Question 1

Which of the following is not a characteristic of a public good?

Accepted Answer

A)  It yields benefits to a number of people simultaneously. 
B)  Benefits from the item cannot be provided to one person without others deriving benefits at no additional cost. 
C)  It cannot be withheld from a person who has failed to contribute to its provision. 
D)  One person cannot consume an additional unit of the item without reducing by one unit the consumption of another person. 
A)  It yields benefits to a number of people simultaneously. 
B)  Benefits from the item cannot be provided to one person without others deriving benefits at no additional cost. 
C)  It cannot be withheld from a person who has failed to contribute to its provision. 
D)  One person cannot consume an additional unit of the item without reducing by one unit the consumption of another person. D

Question 2

The potential for an individual to try to avoid contributing to pay for a public good because he or she believes others will pay for it is referred to as:

Accepted Answer

A)  a moral hazard. 
B)  a free-rider problem. 
C)  asymmetric information. 
D)  an adverse selection problem. 
A)  a moral hazard. 
B)  a free-rider problem. 
C)  asymmetric information. 
D)  an adverse selection problem. B

Question 3

The Agreement on Trade-Related Aspects of Intellectual Property Rights establishes a minimum period of protection of:

Accepted Answer

A)  10 years for trademarks. 
B)  20 years for patents. 
C)  30 years for copyrights. 
D)  40 years for public goods. 
A)  10 years for trademarks. 
B)  20 years for patents. 
C)  30 years for copyrights. 
D)  40 years for public goods. B

Question 4

The idea that an increase in a tax rate generates a reduction in the tax base that makes the net effect of the tax rate increase potentially ambiguous is called the:

Accepted Answer

A)  merit taxation perspective. 
B)  external taxation perspective. 
C)  dynamic view of taxation. 
D)  static view of taxation. 
A)  merit taxation perspective. 
B)  external taxation perspective. 
C)  dynamic view of taxation. 
D)  static view of taxation.

Question 5

Legal documents granting an inventor the exclusive right to make, use, and sell an invention for a specified number of years are known as:

Accepted Answer

A)  patents. 
B)  copyrights. 
C)  trademarks. 
D)  public goods. 
A)  patents. 
B)  copyrights. 
C)  trademarks. 
D)  public goods.

Question 6

The optimal degree of environmental improvement efforts:

Accepted Answer

A)  typically yields a 100 percent pristine environment. 
B)  typically does not yield a 100 percent pristine environment. 
C)  is attained when the additional benefit of the efforts exceeds the additional cost. 
D)  is attained when the additional cost of the efforts exceeds the additional benefit. 
A)  typically yields a 100 percent pristine environment. 
B)  typically does not yield a 100 percent pristine environment. 
C)  is attained when the additional benefit of the efforts exceeds the additional cost. 
D)  is attained when the additional cost of the efforts exceeds the additional benefit.

Question 7

A tax base is an economic quantity subject to taxation.

Accepted Answer

A) True 
 B)False

Question 8

An item that otherwise would function as a private good, yet society determines it wishes to promote consumption of the item through government intervention in the marketplace, is known as:

Accepted Answer

A)  a merit good. 
B)  a positive externality. 
C)  a negative externality. 
D)  a global public good. 
A)  a merit good. 
B)  a positive externality. 
C)  a negative externality. 
D)  a global public good.

Question 9

Which of the following is a reason that some nongovernment organizations offer for opposing international trade as a danger to the global environment?

Accepted Answer

A)  Gains from trade help raise living standards in developing nations, and evidence indicates that environmental protection efforts increase with higher per capita incomes. 
B)  Growth-enhancing international trade speeds the pace at which the world's resources will be exhausted. 
C)  Increased international trade and investment will speed the pace of innovation, which will permit sustainable growth of the global economy. 
D)  Multilateral trade agreements and institutions provide forums for facilitating efforts to protect the environment. 
A)  Gains from trade help raise living standards in developing nations, and evidence indicates that environmental protection efforts increase with higher per capita incomes. 
B)  Growth-enhancing international trade speeds the pace at which the world's resources will be exhausted. 
C)  Increased international trade and investment will speed the pace of innovation, which will permit sustainable growth of the global economy. 
D)  Multilateral trade agreements and institutions provide forums for facilitating efforts to protect the environment.

