Question 1

Suppose that because the government increases the minimum wage,employers choose to hire fewer workers.This is an example of:

Accepted Answer

A)  an intended effect. 
B)  a direct effect. 
C)  an indirect effect. 
D)  a desired outcome. 
A)  an intended effect. 
B)  a direct effect. 
C)  an indirect effect. 
D)  a desired outcome.

Question 2

The equity-efficiency trade-off means that the result of obtaining __________ in equality is also to obtain __________ in the so-called size of the pie.

Accepted Answer

A)  no change; a decrease 
B)  no change; an increase 
C)  a decrease; a decrease 
D)  an increase; a decrease 
A)  no change; a decrease 
B)  no change; an increase 
C)  a decrease; a decrease 
D)  an increase; a decrease

Question 3

Which of the following might be an indirect unintended effect of providing income support to those without jobs?

Accepted Answer

A)  Those without jobs are made better off. 
B)  Those without jobs are made worse off. 
C)  People without jobs now search for and acquire jobs. 
D)  People without jobs no longer search for and acquire jobs. 
A)  Those without jobs are made better off. 
B)  Those without jobs are made worse off. 
C)  People without jobs now search for and acquire jobs. 
D)  People without jobs no longer search for and acquire jobs.

Question 4

Which of the following correctly depicts the changes in the sources of federal,state,and local receipts in the past 50 years?

Accepted Answer

A)  Income taxes are now a larger share of federal receipts. 
B)  Property taxes are now a larger share of state and local receipts. 
C)  Corporate and excise taxes are now a smaller share of federal receipts. 
D)  Sales taxes constitute the exact same share of state and local receipts. 
A)  Income taxes are now a larger share of federal receipts. 
B)  Property taxes are now a larger share of state and local receipts. 
C)  Corporate and excise taxes are now a smaller share of federal receipts. 
D)  Sales taxes constitute the exact same share of state and local receipts.

Question 5

Government intervenes in a market economy to:

Accepted Answer

A)  create externalities. 
B)  prevent competition. 
C)  enhance economic efficiency. 
D)  achieve perfect income equality. 
A)  create externalities. 
B)  prevent competition. 
C)  enhance economic efficiency. 
D)  achieve perfect income equality.

Question 6

Suppose Ali values a slice of pizza at $1.50,but the pizza shop is unwilling to sell a slice of pizza for less than $1.00.These values imply that it is efficient for the shop to sell a slice of pizza to Ali for any price:

Accepted Answer

A)  greater than or equal to $1.50. 
B)  greater than or equal to $1.00 and less than or equal to $1.50. 
C)  less than or equal to $1.00. 
D)  less than or equal to $1.00 and greater than or equal to $1.50. 
A)  greater than or equal to $1.50. 
B)  greater than or equal to $1.00 and less than or equal to $1.50. 
C)  less than or equal to $1.00. 
D)  less than or equal to $1.00 and greater than or equal to $1.50.

Question 7

The current federal debt of the United States is ______ of the gross domestic product.

Accepted Answer

A)  less than 15% 
B)  approximately 30% 
C)  approximately 60% 
D)  over 100% 
A)  less than 15% 
B)  approximately 30% 
C)  approximately 60% 
D)  over 100%

Question 8

Which of the following is generally TRUE regarding proposed solutions to problems in the educational system in the United States?

Accepted Answer

A)  Liberals advocate increased competition among schools,while conservatives advocate higher teacher pay and increasing resources given to disadvantaged schools. 
B)  Liberals advocate higher teacher pay and increased resources given to disadvantaged schools,while conservatives advocate increased competition among schools. 
C)  Both liberals and conservatives advocate increased competition among schools. 
D)  Both liberals and conservatives advocate higher teacher pay and increased resources given to disadvantaged schools. 
A)  Liberals advocate increased competition among schools,while conservatives advocate higher teacher pay and increasing resources given to disadvantaged schools. 
B)  Liberals advocate higher teacher pay and increased resources given to disadvantaged schools,while conservatives advocate increased competition among schools. 
C)  Both liberals and conservatives advocate increased competition among schools. 
D)  Both liberals and conservatives advocate higher teacher pay and increased resources given to disadvantaged schools.

