. 
D)  All of the above are true.

Question 19

How has public policy influenced the incentives of consumers to economize and suppliers to provide their services economically in the health-care industry?

Accepted Answer

Public policy has generally promoted pay

Question 20

Generally, the elasticity of demand for an energy source in the long run will be

Accepted Answer

A)  approximately equal to its elasticity of demand in the short run. 
B)  considerably more elastic than in the short run. 
C)  slightly less elastic than in the short run. 
D)  considerably less elastic than in the short run. 
A)  approximately equal to its elasticity of demand in the short run. 
B)  considerably more elastic than in the short run. 
C)  slightly less elastic than in the short run. 
D)  considerably less elastic than in the short run.

Have market forces failed in keeping healthcare costs under control?

Which of the following types of mutual funds best describes one in which an "expert" seeks to pick the stock holdings in a way that maximizes the rate of return?

Which of the following is true?

Total government spending (federal, state, and local) sums to approximately

Historically, when a diverse set of stocks are held over a lengthy time period, stocks have yielded a rate of return and the variation in the rate of return has been . (Fill in the blanks.)

Technological advances in agriculture (such as chemical fertilizers and harvesting equipment) have helped to preserve and grow forest land because they

Real expenditures on Medicare and Medicaid

Special savings accounts that individuals could pay into directly and then use to pay medical bills or purchase a catastrophic health insurance plan are known as

Most of our environmental problems exist because of

The Fed's low short-term interest rate policy from 2002-2004, along with housing regulations promoting low down-payment loans to sub-prime borrowers, encouraged

An economist would argue that global warming is

A firm's stock price will be higher when the interest rate is and the value of the firm's expected future profits are .

Which of the following would help to avert a healthcare crisis?

Higher levels of carbon dioxide may have led, over the past century, to approximately a

In 2008, approximately what percent of the nonagricultural workforce belonged to a union?

As the share of healthcare expenditures paid for by third parties has grown, both healthcare prices and total expenditures have increased rapidly. Is this surprising?

Which of the following is true about a voucher system?

How has public policy influenced the incentives of consumers to economize and suppliers to provide their services economically in the health-care industry?

Generally, the elasticity of demand for an energy source in the long run will 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

Have market forces failed in keeping healthcare costs under control?

Which of the following types of mutual funds best describes one in which an "expert" seeks to pick the stock holdings in a way that maximizes the rate of return?

Which of the following is true?

Total government spending (federal, state, and local) sums to approximately

Historically, when a diverse set of stocks are held over a lengthy time period, stocks have yielded a ____ rate of return and the variation in the rate of return has been ____. (Fill in the blanks.)

Technological advances in agriculture (such as chemical fertilizers and harvesting equipment) have helped to preserve and grow forest land because they

Real expenditures on Medicare and Medicaid

Special savings accounts that individuals could pay into directly and then use to pay medical bills or purchase a catastrophic health insurance plan are known as

Most of our environmental problems exist because of

The Fed's low short-term interest rate policy from 2002-2004, along with housing regulations promoting low down-payment loans to sub-prime borrowers, encouraged

An economist would argue that global warming is

A firm's stock price will be higher when the interest rate is ____ and the value of the firm's expected future profits are ____.

Which of the following would help to avert a healthcare crisis?

Higher levels of carbon dioxide may have led, over the past century, to approximately a

In 2008, approximately what percent of the nonagricultural workforce belonged to a union?

As the share of healthcare expenditures paid for by third parties has grown, both healthcare prices and total expenditures have increased rapidly. Is this surprising?

Which of the following is true about a voucher system?

How has public policy influenced the incentives of consumers to economize and suppliers to provide their services economically in the health-care industry?

Generally, the elasticity of demand for an energy source in the long run will 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

Historically, when a diverse set of stocks are held over a lengthy time period, stocks have yielded a rate of return and the variation in the rate of return has been . (Fill in the blanks.)

A firm's stock price will be higher when the interest rate is and the value of the firm's expected future profits are .