Question 1

A free rider is someone who

Accepted Answer

A) hops on the bus for free. 
B) enjoys the flowers I have planted and does not compensate me for them. 
C) creates a negative externality. 
D) buys a ticket for a movie. 
A) hops on the bus for free. 
B) enjoys the flowers I have planted and does not compensate me for them. 
C) creates a negative externality. 
D) buys a ticket for a movie.

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

Which of the following is NOT a consequence of the introduction of the Medicare program?

Accepted Answer

A) an increased quantity of medical services demanded 
B) an increased ability for the elderly to obtain medical services 
C) an increased ability for the poor to obtain medical services 
D) a reduced demand for medical services 
A) an increased quantity of medical services demanded 
B) an increased ability for the elderly to obtain medical services 
C) an increased ability for the poor to obtain medical services 
D) a reduced demand for medical services

Question 4

An important characteristic of private goods is

Accepted Answer

A) the nonexclusion principle. 
B) the principle of rival consumption. 
C) the principle of joint consumption. 
D) the principle of conspicuous consumption. 
A) the nonexclusion principle. 
B) the principle of rival consumption. 
C) the principle of joint consumption. 
D) the principle of conspicuous consumption.

Question 5

Which of the following is a government-inhibited good?

Accepted Answer

A) A lighthouse 
B) National defense 
C) Public education 
D) Cocaine 
A) A lighthouse 
B) National defense 
C) Public education 
D) Cocaine

Question 6

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 7

Suppose that a per-unit subsidy is granted to each individual who consumes a product providing external benefits to society at large.Each individuals demand curve will shift ________,and the market demand curve for the product will shift ________.

Accepted Answer

A) to the right;to the right 
B) to the right;to the left 
C) to the left;to the left 
D) to the left;to the right 
A) to the right;to the right 
B) to the right;to the left 
C) to the left;to the left 
D) to the left;to the right

Question 8

Market failure occurs when

Accepted Answer

A) the price system fails to generate an efficient allocation of resources. 
B) the price system fails to generate an equal distribution of income. 
C) the price system fails to generate an equal distribution of wealth. 
D) the price system allows consumers to make their own decisions. 
A) the price system fails to generate an efficient allocation of resources. 
B) the price system fails to generate an equal distribution of income. 
C) the price system fails to generate an equal distribution of wealth. 
D) the price system allows consumers to make their own decisions.

Question 9

Which event was most important in promoting the belief that the U.S.government should work to ensure economy-wide stability?

Accepted Answer

A) World War II 
B) The Civil Rights Movement 
C) The California Gold Rush 
D) The Great Depression 
A) World War II 
B) The Civil Rights Movement 
C) The California Gold Rush 
D) The Great Depression

Question 10

Market failures

Accepted Answer

A) are usually caused by government interference in the economy. 
B) prevent the price system from attaining economic efficiency. 
C) encourage people to purchase more of a good than they really want. 
D) encourage businesses to produce more of a good than they really want to. 
A) are usually caused by government interference in the economy. 
B) prevent the price system from attaining economic efficiency. 
C) encourage people to purchase more of a good than they really want. 
D) encourage businesses to produce more of a good than they really want to.

Question 11

What type of policy does the government adopt in dealing with government-inhibited goods?

Accepted Answer

A) It subsidizes their consumption. 
B) It subsidizes their production. 
C) It provides them as public goods. 
D) It taxes,regulates,or prohibits their use. 
A) It subsidizes their consumption. 
B) It subsidizes their production. 
C) It provides them as public goods. 
D) It taxes,regulates,or prohibits their use.

Question 12

Economically speaking,the design of Medicare

Accepted Answer

A) encourages the consumption of medical services. 
B) discourages the consumption of medical services. 
C) helps to decrease the cost of care to non-Medicare patients. 
D) discourages the provision of medical services. 
A) encourages the consumption of medical services. 
B) discourages the consumption of medical services. 
C) helps to decrease the cost of care to non-Medicare patients. 
D) discourages the provision of medical services.

Question 13

Which of the following checks issued by the government represents a transfer payment?

Accepted Answer

A) The federal government pays a defense contractor for development of a missile system. 
B) The federal government pays a retiree her Social Security benefits. 
C) The state of Oregon pays a construction firm for its work in repairing a state highway. 
D) The state of Illinois pays groundskeepers at the state capitol building their weekly wages. 
A) The federal government pays a defense contractor for development of a missile system. 
B) The federal government pays a retiree her Social Security benefits. 
C) The state of Oregon pays a construction firm for its work in repairing a state highway. 
D) The state of Illinois pays groundskeepers at the state capitol building their weekly wages.

Question 14

If the production of a product results in significant external costs,an appropriate government policy might be to

Accepted Answer

A) subsidize the production of the good. 
B) tax producers and thus shift the supply curve to the left. 
C) tax consumers' incomes and thus shift the demand curve to the left. 
D) subsidize consumers since the good is being under-consumed. 
A) subsidize the production of the good. 
B) tax producers and thus shift the supply curve to the left. 
C) tax consumers' incomes and thus shift the demand curve to the left. 
D) subsidize consumers since the good is being under-consumed.

