Question 1

Which of the following is a good example of government's attempt to correct for macroeconomic externalities?

Accepted Answer

A) Preventing excessive amounts of pollution 
B) Providing public goods 
C) Maintaining full employment 
D) Providing for smoke-free public spaces 
A) Preventing excessive amounts of pollution 
B) Providing public goods 
C) Maintaining full employment 
D) Providing for smoke-free public spaces

Question 2

In the factor market:

Accepted Answer

A) households supply factors of production to business and are paid by business for doing so. 
B) households supply factors of production to business and are paid by government for doing so. 
C) business produces goods and services and sells them to households and government. 
D) government produces goods and services and supplies them to households and business. 
A) households supply factors of production to business and are paid by business for doing so. 
B) households supply factors of production to business and are paid by government for doing so. 
C) business produces goods and services and sells them to households and government. 
D) government produces goods and services and supplies them to households and business.

Question 3

From the Great Depression in the 1930s until the tax reforms of the 1980s, the United States government integrated a number of what might best be called ________ institutions into the economy.

Accepted Answer

A) socialist 
B) capitalist 
C) entrepreneurial 
D) profit-seeking 
A) socialist 
B) capitalist 
C) entrepreneurial 
D) profit-seeking

Question 4

Which two sources of revenue comprise most of federal government revenue?

Accepted Answer

A) Corporate income taxes and social security taxes and contributions 
B) Corporate income taxes and excise taxes 
C) Individual income tax and corporate income taxes 
D) Individual income tax and social security taxes and contributions 
A) Corporate income taxes and social security taxes and contributions 
B) Corporate income taxes and excise taxes 
C) Individual income tax and corporate income taxes 
D) Individual income tax and social security taxes and contributions

Question 5

The Group of Seven is an informal international institution that is comprised primarily of the:

Accepted Answer

A) leading petroleum exporting countries. 
B) leading socialist countries. 
C) leading industrial democracies. 
D) major developing countries. 
A) leading petroleum exporting countries. 
B) leading socialist countries. 
C) leading industrial democracies. 
D) major developing countries.

Question 6

Which of the following was a Marxist prediction?

Accepted Answer

A) Production would move from large to ever-smaller factories. 
B) Standards of living would increase because of improved productivity and technological advance. 
C) There would be significant differentiation between workers and owners of factories. 
D) The use of business power would increase competition. 
A) Production would move from large to ever-smaller factories. 
B) Standards of living would increase because of improved productivity and technological advance. 
C) There would be significant differentiation between workers and owners of factories. 
D) The use of business power would increase competition.

Question 7

Most economies today are:

Accepted Answer

A) pure market economies. 
B) differentiated primarily by the degree to which they depend on markets. 
C) differentiated primarily by who owns the means of production. 
D) socialist. 
A) pure market economies. 
B) differentiated primarily by the degree to which they depend on markets. 
C) differentiated primarily by who owns the means of production. 
D) socialist.

Question 8

Suppose that at the current price, waffle producers offer 5 million waffles for sale, but consumers want to buy 6 million. When the market coordinates the demand and supply for waffles, the price of waffles will:

Accepted Answer

A) rise. 
B) fall. 
C) stay the same. 
D) be fixed by the government. 
A) rise. 
B) fall. 
C) stay the same. 
D) be fixed by the government.

Question 9

A socialist economy in theory:

Accepted Answer

A) requires private ownership of property. 
B) is coordinated by the invisible hand. 
C) expects people to be altruistic. 
D) expects people to be selfish. 
A) requires private ownership of property. 
B) is coordinated by the invisible hand. 
C) expects people to be altruistic. 
D) expects people to be selfish.

Question 10

Governments do all of the following except:

Accepted Answer

A) oversee the interaction of households and businesses in the goods and factor markets. 
B) demand labor services from households in the factor market. 
C) demand goods and services from businesses in the goods market. 
D) supply labor services to businesses in the factor market. 
A) oversee the interaction of households and businesses in the goods and factor markets. 
B) demand labor services from households in the factor market. 
C) demand goods and services from businesses in the goods market. 
D) supply labor services to businesses in the factor market.

