Question 1

Government can correct for negative externalities by

Accepted Answer

A) decreasing taxes. 
B) increasing taxes or regulation. 
C) allowing the market system to correct the problem. 
D) decreasing the costs to those responsible for the externality. 
A) decreasing taxes. 
B) increasing taxes or regulation. 
C) allowing the market system to correct the problem. 
D) decreasing the costs to those responsible for the externality. B

Question 2

By definition, a government-sponsored good

Accepted Answer

A) is a good that is deemed socially desirable. 
B) is a good that should be available only to upper-income groups. 
C) is always provided at a zero price. 
D) does not affect society's general welfare. 
A) is a good that is deemed socially desirable. 
B) is a good that should be available only to upper-income groups. 
C) is always provided at a zero price. 
D) does not affect society's general welfare. A

Question 3

A friend of yours receives a government voucher for an apartment in a public housing project. This apartment represents

Accepted Answer

A) a government-sponsored good. 
B) the free-rider problem. 
C) a public good. 
D) the drop-in-the-bucket problem. 
A) a government-sponsored good. 
B) the free-rider problem. 
C) a public good. 
D) the drop-in-the-bucket problem. A

Question 4

A government agency charged with enforcing antitrust laws is

Accepted Answer

A) the Federal Reserve Board. 
B) the National Labor Relations Board. 
C) the Council of Economic Advisors. 
D) the Federal Trade Commission. 
A) the Federal Reserve Board. 
B) the National Labor Relations Board. 
C) the Council of Economic Advisors. 
D) the Federal Trade Commission.

Question 5

Government-sponsored goods are those goods

Accepted Answer

A) that society views desirable through the political process. 
B) that companies give away as promotional prizes. 
C) that have lower than average negative externality. 
D) that only low-income individuals consume. 
A) that society views desirable through the political process. 
B) that companies give away as promotional prizes. 
C) that have lower than average negative externality. 
D) that only low-income individuals consume.

Question 6

Public education is priced below market price largely as a result of

Accepted Answer

A) government subsidy programs. 
B) under-funded public education. 
C) rising test scores by students. 
D) taxpayers who contribute little to the funding of public education. 
A) government subsidy programs. 
B) under-funded public education. 
C) rising test scores by students. 
D) taxpayers who contribute little to the funding of public education.

Question 7

Why are public goods provided by the government, rather than by the private sector?

Accepted Answer

A) because they are large-scale projects that require the kind of financing only governments can generate through the issuance of bonds 
B) because it would be difficult for a private sector firm to make a profit providing a public good, since consumers who benefit would not have to pay for it 
C) because no one really benefits from public goods 
D) because private sector firms do not have the foresight to plan for public goods 
A) because they are large-scale projects that require the kind of financing only governments can generate through the issuance of bonds 
B) because it would be difficult for a private sector firm to make a profit providing a public good, since consumers who benefit would not have to pay for it 
C) because no one really benefits from public goods 
D) because private sector firms do not have the foresight to plan for public goods

Question 8

One reason the Medicare system costs so much is

Accepted Answer

A) the amount of medical services is determined by the equilibrium of supply and demand. 
B) the supply of medical services does not respond to price changes. 
C) supply and demand analysis does not apply. 
D) beneficiaries are entitled to receive services for which the per-unit cost exceeds their own personal out-of-pocket payment. 
A) the amount of medical services is determined by the equilibrium of supply and demand. 
B) the supply of medical services does not respond to price changes. 
C) supply and demand analysis does not apply. 
D) beneficiaries are entitled to receive services for which the per-unit cost exceeds their own personal out-of-pocket payment.

Question 9

All of the following are assumptions of both market and public-sector decision making EXCEPT

Accepted Answer

A) Decisions are based on majority rule. 
B) Decisions are motivated by individuals' self-interest. 
C) Opportunity costs exist in decisions. 
D) Choices reflect incentives faced by decision makers. 
A) Decisions are based on majority rule. 
B) Decisions are motivated by individuals' self-interest. 
C) Opportunity costs exist in decisions. 
D) Choices reflect incentives faced by decision makers.

Question 10

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 11

The government tries to protect the competitive economic system by passing and enforcing

Accepted Answer

A) price controls. 
B) tariff legislation. 
C) antitrust laws. 
D) building codes and zoning laws. 
A) price controls. 
B) tariff legislation. 
C) antitrust laws. 
D) building codes and zoning laws.

