Question 1

Economically speaking, the design of Medicare

Accepted Answer

A) encourages the consumption of medical services. 
B) discourages the consumption of medical services. 
C) helps to decrease the cost of care to non-Medicare patients. 
D) discourages the provision of medical services. 
A) encourages the consumption of medical services. 
B) discourages the consumption of medical services. 
C) helps to decrease the cost of care to non-Medicare patients. 
D) discourages the provision of medical services.

Question 2

All of the following are characteristics of public goods EXCEPT

Accepted Answer

A) Public goods can be used by more people at no additional cost. 
B) The good can be consumed by everyone at the same time without reducing what is available for anyone else. 
C) the exclusion principle 
D) The goods are perfectly divisible. 
A) Public goods can be used by more people at no additional cost. 
B) The good can be consumed by everyone at the same time without reducing what is available for anyone else. 
C) the exclusion principle 
D) The goods are perfectly divisible.

Question 3

An effluent fee is an example of

Accepted Answer

A) a government policy to correct for an external benefit. 
B) a government policy to promote the production of a product with an external cost. 
C) a government policy to promote the production of a product with an external benefit. 
D) a government policy to correct for an external cost. 
A) a government policy to correct for an external benefit. 
B) a government policy to promote the production of a product with an external cost. 
C) a government policy to promote the production of a product with an external benefit. 
D) a government policy to correct for an external cost.

Question 4

Explain why ensuring economic stability is an economics function of government?

Accepted Answer

Our economy sometimes faces the problems

Question 5

The economic role of the legal system might best be described as

Accepted Answer

A) promoting the productive efficiency of competitive markets. 
B) identifying and producing public goods. 
C) establishing the "rules of the game" and acting as a referee when disputes arise among market participants. 
D) identifying and producing merit goods. 
A) promoting the productive efficiency of competitive markets. 
B) identifying and producing public goods. 
C) establishing the "rules of the game" and acting as a referee when disputes arise among market participants. 
D) identifying and producing merit goods.

Question 6

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.

Question 7

Which of the following terms describes the situation in which all resources are able to move to to highest-valued uses via voluntary exchange?

Accepted Answer

A) government intervention 
B) a market failure 
C) economic efficiency 
D) an externality 
A) government intervention 
B) a market failure 
C) economic efficiency 
D) an externality

Question 8

A public museum is an example of a

Accepted Answer

A) government-sponsored good. 
B) public good. 
C) good which generates a positive externality. 
D) good which generates a negative externality. 
A) government-sponsored good. 
B) public good. 
C) good which generates a positive externality. 
D) good which generates a negative externality.

Question 9

The theory of public choice

Accepted Answer

A) is the theory of how government decides on what military hardware to purchase. 
B) considers government decision-making efficient. 
C) is the study of collective decision making. 
D) is the study of how negative externalities can be reduced. 
A) is the theory of how government decides on what military hardware to purchase. 
B) considers government decision-making efficient. 
C) is the study of collective decision making. 
D) is the study of how negative externalities can be reduced.

Question 10

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 11

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 12

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 13

The incentive structure is a

Accepted Answer

A) system of rewards and punishments that individuals consider when making decisions. 
B) system determined by the federal government that gives certain states more federal funds. 
C) system of infrastructure in the United States that improves commerce. 
D) system of checks and balances in the government. 
A) system of rewards and punishments that individuals consider when making decisions. 
B) system determined by the federal government that gives certain states more federal funds. 
C) system of infrastructure in the United States that improves commerce. 
D) system of checks and balances in the government.

Question 14

Safe Bank has an outside display which has the time and temperature that is always correct. This is an example of

Accepted Answer

A) an interference in the workings of the price system. 
B) a breakdown in communication between the bank and its customers. 
C) a negative externality. 
D) a positive externality. 
A) an interference in the workings of the price system. 
B) a breakdown in communication between the bank and its customers. 
C) a negative externality. 
D) a positive externality.

