Question 1

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 2

-Refer to the above figure. An external cost exists. The amount of that cost is represented by

Accepted Answer

A) P₂. 
B) Q₁. 
C) the vertical distance between point A and the supply curve S₁. 
D) the distance between C and A. 
A) P₂. 
B) Q₁. 
C) the vertical distance between point A and the supply curve S₁. 
D) the distance between C and A.

Question 3

What type of policy does the government adopt in dealing with government-inhibited goods?

Accepted Answer

A) It subsidizes their consumption. 
B) It subsidizes their production. 
C) It provides them as public goods. 
D) It taxes, regulates, or prohibits their use. 
A) It subsidizes their consumption. 
B) It subsidizes their production. 
C) It provides them as public goods. 
D) It taxes, regulates, or prohibits their use.

Question 4

The amount of government spending on education per public school student has ________ since 1960, and the achievement level of students has generally ________ since that time.

Accepted Answer

A) increased; increased 
B) decreased; decreased 
C) increased; decreased 
D) decreased; increased 
A) increased; increased 
B) decreased; decreased 
C) increased; decreased 
D) decreased; increased

Question 5

A characteristic of a public good is

Accepted Answer

A) rival consumption. 
B) the exclusion principle. 
C) the free-rider problem. 
D) clear property rights. 
A) rival consumption. 
B) the exclusion principle. 
C) the free-rider problem. 
D) clear property rights.

Question 6

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. If a positive externality that existed becomes corrected, price and quantity will become

Accepted Answer

A) P₁ and Q₁. 
B) P₂ and Q₂. 
C) P₃ and Q₃. 
D) P₄ and Q₄. 
A) P₁ and Q₁. 
B) P₂ and Q₂. 
C) P₃ and Q₃. 
D) P₄ and Q₄.

Question 7

A situation in which a market economy leads to too few or too many resources going to a particular economic activity is known as

Accepted Answer

A) competition. 
B) excessive competition. 
C) destructive competition. 
D) a market failure. 
A) competition. 
B) excessive competition. 
C) destructive competition. 
D) a market failure.

Question 8

According to the textbook, what are the two key political functions of government in a market economy?

Accepted Answer

The two functions of governmen

Question 9

My brother decides to leave his empty soda can on someone's lawn. This is an example of a

Accepted Answer

A) public good. 
B) positive externality. 
C) neutral externality. 
D) negative externality. 
A) public good. 
B) positive externality. 
C) neutral externality. 
D) negative externality.

Question 10

Which of the following is NOT an example of a transfer payment?

Accepted Answer

A) unemployment compensation 
B) food stamps 
C) government salaries 
D) Social Security benefits 
A) unemployment compensation 
B) food stamps 
C) government salaries 
D) Social Security benefits

Question 11

Which of the following is NOT a transfer payment?

Accepted Answer

A) Medicare 
B) Social Security retirement payments 
C) Social Security disability payments 
D) spending on national defense 
A) Medicare 
B) Social Security retirement payments 
C) Social Security disability payments 
D) spending on national defense

Question 12

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 13

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

Accepted Answer

A) inoculation against a contagious disease 
B) a streetlight 
C) garbage collection 
D) Internet access 
A) inoculation against a contagious disease 
B) a streetlight 
C) garbage collection 
D) Internet access

Question 14

Public goods are

Accepted Answer

A) rival and exclusive. 
B) rival, but not exclusive. 
C) exclusive, but not rival. 
D) neither exclusive nor rival. 
A) rival and exclusive. 
B) rival, but not exclusive. 
C) exclusive, but not rival. 
D) neither exclusive nor rival.

Question 15

How have some patients been harmed by Medicare reimbursement caps?

Accepted Answer

A) They have been discharged from the hospital too soon, so that the hospital can cut costs. 
B) They have been kept in the hospital too long, so that the hospital can get a higher reimbursement amount. 
C) They have had to undergo unnecessary procedures, so that the hospital can get a higher reimbursement amount. 
D) They have had to wait too long for essential procedures. 
A) They have been discharged from the hospital too soon, so that the hospital can cut costs. 
B) They have been kept in the hospital too long, so that the hospital can get a higher reimbursement amount. 
C) They have had to undergo unnecessary procedures, so that the hospital can get a higher reimbursement amount. 
D) They have had to wait too long for essential procedures.

