Question 1

Cities and other local governments receive most of their tax revenues from

Accepted Answer

A) Local income taxes. 
B) Sales tax. 
C) Property taxes. 
D) Excise taxes. 
A) Local income taxes. 
B) Sales tax. 
C) Property taxes. 
D) Excise taxes.

Question 2

Suppose that if your income is $50,000,your tax is $5,000,but if your income is $100,000,your tax is $8,000.Such a tax is

Accepted Answer

A) Regressive. 
B) Progressive. 
C) Proportional. 
D) An excise tax. 
A) Regressive. 
B) Progressive. 
C) Proportional. 
D) An excise tax.

Question 3

Public goods are any goods provided by units of local,state,or federal governments.

Accepted Answer

A) True 
 B)False

Question 4

Public choice theory emphasizes the role of self-interest in public decision-making.

Accepted Answer

A) True 
 B)False

Question 5

When external costs result from the production of a good,

Accepted Answer

A) Producers have an incentive to produce too little. 
B) Consumers have an incentive to consume too little. 
C) Both producers and consumers have an incentive to produce and consume too much. 
D) Producers and consumers are not affected. 
A) Producers have an incentive to produce too little. 
B) Consumers have an incentive to consume too little. 
C) Both producers and consumers have an incentive to produce and consume too much. 
D) Producers and consumers are not affected.

Question 6

Which of the following is an example of a progressive tax?

Accepted Answer

A) Social Security payroll tax. 
B) A local sales tax. 
C) The federal income tax. 
D) An excise tax. 
A) Social Security payroll tax. 
B) A local sales tax. 
C) The federal income tax. 
D) An excise tax.

Question 7

Firms in Colorado dump waste into the Colorado River and as a result,people in California and Mexico cannot use the water.What type of market failure is most likely involved?

Accepted Answer

A) Inequity. 
B) Public goods. 
C) Externalities. 
D) Market power. 
A) Inequity. 
B) Public goods. 
C) Externalities. 
D) Market power.

Question 8

Government failure means that government intervention fails to move us closer to our economic goals.

Accepted Answer

A) True 
 B)False

Question 9

Fire protection and police protection may be provided more efficiently by the private sector than by the public sector.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is the best description of the U.S.tax system?

Accepted Answer

A) The federal income tax is regressive,but sales,property,and other taxes tend to be progressive. 
B) The U.S.tax system is consistently progressive. 
C) The federal income tax is progressive,but sales,property,and other taxes tend to be regressive. 
D) The U.S.tax system is consistently regressive. 
A) The federal income tax is regressive,but sales,property,and other taxes tend to be progressive. 
B) The U.S.tax system is consistently progressive. 
C) The federal income tax is progressive,but sales,property,and other taxes tend to be regressive. 
D) The U.S.tax system is consistently regressive.

Question 11

The free-rider problem

Accepted Answer

A) Arises from the ability to exclude an individual from the benefits of someone else's purchase. 
B) Is a government failure resulting from consumption of private goods. 
C) Reflects the inability to exclude an individual from the benefits of someone else's purchase. 
D) Means that the market mechanism is the most efficient way to produce public goods. 
A) Arises from the ability to exclude an individual from the benefits of someone else's purchase. 
B) Is a government failure resulting from consumption of private goods. 
C) Reflects the inability to exclude an individual from the benefits of someone else's purchase. 
D) Means that the market mechanism is the most efficient way to produce public goods.

Question 12

The term market mechanism refers to

Accepted Answer

A) The use of market prices and sales to signal desired output. 
B) Resource allocation based on a production possibilities curve. 
C) Resource allocation based on consumer needs. 
D) Government laws and regulations concerning how the market should operate. 
A) The use of market prices and sales to signal desired output. 
B) Resource allocation based on a production possibilities curve. 
C) Resource allocation based on consumer needs. 
D) Government laws and regulations concerning how the market should operate.