Question 10

An international externality occurs when spillover effects from market activities within one country affect third parties located in other nations.

Accepted Answer

A) True 
 B)False

Question 11

A free-rider problem exists when:

Accepted Answer

A)  individuals presume that others will pay for public goods so that, individually, they can escape from paying for their portion without reducing production of the public good. 
B)  individuals on one side of a market transaction possess information not available to people on the other side of the transaction. 
C)  a seller of an item may behave differently following agreement to undertake a transaction than they did prior to that agreement. 
D)  a seller of a low-quality item has the greatest incentive to try to sell that item to an uninformed buyer. 
A)  individuals presume that others will pay for public goods so that, individually, they can escape from paying for their portion without reducing production of the public good. 
B)  individuals on one side of a market transaction possess information not available to people on the other side of the transaction. 
C)  a seller of an item may behave differently following agreement to undertake a transaction than they did prior to that agreement. 
D)  a seller of a low-quality item has the greatest incentive to try to sell that item to an uninformed buyer.

Question 12

Intellectual property rights are laws granting ownership of creative ideas, typically in the form of a copyright, trademark, or patent.

Accepted Answer

A) True 
 B)False

Question 13

Moral hazard refers to the likelihood that firms selling particularly poor-quality products are the ones that have the greatest incentive to misrepresent their attributes in an effort to sell them.

Accepted Answer

A) True 
 B)False

Question 14

Words or symbols that companies use to identify their goods or services and distinguish them from the goods or services produced by other firms are known as:

Accepted Answer

A)  patents. 
B)  copyrights. 
C)  trademarks. 
D)  public goods. 
A)  patents. 
B)  copyrights. 
C)  trademarks. 
D)  public goods.

Question 15

A free-rider problem arises when individuals presume that others will pay for public goods so that, individually, they can escape from paying for their portion without reducing production of the public good.

Accepted Answer

A) True 
 B)False

Question 16

Common property is a resource subdivided into shares exclusively owned by each individual in society.

Accepted Answer

A) True 
 B)False

Question 17

The static view on taxation predicts a generally ambiguous net relationship between the tax rate and the tax base.

Accepted Answer

A) True 
 B)False

Question 18

One way of addressing a situation of a negative international externality would be for a multinational authority to:

Accepted Answer

A)  subsidize consumption of the item creating the externality. 
B)  tax producers of the item creating the externality. 
C)  implement policies aimed at boosting demand for the item creating the externality. 
D)  expand production of the item by having governments provide more units. 
A)  subsidize consumption of the item creating the externality. 
B)  tax producers of the item creating the externality. 
C)  implement policies aimed at boosting demand for the item creating the externality. 
D)  expand production of the item by having governments provide more units.

Question 19

International tax competition involves efforts by national governments:

Accepted Answer

A)  to act together to jointly raise their tax rates and thereby remove incentives for people to shift taxable activities to other locales. 
B)  to reduce their tax rates below those prevailing in other countries in an effort to induce individuals and businesses to engage in taxable activities within their borders instead. 
C)  to act together to jointly establish identical tax bases to which they will apply identical tax rates. 
D)  to increase tax rates while expanding their tax bases in an effort to generated coordinated increases in tax revenues. 
A)  to act together to jointly raise their tax rates and thereby remove incentives for people to shift taxable activities to other locales. 
B)  to reduce their tax rates below those prevailing in other countries in an effort to induce individuals and businesses to engage in taxable activities within their borders instead. 
C)  to act together to jointly establish identical tax bases to which they will apply identical tax rates. 
D)  to increase tax rates while expanding their tax bases in an effort to generated coordinated increases in tax revenues.

Question 20

Economic inefficiency results when individuals know the true opportunity costs of their decisions.

Accepted Answer

A) True 
 B)False

Which of the following is not a characteristic of a public good?

The potential for an individual to try to avoid contributing to pay for a public good because he or she believes others will pay for it is referred to as:

The Agreement on Trade-Related Aspects of Intellectual Property Rights establishes a minimum period of protection of:

The idea that an increase in a tax rate generates a reduction in the tax base that makes the net effect of the tax rate increase potentially ambiguous is called the:

Legal documents granting an inventor the exclusive right to make, use, and sell an invention for a specified number of years are known as:

The optimal degree of environmental improvement efforts:

A tax base is an economic quantity subject to taxation.