Question 16

Medicare

Accepted Answer

A) subsidizes the care of older people, which gives them NO incentive to consume more medical services. 
B) subsidizes the care of older people, which gives them an incentive to consume more medical services. 
C) subsidizes the care of young people, which gives them an incentive to consume less medical services. 
D) subsidizes the care of middle aged people, which gives them an incentive to consume more medical services. 
A) subsidizes the care of older people, which gives them NO incentive to consume more medical services. 
B) subsidizes the care of older people, which gives them an incentive to consume more medical services. 
C) subsidizes the care of young people, which gives them an incentive to consume less medical services. 
D) subsidizes the care of middle aged people, which gives them an incentive to consume more medical services.

Question 17

Which of the following statements is TRUE of external costs?

Accepted Answer

A) External costs should not be corrected since people will bear the costs whether they are corrected or not. 
B) There are no good ways to correct for the external costs. 
C) When external costs exist, the price of the good will be deceptively low leading to an overallocation of resources. 
D) External costs should only be corrected for if the correction will not increase the market price. 
A) External costs should not be corrected since people will bear the costs whether they are corrected or not. 
B) There are no good ways to correct for the external costs. 
C) When external costs exist, the price of the good will be deceptively low leading to an overallocation of resources. 
D) External costs should only be corrected for if the correction will not increase the market price.

Question 18

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 19

When negative externalities exist, the private market equilibrium represents a

Accepted Answer

A) market price which is too low and a market quantity which is too low. 
B) market price which is too low and a market quantity which is too high. 
C) market price which is too high and a market quantity which is too low. 
D) market price which is too high and a market quantity which is too high. 
A) market price which is too low and a market quantity which is too low. 
B) market price which is too low and a market quantity which is too high. 
C) market price which is too high and a market quantity which is too low. 
D) market price which is too high and a market quantity which is too high.

Question 20

Which of the following is NOT an example of a transfer payment?

Accepted Answer

A) Social Security 
B) unemployment benefits 
C) welfare 
D) interest payments on government bonds 
A) Social Security 
B) unemployment benefits 
C) welfare 
D) interest payments on government bonds

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

-Refer to the above figure. An external cost exists. The amount of that cost is represented by

What type of policy does the government adopt in dealing with government-inhibited goods?

The amount of government spending on education per public school student has since 1960, and the achievement level of students has generally since that time.

A characteristic of a public good is

A situation in which a market economy leads to too few or too many resources going to a particular economic activity is known as

According to the textbook, what are the two key political functions of government in a market economy?

My brother decides to leave his empty soda can on someone's lawn. This is an example of a

Which of the following is NOT an example of a transfer payment?

Which of the following is NOT a transfer payment?

An example of an in-kind transfer is

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

Public goods are

How have some patients been harmed by Medicare reimbursement caps?

Medicare

Which of the following statements is TRUE of external costs?

A fundamental aspect of public goods is that they

When negative externalities exist, the private market equilibrium represents a

Which of the following is NOT an example of a transfer payment?

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

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

-Refer to the above figure. An external cost exists. The amount of that cost is represented by

What type of policy does the government adopt in dealing with government-inhibited goods?

The amount of government spending on education per public school student has ________ since 1960, and the achievement level of students has generally ________ since that time.

A characteristic of a public good is

A situation in which a market economy leads to too few or too many resources going to a particular economic activity is known as

According to the textbook, what are the two key political functions of government in a market economy?

My brother decides to leave his empty soda can on someone's lawn. This is an example of a

Which of the following is NOT an example of a transfer payment?

Which of the following is NOT a transfer payment?

An example of an in-kind transfer is

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

Public goods are

How have some patients been harmed by Medicare reimbursement caps?

Medicare

Which of the following statements is TRUE of external costs?

A fundamental aspect of public goods is that they

When negative externalities exist, the private market equilibrium represents a

Which of the following is NOT an example of a transfer payment?

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

The amount of government spending on education per public school student has since 1960, and the achievement level of students has generally since that time.