Question 13

The term market power refers to

Accepted Answer

A) A firm's ability to eliminate free riders. 
B) A firm's ability to alter the market price or quantity of a good or service. 
C) The government's ability to change market outcomes. 
D) The government's authority to tax businesses. 
A) A firm's ability to eliminate free riders. 
B) A firm's ability to alter the market price or quantity of a good or service. 
C) The government's ability to change market outcomes. 
D) The government's authority to tax businesses.

Question 14

Government intervention to alter market structure or prevent abuse of market power is the basic purpose of

Accepted Answer

A) Merit goods. 
B) Government taxes. 
C) Social demand. 
D) Antitrust policy. 
A) Merit goods. 
B) Government taxes. 
C) Social demand. 
D) Antitrust policy.

Question 15

Which of the following is a source of government failure but is not typically an example of market failure?

Accepted Answer

A) Monopoly. 
B) Externalities. 
C) Inequity. 
D) Waste. 
A) Monopoly. 
B) Externalities. 
C) Inequity. 
D) Waste.

Question 16

Government intervention can serve to stabilize the macro economy by

Accepted Answer

A) Reducing inflation and encouraging the equitable distribution of income. 
B) Reducing employment and encouraging economic growth. 
C) Regulating monopolies and encouraging the equitable distribution of output. 
D) Reducing inflation and encouraging economic growth. 
A) Reducing inflation and encouraging the equitable distribution of income. 
B) Reducing employment and encouraging economic growth. 
C) Regulating monopolies and encouraging the equitable distribution of output. 
D) Reducing inflation and encouraging economic growth.

Question 17

Antitrust activity addresses

Accepted Answer

A) Market power. 
B) Inequity. 
C) Macro instability. 
D) Public goods. 
A) Market power. 
B) Inequity. 
C) Macro instability. 
D) Public goods.

Question 18

Resources are directed from one industry to another by

Accepted Answer

A) Changes in market prices. 
B) Market failure. 
C) Government failure. 
D) None of the choices are correct. 
A) Changes in market prices. 
B) Market failure. 
C) Government failure. 
D) None of the choices are correct.

Question 19

Most of the direct spending at the state government level is on

Accepted Answer

A) Defense. 
B) Public safety. 
C) Transportation. 
D) Education. 
A) Defense. 
B) Public safety. 
C) Transportation. 
D) Education.

Question 20

If production in the economy is efficient,then changes in market prices

Accepted Answer

A) Move us along the edge of the production possibilities curve. 
B) Move us to a point above the production possibilities curve. 
C) Move us from a point below the production possibilities curve to a point on the production possibilities curve. 
D) Have no effect on our position on the production possibilities curve. 
A) Move us along the edge of the production possibilities curve. 
B) Move us to a point above the production possibilities curve. 
C) Move us from a point below the production possibilities curve to a point on the production possibilities curve. 
D) Have no effect on our position on the production possibilities curve.

Exam 4: The Role of Government

Cities and other local governments receive most of their tax revenues from

Suppose that if your income is $50,000,your tax is $5,000,but if your income is $100,000,your tax is $8,000.Such a tax is

Public goods are any goods provided by units of local,state,or federal governments.

Public choice theory emphasizes the role of self-interest in public decision-making.

When external costs result from the production of a good,

Which of the following is an example of a progressive tax?

Firms in Colorado dump waste into the Colorado River and as a result,people in California and Mexico cannot use the water.What type of market failure is most likely involved?

Government failure means that government intervention fails to move us closer to our economic goals.

Fire protection and police protection may be provided more efficiently by the private sector than by the public sector.

Which of the following is the best description of the U.S.tax system?

The free-rider problem

The term market mechanism refers to

The term market power refers to

Government intervention to alter market structure or prevent abuse of market power is the basic purpose of

Which of the following is a source of government failure but is not typically an example of market failure?

Government intervention can serve to stabilize the macro economy by

Antitrust activity addresses

Resources are directed from one industry to another by

Most of the direct spending at the state government level is on

If production in the economy is efficient,then changes in market prices

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

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