Question 1

What are the voting rules followed by the political system as opposed to the market system?

Accepted Answer

In the political system, one person gets

Question 2

The economic functions of government differ from the political functions of government in that

Accepted Answer

A) the economic functions are carried out by the federal government, while the political functions are carried out by state and local governments. 
B) the economic functions include policies that affect income redistribution, while the political functions involve things that affect the way exchange is carried out. 
C) the economic functions involve things that affect the way exchange is carried out while the political functions include policies that affect income redistribution. 
D) the economic functions are carried out by state and local governments, while the political functions are carried out by the federal government. 
A) the economic functions are carried out by the federal government, while the political functions are carried out by state and local governments. 
B) the economic functions include policies that affect income redistribution, while the political functions involve things that affect the way exchange is carried out. 
C) the economic functions involve things that affect the way exchange is carried out while the political functions include policies that affect income redistribution. 
D) the economic functions are carried out by state and local governments, while the political functions are carried out by the federal government.

Question 3

Providing public goods is a(n)

Accepted Answer

A) economic function of government. 
B) political function of government. 
C) economic and political function of government. 
D) price system function. 
A) economic function of government. 
B) political function of government. 
C) economic and political function of government. 
D) price system function.

Question 4

A negative externality is a situation in which

Accepted Answer

A) there is a spillover of benefits. 
B) a cost associated with an economic activity is borne by a third party. 
C) a firm is paying in excess of the total costs of producing a good. 
D) none of the above. 
A) there is a spillover of benefits. 
B) a cost associated with an economic activity is borne by a third party. 
C) a firm is paying in excess of the total costs of producing a good. 
D) none of the above.

Question 5

Which of the following might be a method that the government could use to promote the production of a good that generates positive externalities?

Accepted Answer

A) subsidies 
B) regulations 
C) financing additional production 
D) All of the above are correct. 
A) subsidies 
B) regulations 
C) financing additional production 
D) All of the above are correct.

Question 6

Assume the production of a good gives rise to external benefits. The government may increase efficiency by

Accepted Answer

A) subsidizing consumption of the good. 
B) requiring all producers of the good to be licensed. 
C) taxing production of the good. 
D) imposing taxes on the good. 
A) subsidizing consumption of the good. 
B) requiring all producers of the good to be licensed. 
C) taxing production of the good. 
D) imposing taxes on the good.

Question 7

-Refer to the above figure. Medicare subsidies have increased the price of medical services to Ps. Which of the following statements is TRUE about the effect the Medicare subsidy has had on the consumption of medical services?

Accepted Answer

A) The amount of medical services provided has decreased from Q₀ to Qd as a result of the subsidy. 
B) The amount of medical services provided has increased from Q₀ to QM as a result of the subsidy. 
C) The amount of medical services provided has increased from Qd to QM as a result of the subsidy. 
D) The amount of medical services provided has remained unchanged as a result of the subsidy. 
A) The amount of medical services provided has decreased from Q₀ to Qd as a result of the subsidy. 
B) The amount of medical services provided has increased from Q₀ to QM as a result of the subsidy. 
C) The amount of medical services provided has increased from Qd to QM as a result of the subsidy. 
D) The amount of medical services provided has remained unchanged as a result of the subsidy.

Question 8

Graphically, the effect of a government subsidy on a good is shown as

Accepted Answer

A) a leftward shift of the market demand curve. 
B) a rightward shift of the market demand curve. 
C) a downward movement along the market demand curve. 
D) no change to the market demand curve. 
A) a leftward shift of the market demand curve. 
B) a rightward shift of the market demand curve. 
C) a downward movement along the market demand curve. 
D) no change to the market demand curve.

Question 9

How do public goods differ from private goods?

Accepted Answer

A private good is characterized by the p

Question 10

The political functions of government differ from the economic functions of government in that

Accepted Answer

A) the political functions relate to income distribution while the economic functions relate to the way exchange is carried out. 
B) the political functions are performed at the federal government while the economic functions are at the state and local government levels. 
C) the political functions involve elections and the court systems while the economic functions involve taxation and transfers. 
D) the President deals with the economic functions while Congress deals with the political functions. 
A) the political functions relate to income distribution while the economic functions relate to the way exchange is carried out. 
B) the political functions are performed at the federal government while the economic functions are at the state and local government levels. 
C) the political functions involve elections and the court systems while the economic functions involve taxation and transfers. 
D) the President deals with the economic functions while Congress deals with the political functions.

Question 11

Market failure occurs when

Accepted Answer

A) a good is too expensive for the market to provide. 
B) an unrestrained market economy leads to too few or too many resources going to a specific economic activity. 
C) one good is superior to another and drives it out of the market. 
D) the stock market experiences a very large loss. 
A) a good is too expensive for the market to provide. 
B) an unrestrained market economy leads to too few or too many resources going to a specific economic activity. 
C) one good is superior to another and drives it out of the market. 
D) the stock market experiences a very large loss.

Question 12

Which of the following statements about public education is TRUE?

