Question 1

The U.S.antitrust laws

Accepted Answer

A) aid monopolies in their quest to dominate the market for a good or service. 
B) are outdated and rarely used anymore. 
C) promote competition. 
D) are administered by the Department of Commerce. 
A) aid monopolies in their quest to dominate the market for a good or service. 
B) are outdated and rarely used anymore. 
C) promote competition. 
D) are administered by the Department of Commerce.

Question 2

Which of the following is an example of the free-rider problem?

Accepted Answer

A) A neighbor who refuses to help pay for a street light that is intended to help reduce crime 
B) A student who refuses to buy a college catalog 
C) A law enforcement officer who receives a uniform from the police department 
D) A fast food employee who is provided food at work 
A) A neighbor who refuses to help pay for a street light that is intended to help reduce crime 
B) A student who refuses to buy a college catalog 
C) A law enforcement officer who receives a uniform from the police department 
D) A fast food employee who is provided food at work

Question 3

An externality exists when

Accepted Answer

A) goods are sold in specific geographic locations. 
B) some of the benefits or costs associated with a good are borne by third parties. 
C) the government taxes a good. 
D) the government subsidizes a good. 
A) goods are sold in specific geographic locations. 
B) some of the benefits or costs associated with a good are borne by third parties. 
C) the government taxes a good. 
D) the government subsidizes a good.

Question 4

An example of an in-kind transfer is

Accepted Answer

A) national defense. 
B) Social Security. 
C) low-cost public housing. 
D) Unemployment benefits. 
A) national defense. 
B) Social Security. 
C) low-cost public housing. 
D) Unemployment benefits.

Question 5

One way of addressing the associated market failure that generates both private costs and external costs is for this activity to be

Accepted Answer

A) left alone. 
B) taxed. 
C) subsidized. 
D) banned. 
A) left alone. 
B) taxed. 
C) subsidized. 
D) banned.

Question 6

Which of the following is a major reason why the Medicare program is in such financial trouble?

Accepted Answer

A) Workers are not paying enough into the program. 
B) The government set reimbursement rates too high. 
C) Because medical services are subsidized by the government,both consumption by the elderly and the cost of services have increased. 
D) There is a shortage of medical school applicants. 
A) Workers are not paying enough into the program. 
B) The government set reimbursement rates too high. 
C) Because medical services are subsidized by the government,both consumption by the elderly and the cost of services have increased. 
D) There is a shortage of medical school applicants.

Question 7

When costs spill over to third parties,there is a(n)

Accepted Answer

A) cost overrun 
B) excessive competition. 
C) negative externality. 
D) government subsidy. 
A) cost overrun 
B) excessive competition. 
C) negative externality. 
D) government subsidy.

Question 8

Examples of transfer payments are

Accepted Answer

A) wages,profits,and rents. 
B) Social Security checks and unemployment insurance payments. 
C) salaries of educators,police,and firefighters. 
D) federal government spending for national defense. 
A) wages,profits,and rents. 
B) Social Security checks and unemployment insurance payments. 
C) salaries of educators,police,and firefighters. 
D) federal government spending for national defense.

Question 9

A public museum is an example of a

Accepted Answer

A) government-sponsored good. 
B) public good. 
C) good which generates a positive externality. 
D) good which generates a negative externality. 
A) government-sponsored good. 
B) public good. 
C) good which generates a positive externality. 
D) good which generates a negative externality.

Question 10

Which of the following leads to an underallocation of resources to a specific economic activity?

Accepted Answer

A) External costs 
B) External benefits 
C) Marginal costs 
D) Effluent benefits 
A) External costs 
B) External benefits 
C) Marginal costs 
D) Effluent benefits

Question 11

Market failure occurs when

Accepted Answer

A) a good is too expensive for the market to provide. 
B) an unrestrained market economy leads to too few or too many resources going to a specific economic activity. 
C) one good is superior to another and drives it out of the market. 
D) the stock market experiences a very large loss. 
A) a good is too expensive for the market to provide. 
B) an unrestrained market economy leads to too few or too many resources going to a specific economic activity. 
C) one good is superior to another and drives it out of the market. 
D) the stock market experiences a very large loss.

Question 12

Use the concept of supply and demand to explain why an increase in Medicare subsidies can lead to an increase in health care spending by the government.

