Question 1

The legal system provided by the government is necessary for the smooth working of markets because

Accepted Answer

A) it keeps criminals off of the streets. 
B) it defines and protects property rights. 
C) it is set up in the U.S.constitution. 
D) it ensures that producers maximize their profits. 
A) it keeps criminals off of the streets. 
B) it defines and protects property rights. 
C) it is set up in the U.S.constitution. 
D) it ensures that producers maximize their profits.

Question 2

What are the voting rules followed by the political system as opposed to the market system?

Accepted Answer

In the political system,one person gets

Question 3

The Employment Act of 1946 reflects which one of the following functions of government?

Accepted Answer

A) Providing a legal system 
B) Improving economy-wide stabilization 
C) Correcting externalities 
D) Providing public goods 
A) Providing a legal system 
B) Improving economy-wide stabilization 
C) Correcting externalities 
D) Providing public goods

Question 4

A fundamental aspect of public goods is that they

Accepted Answer

A) are just like private goods EXCEPT that everybody wants to consume the same amount. 
B) have positive externalities. 
C) are characterized by the principle of rival consumption. 
D) can be consumed jointly by many people simultaneously. 
A) are just like private goods EXCEPT that everybody wants to consume the same amount. 
B) have positive externalities. 
C) are characterized by the principle of rival consumption. 
D) can be consumed jointly by many people simultaneously.

Question 5

-Refer to the above figure.Medicare subsidies have increased the price of medical services to   .The perceived price on the part of consumers is

Accepted Answer

A)    . 
B)    . 
C)    . 
D) undetermined without more information. 
A)    . 
B)    . 
C)    . 
D) undetermined without more information.

Question 6

-Refer to above figure in which negative externality existed.The government imposes a $1.00 pollution tax on the producer.Supply shifts leftward.

Accepted Answer

A) This tax will be shifted entirely to the consumer. 
B) This tax will be borne entirely by the producer. 
C) The amount of the tax shifted to the consumer depends on the consumer's reaction. 
D) The tax will be divided into equal amounts between consumer and producer. 
A) This tax will be shifted entirely to the consumer. 
B) This tax will be borne entirely by the producer. 
C) The amount of the tax shifted to the consumer depends on the consumer's reaction. 
D) The tax will be divided into equal amounts between consumer and producer.

Question 7

A shift from S1 to S2 reflects the change that happens when a negative externality is taken into account.A shift from D1 to D2 reflects the change that happens when a positive externality is taken into account.
-Refer to above figures.Prior to the shift of the curves,which panel and which curve involve the existence of negative externality?

Accepted Answer

A) Panel 1 and S1 
B) Panel 1 and S2 
C) Panel 2 and D1 
D) Panel 2 and D2 
A) Panel 1 and S1 
B) Panel 1 and S2 
C) Panel 2 and D1 
D) Panel 2 and D2

Question 8

Markets tend to underallocate resources to the production of a good when

Accepted Answer

A) there are negative externalities. 
B) there are positive externalities. 
C) there are public goods produced. 
D) equilibrium occurs. 
A) there are negative externalities. 
B) there are positive externalities. 
C) there are public goods produced. 
D) equilibrium occurs.

Question 9

Which of the following is an example of a public good?

Accepted Answer

A) Amtrak rail transport services 
B) Services of the U.S.Post Office 
C) The provision of medical care 
D) The provision of national defense 
A) Amtrak rail transport services 
B) Services of the U.S.Post Office 
C) The provision of medical care 
D) The provision of national defense

Question 10

Costs that spill over to third parties are called

Accepted Answer

A) opportunity costs. 
B) external costs. 
C) variable costs. 
D) public costs. 
A) opportunity costs. 
B) external costs. 
C) variable costs. 
D) public costs.

Question 11

A shift from S1 to S2 reflects the change that happens when a negative externality is taken into account.A shift from D1 to D2 reflects the change that happens when a positive externality is taken into account.
-Refer to the above figures.A positive externality exists that has not been corrected.Price and quantity will be

Accepted Answer

A)    and   . 
B)    and   . 
C)    and   . 
D)    and   . 
A)    and   . 
B)    and   . 
C)    and   . 
D)    and   .

Question 12

Which law specifically mandated the federal government's responsibility for economy-wide stability?

Accepted Answer

A) The Employment Act of 1946 
B) The Sherman Act of 1890 
C) The Great Depression Act of 1930 
D) The Miller Act of 1960 
A) The Employment Act of 1946 
B) The Sherman Act of 1890 
C) The Great Depression Act of 1930 
D) The Miller Act of 1960

Question 13

Fred receives a $14,000.00 per year grant by the federal government because he is disabled.This is a

Accepted Answer

A) demerit good. 
B) transfer payment. 
C) non-rival good. 
D) free rider problem. 
A) demerit good. 
B) transfer payment. 
C) non-rival good. 
D) free rider problem.