Question 12

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 13

The government's policy of reducing payments for physicians' services has generated a relative

Accepted Answer

A) increase in the number of physicians in the program. 
B) reduction in the number of physicians in the program. 
C) reduction in the demand for medical services. 
D) increase in the income of the physicians remaining in the program. 
A) increase in the number of physicians in the program. 
B) reduction in the number of physicians in the program. 
C) reduction in the demand for medical services. 
D) increase in the income of the physicians remaining in the program.

Question 14

Public goods are characterized by the free-rider problem because

Accepted Answer

A) no one can be excluded from the benefits of public goods once they are produced. 
B) public goods are usually things that people really do not want to consume. 
C) public goods are characterized by the principle of rival consumption. 
D) public goods can easily be subdivided into small units. 
A) no one can be excluded from the benefits of public goods once they are produced. 
B) public goods are usually things that people really do not want to consume. 
C) public goods are characterized by the principle of rival consumption. 
D) public goods can easily be subdivided into small units.

Question 15

An effluent fee is more effective when imposed on

Accepted Answer

A) the firm or producer of the product which generates pollution. 
B) the consumer of the product. 
C) neither the producer nor the consumer of the product. 
D) the supplier of the raw material used by the firm. 
A) the firm or producer of the product which generates pollution. 
B) the consumer of the product. 
C) neither the producer nor the consumer of the product. 
D) the supplier of the raw material used by the firm.

Question 16

-According to the above figure, then the supply curve will

Accepted Answer

A) shift from S₁ to S₂. 
B) shift from S₂ to S₁. 
C) remain at S₁. 
D) shift either to the left or the right, but it is impossible to say without more information. 
A) shift from S₁ to S₂. 
B) shift from S₂ to S₁. 
C) remain at S₁. 
D) shift either to the left or the right, but it is impossible to say without more information.

Question 17

In the United States, which of the following is an example of a government-inhibited good?

Accepted Answer

A) museums 
B) concerts 
C) cigarettes 
D) sports stadiums 
A) museums 
B) concerts 
C) cigarettes 
D) sports stadiums

Question 18

In the spring, I enjoy the fragrance coming from my neighbors' flowers. The fragrance is is an example of

Accepted Answer

A) a negative externality. 
B) a private good. 
C) the need for antitrust legislation. 
D) a free rider problem. 
A) a negative externality. 
B) a private good. 
C) the need for antitrust legislation. 
D) a free rider problem.

Question 19

The government corrects for externalities in all of the following ways EXCEPT

Accepted Answer

A) taxes. 
B) regulation. 
C) lobbying. 
D) subsidies. 
A) taxes. 
B) regulation. 
C) lobbying. 
D) subsidies.

Question 20

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.

Government can correct for negative externalities by

By definition, a government-sponsored good

A friend of yours receives a government voucher for an apartment in a public housing project. This apartment represents

A government agency charged with enforcing antitrust laws is

Government-sponsored goods are those goods

Public education is priced below market price largely as a result of

Why are public goods provided by the government, rather than by the private sector?

One reason the Medicare system costs so much is

All of the following are assumptions of both market and public-sector decision making EXCEPT

The U.S. antitrust laws

The government tries to protect the competitive economic system by passing and enforcing

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

The government's policy of reducing payments for physicians' services has generated a relative

Public goods are characterized by the free-rider problem because

An effluent fee is more effective when imposed on

-According to the above figure, then the supply curve will

In the United States, which of the following is an example of a government-inhibited good?

In the spring, I enjoy the fragrance coming from my neighbors' flowers. The fragrance is is an example of

The government corrects for externalities in all of the following ways EXCEPT

An externality exists when

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

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

Government can correct for negative externalities by

By definition, a government-sponsored good

A friend of yours receives a government voucher for an apartment in a public housing project. This apartment represents

A government agency charged with enforcing antitrust laws is

Government-sponsored goods are those goods

Public education is priced below market price largely as a result of

Why are public goods provided by the government, rather than by the private sector?

One reason the Medicare system costs so much is

All of the following are assumptions of both market and public-sector decision making EXCEPT

The U.S. antitrust laws

The government tries to protect the competitive economic system by passing and enforcing

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

The government's policy of reducing payments for physicians' services has generated a relative

Public goods are characterized by the free-rider problem because

An effluent fee is more effective when imposed on

-According to the above figure, then the supply curve will

In the United States, which of the following is an example of a government-inhibited good?

In the spring, I enjoy the fragrance coming from my neighbors' flowers. The fragrance is is an example of

The government corrects for externalities in all of the following ways EXCEPT

An externality exists when

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

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