Accepted Answer

Medicare reduces the price that the elde

Question 13

The funds that polluters pay that gives them the right to discharge into the air or water a certain amount of pollution are

Accepted Answer

A) special subsidies. 
B) regulation fees. 
C) external costs. 
D) effluent fees. 
A) special subsidies. 
B) regulation fees. 
C) external costs. 
D) effluent fees.

Question 14

Market failures occur when

Accepted Answer

A) externalities exist. 
B) wages increase. 
C) there is an increase in demand. 
D) there is a change in quantity demanded. 
A) externalities exist. 
B) wages increase. 
C) there is an increase in demand. 
D) there is a change in quantity demanded.

Question 15

When market failures occur,

Accepted Answer

A) the invisible had will correct for the market failures. 
B) the price system will correct the market failures. 
C) people will reduce their consumption. 
D) the government can step in to correct the market failure. 
A) the invisible had will correct for the market failures. 
B) the price system will correct the market failures. 
C) people will reduce their consumption. 
D) the government can step in to correct the market failure.

Question 16

Positive externalities arise when

Accepted Answer

A) an unprofitable firm is shut down. 
B) a profitable firm is regulated. 
C) tax rates are reduced. 
D) production of a good generates benefits that spill over to third parties. 
A) an unprofitable firm is shut down. 
B) a profitable firm is regulated. 
C) tax rates are reduced. 
D) production of a good generates benefits that spill over to third parties.

Question 17

Market failures include all of the following EXCEPT

Accepted Answer

A) equalization of quantity supplied and quantity demanded 
B) public goods 
C) positive externalities 
D) negative externalities 
A) equalization of quantity supplied and quantity demanded 
B) public goods 
C) positive externalities 
D) negative externalities

Question 18

The goal of Medicare is to

Accepted Answer

A) help the poor and indigent pay their hospital bills. 
B) prevent poverty in urban cities. 
C) subsidize medical expenses for the elderly. 
D) subsidize costs incurred by doctors. 
A) help the poor and indigent pay their hospital bills. 
B) prevent poverty in urban cities. 
C) subsidize medical expenses for the elderly. 
D) subsidize costs incurred by doctors.

Question 19

Which of the following is NOT an economic function of the U.S.government?

Accepted Answer

A) Promoting competition 
B) Providing public goods 
C) Promoting price stability 
D) Encouraging production of government-inhibited goods 
A) Promoting competition 
B) Providing public goods 
C) Promoting price stability 
D) Encouraging production of government-inhibited goods

Question 20

A government subsidy is typically used

Accepted Answer

A) to correct a negative externality. 
B) to provide a government-inhibited good. 
C) to reduce inflation. 
D) to correct a positive externality. 
A) to correct a negative externality. 
B) to provide a government-inhibited good. 
C) to reduce inflation. 
D) to correct a positive externality.

The U.S.antitrust laws

Which of the following is an example of the free-rider problem?

An externality exists when

An example of an in-kind transfer is

One way of addressing the associated market failure that generates both private costs and external costs is for this activity to be

Which of the following is a major reason why the Medicare program is in such financial trouble?

When costs spill over to third parties,there is a(n)

Examples of transfer payments are

A public museum is an example of a

Which of the following leads to an underallocation of resources to a specific economic activity?

Market failure occurs when

Use the concept of supply and demand to explain why an increase in Medicare subsidies can lead to an increase in health care spending by the government.

The funds that polluters pay that gives them the right to discharge into the air or water a certain amount of pollution are

Market failures occur when

When market failures occur,

Positive externalities arise when

Market failures include all of the following EXCEPT

The goal of Medicare is to

Which of the following is NOT an economic function of the U.S.government?

A government subsidy is typically used

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

The U.S.antitrust laws

Which of the following is an example of the free-rider problem?

An externality exists when

An example of an in-kind transfer is

One way of addressing the associated market failure that generates both private costs and external costs is for this activity to be

Which of the following is a major reason why the Medicare program is in such financial trouble?

When costs spill over to third parties,there is a(n)

Examples of transfer payments are

A public museum is an example of a

Which of the following leads to an underallocation of resources to a specific economic activity?

Market failure occurs when

Use the concept of supply and demand to explain why an increase in Medicare subsidies can lead to an increase in health care spending by the government.

The funds that polluters pay that gives them the right to discharge into the air or water a certain amount of pollution are

Market failures occur when

When market failures occur,

Positive externalities arise when

Market failures include all of the following EXCEPT

The goal of Medicare is to

Which of the following is NOT an economic function of the U.S.government?

A government subsidy is typically used

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