Question 14

The theory of public choice suggests that

Accepted Answer

A) government agencies tend to be inefficient because the people running them do not understand the concept of opportunity cost. 
B) government agencies tend to be inefficient because they are subject to institutional arrangements in which managers do not have an incentive to be efficient. 
C) the goods provided by government,whether public or private goods,are not scarce. 
D) you can lower your tax bill if you are careful not to consume too many government resources,regardless of what your neighbors do. 
A) government agencies tend to be inefficient because the people running them do not understand the concept of opportunity cost. 
B) government agencies tend to be inefficient because they are subject to institutional arrangements in which managers do not have an incentive to be efficient. 
C) the goods provided by government,whether public or private goods,are not scarce. 
D) you can lower your tax bill if you are careful not to consume too many government resources,regardless of what your neighbors do.

Question 15

When an external cost exists in the production of a good,firms tend to

Accepted Answer

A) under-produce the good since society pays these costs. 
B) over-produce the good. 
C) keep production constant throughout the year. 
D) under-allocate resources to the production of the good. 
A) under-produce the good since society pays these costs. 
B) over-produce the good. 
C) keep production constant throughout the year. 
D) under-allocate resources to the production of the good.

Question 16

The market and public sector are similar in that

Accepted Answer

A) there is competition amongst the participants in both sectors. 
B) the resources used in both sectors are scarce. 
C) the participants in both sectors react to incentives. 
D) All of the above are true. 
A) there is competition amongst the participants in both sectors. 
B) the resources used in both sectors are scarce. 
C) the participants in both sectors react to incentives. 
D) All of the above are true.

Question 17

The price system will allocate resources efficiently except when

Accepted Answer

A) consumers decide they want more of a good. 
B) no externalities exist. 
C) farmers decide to produce more corn. 
D) market failures exist. 
A) consumers decide they want more of a good. 
B) no externalities exist. 
C) farmers decide to produce more corn. 
D) market failures exist.

Question 18

Which of the following would be best classified as a private good?

Accepted Answer

A) A missile defense system 
B) Police force 
C) Radio frequency 
D) Clothing 
A) A missile defense system 
B) Police force 
C) Radio frequency 
D) Clothing

Question 19

Establishing rules for voter registration is an example of a(n)

Accepted Answer

A) economic function of government. 
B) political function of government. 
C) public good. 
D) transfer payment. 
A) economic function of government. 
B) political function of government. 
C) public good. 
D) transfer payment.

Question 20

The difference between a private good and a public good is that

Accepted Answer

A) private goods are government-sponsored goods while public goods are government-inhibited goods. 
B) externalities are always created in the production process but not in the production of public goods. 
C) private goods make us happy while public goods do not. 
D) the exclusion principle applies to a private good but not to a public good. 
A) private goods are government-sponsored goods while public goods are government-inhibited goods. 
B) externalities are always created in the production process but not in the production of public goods. 
C) private goods make us happy while public goods do not. 
D) the exclusion principle applies to a private good but not to a public good.

The legal system provided by the government is necessary for the smooth working of markets because

What are the voting rules followed by the political system as opposed to the market system?

The Employment Act of 1946 reflects which one of the following functions of government?

A fundamental aspect of public goods is that they

-Refer to the above figure.Medicare subsidies have increased the price of medical services to .The perceived price on the part of consumers is

-Refer to above figure in which negative externality existed.The government imposes a $1.00 pollution tax on the producer.Supply shifts leftward.

Markets tend to underallocate resources to the production of a good when

Which of the following is an example of a public good?

Costs that spill over to third parties are called

Which law specifically mandated the federal government's responsibility for economy-wide stability?

Fred receives a $14,000.00 per year grant by the federal government because he is disabled.This is a

The theory of public choice suggests that

When an external cost exists in the production of a good,firms tend to

The market and public sector are similar in that

The price system will allocate resources efficiently except when

Which of the following would be best classified as a private good?

Establishing rules for voter registration is an example of a(n)

The difference between a private good and a public good is that

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 legal system provided by the government is necessary for the smooth working of markets because

What are the voting rules followed by the political system as opposed to the market system?

The Employment Act of 1946 reflects which one of the following functions of government?

A fundamental aspect of public goods is that they

-Refer to the above figure.Medicare subsidies have increased the price of medical services to .The perceived price on the part of consumers is

-Refer to above figure in which negative externality existed.The government imposes a $1.00 pollution tax on the producer.Supply shifts leftward.

Markets tend to underallocate resources to the production of a good when

Which of the following is an example of a public good?

Costs that spill over to third parties are called

Which law specifically mandated the federal government's responsibility for economy-wide stability?

Fred receives a $14,000.00 per year grant by the federal government because he is disabled.This is a

The theory of public choice suggests that

When an external cost exists in the production of a good,firms tend to

The market and public sector are similar in that

The price system will allocate resources efficiently except when

Which of the following would be best classified as a private good?

Establishing rules for voter registration is an example of a(n)

The difference between a private good and a public good is that

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