Question 15

An effluent fee is a

Accepted Answer

A) subsidy given to the producer of a positive externality. 
B) charge to a polluter that gives the right to discharge pollution into the air. 
C) fine imposed on a polluter for dumping illegal pollution. 
D) charge for a public good. 
A) subsidy given to the producer of a positive externality. 
B) charge to a polluter that gives the right to discharge pollution into the air. 
C) fine imposed on a polluter for dumping illegal pollution. 
D) charge for a public good.

Question 16

A characteristic of a public good is that a public good is provided

Accepted Answer

A) to some businesses,but not to others. 
B) only in some states. 
C) to low income residents in some states. 
D) to many individuals at no additional cost. 
A) to some businesses,but not to others. 
B) only in some states. 
C) to low income residents in some states. 
D) to many individuals at no additional cost.

Question 17

When comparing market and public sector decision making,which statement is NOT true?

Accepted Answer

A) Self-interest is the motivating force in each decision making arena. 
B) In both decision making sectors,majority rule is how things are done. 
C) In both decision making sectors,there are scarcity constraints. 
D) Collective (political)outcomes and economic outcomes may differ. 
A) Self-interest is the motivating force in each decision making arena. 
B) In both decision making sectors,majority rule is how things are done. 
C) In both decision making sectors,there are scarcity constraints. 
D) Collective (political)outcomes and economic outcomes may differ.

Question 18

A result of a positive externality in the production of a good is that

Accepted Answer

A) the price system will over-allocate resources to the production of that good or service. 
B) the price system will under-allocate resources to the production of that good or service. 
C) the market supply will be too high. 
D) the market demand will be too high. 
A) the price system will over-allocate resources to the production of that good or service. 
B) the price system will under-allocate resources to the production of that good or service. 
C) the market supply will be too high. 
D) the market demand will be too high.

Question 19

The provision of a legal system is an important economic function of the government because

Accepted Answer

A) lawyers and judges tend to be high-income people. 
B) people need to feel safe when they go to work. 
C) the legal system affects how exchange takes place through its enforcement of contracts. 
D) the legal system affects the distribution of income through its awarding of damages in accident claims. 
A) lawyers and judges tend to be high-income people. 
B) people need to feel safe when they go to work. 
C) the legal system affects how exchange takes place through its enforcement of contracts. 
D) the legal system affects the distribution of income through its awarding of damages in accident claims.

Question 20

Which of the following will LEAST likely generate positive external benefits to society?

Accepted Answer

A) Education 
B) The use of cell phone services 
C) Health care 
D) Requiring drivers to undergo periodic eye examinations 
A) Education 
B) The use of cell phone services 
C) Health care 
D) Requiring drivers to undergo periodic eye examinations

A free rider is someone who

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

Which of the following is NOT a consequence of the introduction of the Medicare program?

An important characteristic of private goods is

Which of the following is a government-inhibited good?

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

Suppose that a per-unit subsidy is granted to each individual who consumes a product providing external benefits to society at large.Each individuals demand curve will shift ,and the market demand curve for the product will shift .

Market failure occurs when

Which event was most important in promoting the belief that the U.S.government should work to ensure economy-wide stability?

Market failures

What type of policy does the government adopt in dealing with government-inhibited goods?

Economically speaking,the design of Medicare

Which of the following checks issued by the government represents a transfer payment?

If the production of a product results in significant external costs,an appropriate government policy might be to

An effluent fee is a

A characteristic of a public good is that a public good is provided

When comparing market and public sector decision making,which statement is NOT true?

A result of a positive externality in the production of a good is that

The provision of a legal system is an important economic function of the government because

Which of the following will LEAST likely generate positive external benefits to society?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 5: Public Spending and Public Choice

A free rider is someone who

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

Which of the following is NOT a consequence of the introduction of the Medicare program?

An important characteristic of private goods is

Which of the following is a government-inhibited good?

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

Suppose that a per-unit subsidy is granted to each individual who consumes a product providing external benefits to society at large.Each individuals demand curve will shift ________,and the market demand curve for the product will shift ________.

Market failure occurs when

Which event was most important in promoting the belief that the U.S.government should work to ensure economy-wide stability?

Market failures

What type of policy does the government adopt in dealing with government-inhibited goods?

Economically speaking,the design of Medicare

Which of the following checks issued by the government represents a transfer payment?

If the production of a product results in significant external costs,an appropriate government policy might be to

An effluent fee is a

A characteristic of a public good is that a public good is provided

When comparing market and public sector decision making,which statement is NOT true?

A result of a positive externality in the production of a good is that

The provision of a legal system is an important economic function of the government because

Which of the following will LEAST likely generate positive external benefits to society?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Suppose that a per-unit subsidy is granted to each individual who consumes a product providing external benefits to society at large.Each individuals demand curve will shift ,and the market demand curve for the product will shift .