An item that otherwise would function as a private good, yet society determines it wishes to promote consumption of the item through government intervention in the marketplace, is known as:

Which of the following is a reason that some nongovernment organizations offer for opposing international trade as a danger to the global environment?

An international externality occurs when spillover effects from market activities within one country affect third parties located in other nations.

A free-rider problem exists when:

Intellectual property rights are laws granting ownership of creative ideas, typically in the form of a copyright, trademark, or patent.

Moral hazard refers to the likelihood that firms selling particularly poor-quality products are the ones that have the greatest incentive to misrepresent their attributes in an effort to sell them.

Words or symbols that companies use to identify their goods or services and distinguish them from the goods or services produced by other firms are known as:

A free-rider problem arises when individuals presume that others will pay for public goods so that, individually, they can escape from paying for their portion without reducing production of the public good.

Common property is a resource subdivided into shares exclusively owned by each individual in society.

The static view on taxation predicts a generally ambiguous net relationship between the tax rate and the tax base.

One way of addressing a situation of a negative international externality would be for a multinational authority to:

International tax competition involves efforts by national governments:

Economic inefficiency results when individuals know the true opportunity costs of their decisions.

Understanding the Global Economy

Comparative Advantage: How Nations Can Gain From International Trade

Sources of Comparative Advantage

Regulating International Trade: Trade Policies and Their Effects

Regionalism and Multilateralism

Balance of Payments and Foreign Exchange Markets

Exchange Rate Systems: Past to Present

The Power of Arbitrage: Purchasing Power and Interest Rate Parities

Global Money and Banking: Where Central Banks Fit Into the World Economy

Contemporary Global Economic Issues and Policies

Economic Development

Industrial Structure and Trade in the Global Economy: Businesses Without Borders

Dealing With Financial Crises: Does the World Need a New International Financial Architecture

Filters

Exam 13: The Public Sector in the Global Economy

Which of the following is not a characteristic of a public good?

The potential for an individual to try to avoid contributing to pay for a public good because he or she believes others will pay for it is referred to as:

The Agreement on Trade-Related Aspects of Intellectual Property Rights establishes a minimum period of protection of:

The idea that an increase in a tax rate generates a reduction in the tax base that makes the net effect of the tax rate increase potentially ambiguous is called the:

Legal documents granting an inventor the exclusive right to make, use, and sell an invention for a specified number of years are known as:

The optimal degree of environmental improvement efforts:

A tax base is an economic quantity subject to taxation.

An item that otherwise would function as a private good, yet society determines it wishes to promote consumption of the item through government intervention in the marketplace, is known as:

Which of the following is a reason that some nongovernment organizations offer for opposing international trade as a danger to the global environment?

An international externality occurs when spillover effects from market activities within one country affect third parties located in other nations.

A free-rider problem exists when:

Intellectual property rights are laws granting ownership of creative ideas, typically in the form of a copyright, trademark, or patent.

Moral hazard refers to the likelihood that firms selling particularly poor-quality products are the ones that have the greatest incentive to misrepresent their attributes in an effort to sell them.

Words or symbols that companies use to identify their goods or services and distinguish them from the goods or services produced by other firms are known as:

A free-rider problem arises when individuals presume that others will pay for public goods so that, individually, they can escape from paying for their portion without reducing production of the public good.

Common property is a resource subdivided into shares exclusively owned by each individual in society.

The static view on taxation predicts a generally ambiguous net relationship between the tax rate and the tax base.

One way of addressing a situation of a negative international externality would be for a multinational authority to:

International tax competition involves efforts by national governments:

Economic inefficiency results when individuals know the true opportunity costs of their decisions.

Understanding the Global Economy

Comparative Advantage: How Nations Can Gain From International Trade

Sources of Comparative Advantage

Regulating International Trade: Trade Policies and Their Effects

Regionalism and Multilateralism

Balance of Payments and Foreign Exchange Markets

Exchange Rate Systems: Past to Present

The Power of Arbitrage: Purchasing Power and Interest Rate Parities

Global Money and Banking: Where Central Banks Fit Into the World Economy

Contemporary Global Economic Issues and Policies

Economic Development

Industrial Structure and Trade in the Global Economy: Businesses Without Borders

Dealing With Financial Crises: Does the World Need a New International Financial Architecture

Filters