Question 9

The government offers unemployment benefits to workers who have lost their jobs and not yet found new ones.Which of the following is an example of an indirect unintended effect of the government intervention?

Accepted Answer

A)  Recipients reduce their job search activities. 
B)  Recipients can still afford to pay health insurance premiums. 
C)  Recipients are at less risk for falling into poverty. 
D)  Potential recipients choose not to file for benefits. 
A)  Recipients reduce their job search activities. 
B)  Recipients can still afford to pay health insurance premiums. 
C)  Recipients are at less risk for falling into poverty. 
D)  Potential recipients choose not to file for benefits.

Question 10

Does taxing the wealthy to give benefits to the poor increase social welfare? Explain.

Accepted Answer

It depends.Taxing the rich to give benef

Question 11

If government revenues exceed government spending,the difference is called the:

Accepted Answer

A)  cash flow deficit. 
B)  cash flow surplus. 
C)  debt. 
D)  budget. 
A)  cash flow deficit. 
B)  cash flow surplus. 
C)  debt. 
D)  budget.

Question 12

How governments should intervene is a _________ question,and why governments intervene in the way they do is a __________ question.

Accepted Answer

A)  normative; normative 
B)  positive; negative 
C)  normative; positive 
D)  positive; normative 
A)  normative; normative 
B)  positive; negative 
C)  normative; positive 
D)  positive; normative

Question 13

The accumulation of past deficits over time is measured by the:

Accepted Answer

A)  cash flow deficit. 
B)  cash flow surplus. 
C)  debt. 
D)  budget. 
A)  cash flow deficit. 
B)  cash flow surplus. 
C)  debt. 
D)  budget.

Question 14

What are the fundamental issues that the supporters and opponents of Affordable Care Act (ACA)cannot agree on? Explain.

Accepted Answer

The proper role of the government in dea

Question 15

Which of the following might be a direct effect of providing free health care for those without insurance?

Accepted Answer

A)  Those who were without private health insurance are now better off. 
B)  Those with private health insurance may drop their coverage. 
C)  Those without health insurance may purchase private health insurance. 
D)  Those eligible for free health insurance are not aware of the benefit. 
A)  Those who were without private health insurance are now better off. 
B)  Those with private health insurance may drop their coverage. 
C)  Those without health insurance may purchase private health insurance. 
D)  Those eligible for free health insurance are not aware of the benefit.

Question 16

Veterans receive health benefits directly through hospitals owned and operated by the Veterans Health Administration.This is an example of:

Accepted Answer

A)  public financing of private provision. 
B)  restriction or mandate of private sale or purchase. 
C)  a subsidy. 
D)  public provision. 
A)  public financing of private provision. 
B)  restriction or mandate of private sale or purchase. 
C)  a subsidy. 
D)  public provision.

Question 17

If the competitive equilibrium does not lead to the efficiency-maximizing outcome,then government intervention:

Accepted Answer

A)  will increase efficiency. 
B)  will reduce efficiency. 
C)  may increase or decrease efficiency. 
D)  will not affect efficiency. 
A)  will increase efficiency. 
B)  will reduce efficiency. 
C)  may increase or decrease efficiency. 
D)  will not affect efficiency.

Question 18

Suppose you hear someone argue that the proper role of government is to increase the size of the pie.Which justification for government intervention in the economy is this person referring to?