Question 11

International market failures:

Accepted Answer

A) are more likely to be solved in the presence of a world government. 
B) are less likely to be solved in the presence of a world government. 
C) are equally likely to be solved in the presence or absence of a world government. 
D) do not occur in the presence or absence of a world government. 
A) are more likely to be solved in the presence of a world government. 
B) are less likely to be solved in the presence of a world government. 
C) are equally likely to be solved in the presence or absence of a world government. 
D) do not occur in the presence or absence of a world government.

Question 12

In the former USSR, state planners decided what was to be produced. They passed orders down to factories, allocating raw materials, workers, and other factors of production to them. This is an example of (a):

Accepted Answer

A) corporation. 
B) command economy. 
C) market economy. 
D) government as a referee. 
A) corporation. 
B) command economy. 
C) market economy. 
D) government as a referee.

Question 13

Determining whether a good is a merit good is:

Accepted Answer

A) an objective exercise. 
B) a subjective exercise. 
C) best done using economic theory. 
D) best left to economists. 
A) an objective exercise. 
B) a subjective exercise. 
C) best done using economic theory. 
D) best left to economists.

Question 14

How does the factor market differ from the goods market?

Accepted Answer

In the factor market,households supply a

Question 15

Governments establish the laws that regulate the interaction between businesses and households but do not serve as actors in the economy themselves.

Accepted Answer

A) True 
 B)False

Question 16

One advantage of a partnership over a sole proprietorship is:

Accepted Answer

A) greater accountability. 
B) limited liability. 
C) ease of formation. 
D) the ability to share the work and risks of business. 
A) greater accountability. 
B) limited liability. 
C) ease of formation. 
D) the ability to share the work and risks of business.

Question 17

Corporate advertising:

Accepted Answer

A) may reinforce consumer sovereignty. 
B) may undermine consumer sovereignty. 
C) cannot affect consumer sovereignty. 
D) makes consumer sovereignty meaningless. 
A) may reinforce consumer sovereignty. 
B) may undermine consumer sovereignty. 
C) cannot affect consumer sovereignty. 
D) makes consumer sovereignty meaningless.

Question 18

When Churchill County residents voted whether to continue allowing two brothels to operate, the government was acting as:

Accepted Answer

A) referee. 
B) actor. 
C) big spender. 
D) public goods supplier. 
A) referee. 
B) actor. 
C) big spender. 
D) public goods supplier.

Question 19

Limited liability is a key advantage of partnerships and sole proprietorships over corporations.

Accepted Answer

A) True 
 B)False

Question 20

When a government bans prostitution, it may do so because it considers prostitution to be a:

Accepted Answer

A) progressive good. 
B) regressive good. 
C) public good. 
D) demerit good. 
A) progressive good. 
B) regressive good. 
C) public good. 
D) demerit good.

Exam 3: Economic Institutions

Which of the following is a good example of government's attempt to correct for macroeconomic externalities?

In the factor market:

From the Great Depression in the 1930s until the tax reforms of the 1980s, the United States government integrated a number of what might best be called ________ institutions into the economy.

Which two sources of revenue comprise most of federal government revenue?

The Group of Seven is an informal international institution that is comprised primarily of the:

Which of the following was a Marxist prediction?

Most economies today are:

Suppose that at the current price, waffle producers offer 5 million waffles for sale, but consumers want to buy 6 million. When the market coordinates the demand and supply for waffles, the price of waffles will:

A socialist economy in theory:

Governments do all of the following except:

International market failures:

In the former USSR, state planners decided what was to be produced. They passed orders down to factories, allocating raw materials, workers, and other factors of production to them. This is an example of (a):

Determining whether a good is a merit good is:

How does the factor market differ from the goods market?

Governments establish the laws that regulate the interaction between businesses and households but do not serve as actors in the economy themselves.

One advantage of a partnership over a sole proprietorship is:

Corporate advertising:

When Churchill County residents voted whether to continue allowing two brothels to operate, the government was acting as:

Limited liability is a key advantage of partnerships and sole proprietorships over corporations.

When a government bans prostitution, it may do so because it considers prostitution to be a:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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