Accepted Answer

A) Over the last 40 years, there has been an increase in spending for public education, while there has not been a significant increase in performance. 
B) Over the last 40 years, there has been a decrease in public spending for public education, while there has not been a significant increase in performance. 
C) Most of the increases in public spending on public education have gone into programs that have increased student learning. 
D) Over the last 40 years there has been no decline in any of the measures of student performance in public education. 
A) Over the last 40 years, there has been an increase in spending for public education, while there has not been a significant increase in performance. 
B) Over the last 40 years, there has been a decrease in public spending for public education, while there has not been a significant increase in performance. 
C) Most of the increases in public spending on public education have gone into programs that have increased student learning. 
D) Over the last 40 years there has been no decline in any of the measures of student performance in public education.

Question 13

A subsidy is sometimes used by government to correct the problems associated with

Accepted Answer

A) negative externalities. 
B) positive externalities. 
C) internal benefits. 
D) external benefits. 
A) negative externalities. 
B) positive externalities. 
C) internal benefits. 
D) external benefits.

Question 14

What are the key characteristics of a public good?

Accepted Answer

A public good is not subject to the prin

Question 15

As a share of total national income, government spending generally has

Accepted Answer

A) been constant over the last fifty years. 
B) increased over the last fifty years. 
C) decreased over the last fifty years. 
D) increased until ten years ago, and then decreased steadily. 
A) been constant over the last fifty years. 
B) increased over the last fifty years. 
C) decreased over the last fifty years. 
D) increased until ten years ago, and then decreased steadily.

Question 16

The price system allocates resources efficiently EXCEPT when

Accepted Answer

A) consumers decide they want more of a good. 
B) resources are utilized to produce the highest-valued goods and services. 
C) voluntary exchange exists. 
D) the production of a good affects parties other than its buyers and sellers. 
A) consumers decide they want more of a good. 
B) resources are utilized to produce the highest-valued goods and services. 
C) voluntary exchange exists. 
D) the production of a good affects parties other than its buyers and sellers.

Question 17

The major economic effect of Medicare subsidies is

Accepted Answer

A) that the number of physicians has decreased since compensation is low. 
B) to increase the price of medical services and reduce the quantity demanded. 
C) to increase the price of medical services and increase the quantity demanded. 
D) to lower the price of medical services and reduce the quantity demanded. 
A) that the number of physicians has decreased since compensation is low. 
B) to increase the price of medical services and reduce the quantity demanded. 
C) to increase the price of medical services and increase the quantity demanded. 
D) to lower the price of medical services and reduce the quantity demanded.

Question 18

Which of the following is a transfer payment?
I. Social Security
II. Unemployment benefits

Accepted Answer

A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II 
A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II

Question 19

A government-sponsored good is one that

Accepted Answer

A) is desirable to no one but ruled desirable by the court system nonetheless. 
B) everyone agrees is socially desirable. 
C) freely competitive markets have determined is socially desirable. 
D) the political process has determined is socially desirable. 
A) is desirable to no one but ruled desirable by the court system nonetheless. 
B) everyone agrees is socially desirable. 
C) freely competitive markets have determined is socially desirable. 
D) the political process has determined is socially desirable.

What are the voting rules followed by the political system as opposed to the market system?

The economic functions of government differ from the political functions of government in that

Providing public goods is a(n)

A negative externality is a situation in which

Which of the following might be a method that the government could use to promote the production of a good that generates positive externalities?

Assume the production of a good gives rise to external benefits. The government may increase efficiency by

-Refer to the above figure. Medicare subsidies have increased the price of medical services to Ps. Which of the following statements is TRUE about the effect the Medicare subsidy has had on the consumption of medical services?

Graphically, the effect of a government subsidy on a good is shown as

How do public goods differ from private goods?

The political functions of government differ from the economic functions of government in that

Market failure occurs when

Which of the following statements about public education is TRUE?

A subsidy is sometimes used by government to correct the problems associated with

What are the key characteristics of a public good?

As a share of total national income, government spending generally has

The price system allocates resources efficiently EXCEPT when

The major economic effect of Medicare subsidies is

Which of the following is a transfer payment? I. Social Security II. Unemployment benefits

A government-sponsored good is one that

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

What are the voting rules followed by the political system as opposed to the market system?

The economic functions of government differ from the political functions of government in that

Providing public goods is a(n)

A negative externality is a situation in which

Which of the following might be a method that the government could use to promote the production of a good that generates positive externalities?

Assume the production of a good gives rise to external benefits. The government may increase efficiency by

-Refer to the above figure. Medicare subsidies have increased the price of medical services to Ps. Which of the following statements is TRUE about the effect the Medicare subsidy has had on the consumption of medical services?

Graphically, the effect of a government subsidy on a good is shown as

How do public goods differ from private goods?

The political functions of government differ from the economic functions of government in that

Market failure occurs when

Which of the following statements about public education is TRUE?

A subsidy is sometimes used by government to correct the problems associated with

What are the key characteristics of a public good?

As a share of total national income, government spending generally has

The price system allocates resources efficiently EXCEPT when

The major economic effect of Medicare subsidies is

Which of the following is a transfer payment? I. Social Security II. Unemployment benefits

A government-sponsored good is one that

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