Accepted Answer

A)  increasing equality in the economy 
B)  promoting social justice 
C)  improving efficiency 
D)  preventing competition 
A)  increasing equality in the economy 
B)  promoting social justice 
C)  improving efficiency 
D)  preventing competition

Question 19

As a result of the Affordable Care Act passed in 2010:

Accepted Answer

A)  insurance companies are allowed to discriminate against those with medical conditions that are too expensive to treat. 
B)  individuals who cannot afford health insurance have all been enrolled in Medicaid. 
C)  individuals who can afford health insurance must purchase it or pay a penalty. 
D)  the government is no longer attempting to control the costs of providing medical care. 
A)  insurance companies are allowed to discriminate against those with medical conditions that are too expensive to treat. 
B)  individuals who cannot afford health insurance have all been enrolled in Medicaid. 
C)  individuals who can afford health insurance must purchase it or pay a penalty. 
D)  the government is no longer attempting to control the costs of providing medical care.

Question 20

Suppose government proposes taxing Peter to pay Paul.The goal of this intervention could be best characterized as an attempt to achieve:

Accepted Answer

A)  redistribution. 
B)  efficiency. 
C)  market failure. 
D)  competitive equilibrium. 
A)  redistribution. 
B)  efficiency. 
C)  market failure. 
D)  competitive equilibrium.

Exam 1: Why Study Public Finance

Suppose that because the government increases the minimum wage,employers choose to hire fewer workers.This is an example of:

The equity-efficiency trade-off means that the result of obtaining __________ in equality is also to obtain __________ in the so-called size of the pie.

Which of the following might be an indirect unintended effect of providing income support to those without jobs?

Which of the following correctly depicts the changes in the sources of federal,state,and local receipts in the past 50 years?

Government intervenes in a market economy to:

Suppose Ali values a slice of pizza at $1.50,but the pizza shop is unwilling to sell a slice of pizza for less than $1.00.These values imply that it is efficient for the shop to sell a slice of pizza to Ali for any price:

The current federal debt of the United States is ______ of the gross domestic product.

Which of the following is generally TRUE regarding proposed solutions to problems in the educational system in the United States?

The government offers unemployment benefits to workers who have lost their jobs and not yet found new ones.Which of the following is an example of an indirect unintended effect of the government intervention?

Does taxing the wealthy to give benefits to the poor increase social welfare? Explain.

If government revenues exceed government spending,the difference is called the:

How governments should intervene is a _________ question,and why governments intervene in the way they do is a __________ question.

The accumulation of past deficits over time is measured by the:

What are the fundamental issues that the supporters and opponents of Affordable Care Act (ACA)cannot agree on? Explain.

Which of the following might be a direct effect of providing free health care for those without insurance?

Veterans receive health benefits directly through hospitals owned and operated by the Veterans Health Administration.This is an example of:

If the competitive equilibrium does not lead to the efficiency-maximizing outcome,then government intervention:

Suppose you hear someone argue that the proper role of government is to increase the size of the pie.Which justification for government intervention in the economy is this person referring to?

As a result of the Affordable Care Act passed in 2010:

Suppose government proposes taxing Peter to pay Paul.The goal of this intervention could be best characterized as an attempt to achieve:

Theoretical Tools of Public Finance

Empirical Tools of Public Finance

Budget Analysis and Deficit Financing

Externalities- Problems and Solutions

Externalities in Action- Environmental and Health Externalities

Public Goods

Cost-Benefit Analysis

Political Economy

State and Local Government Expenditures

Education

Social Insurance- the New Function of Government

Social Security

Unemployment Insurance, disability Insurance, and Workers Compensation

Health Insurance I- Health Economics and Private Health Insurance

Health Insurance Ii- Medicare, medicaid, and Health Care Reform

Income Distribution and Welfare Programs

Taxation- How It Works and What It Means

The Equity Implications of Taxation- Tax Incidence

Taxes on Labor Supply

Taxes on Savings

Taxes on Risk Taking and Wealth

Taxation of Business Income

Fundamental Tax Reform and Consumption Tax

Filters

The equity-efficiency trade-off means that the result of obtaining in equality is also to obtain in the so-called size of the pie.

How governments should intervene is a _ question,and why governments intervene in the way they do is a __ question.