Question 15

How does the government carry out income redistribution?

Accepted Answer

Income redistribution can be carried out

Question 16

Education in the United States is

Accepted Answer

A) subsidized mainly by state and local governments. 
B) funded by the federal government only. 
C) paid for by the parents of students in public school system. 
D) paid for by Social Security taxes. 
A) subsidized mainly by state and local governments. 
B) funded by the federal government only. 
C) paid for by the parents of students in public school system. 
D) paid for by Social Security taxes.

Question 17

-Refer to the above figure. The market equilibrium quantity is Q₁. Point Q₂ represents the optimal amount of production. The government can achieve the optimal outcome by

Accepted Answer

A)  setting the price at P₃. 
B) providing a per-unit subsidy to consumers equal to P₃ - P₁. 
C) providing a per-unit subsidy to consumers equal to P₂ - P₁. 
D) establishing a tax equal to P₂ - P₁ per unit of the good sold. 
A)  setting the price at P₃. 
B) providing a per-unit subsidy to consumers equal to P₃ - P₁. 
C) providing a per-unit subsidy to consumers equal to P₂ - P₁. 
D) establishing a tax equal to P₂ - P₁ per unit of the good sold.

Question 18

Which of the following functions of government gives property owners the incentive to use their property efficiently?

Accepted Answer

A) making sure that courts are lenient on people who steal private property 
B) the protection of property rights 
C) the enforcement of antitrust legislation 
D) the financing of public goods 
A) making sure that courts are lenient on people who steal private property 
B) the protection of property rights 
C) the enforcement of antitrust legislation 
D) the financing of public goods

Question 19

An important characteristic of private goods is

Accepted Answer

A) the nonexclusion principle. 
B) the principle of rival consumption. 
C) the principle of joint consumption. 
D) the principle of conspicuous consumption. 
A) the nonexclusion principle. 
B) the principle of rival consumption. 
C) the principle of joint consumption. 
D) the principle of conspicuous consumption.

Question 20

The distinguishing characteristic of a public good is

Accepted Answer

A) noncompetitive production. 
B) durability. 
C) exclusivity. 
D) nonrival consumption. 
A) noncompetitive production. 
B) durability. 
C) exclusivity. 
D) nonrival consumption.

Economically speaking, the design of Medicare

All of the following are characteristics of public goods EXCEPT

An effluent fee is an example of

Explain why ensuring economic stability is an economics function of government?

The economic role of the legal system might best be described as

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

Which of the following terms describes the situation in which all resources are able to move to to highest-valued uses via voluntary exchange?

A public museum is an example of a

The theory of public choice

Costs that spill over to third parties are called

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

The incentive structure is a

Safe Bank has an outside display which has the time and temperature that is always correct. This is an example of

How does the government carry out income redistribution?

Education in the United States is

-Refer to the above figure. The market equilibrium quantity is Q₁. Point Q₂ represents the optimal amount of production. The government can achieve the optimal outcome by

Which of the following functions of government gives property owners the incentive to use their property efficiently?

An important characteristic of private goods is

The distinguishing characteristic of a public good is

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

Economically speaking, the design of Medicare

All of the following are characteristics of public goods EXCEPT

An effluent fee is an example of

Explain why ensuring economic stability is an economics function of government?

The economic role of the legal system might best be described as

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

Which of the following terms describes the situation in which all resources are able to move to to highest-valued uses via voluntary exchange?

A public museum is an example of a

The theory of public choice

Costs that spill over to third parties are called

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

The incentive structure is a

Safe Bank has an outside display which has the time and temperature that is always correct. This is an example of

How does the government carry out income redistribution?

Education in the United States is

-Refer to the above figure. The market equilibrium quantity is Q₁. Point Q₂ represents the optimal amount of production. The government can achieve the optimal outcome by

Which of the following functions of government gives property owners the incentive to use their property efficiently?

An important characteristic of private goods is

The distinguishing characteristic of a public good is

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