Question 1

Government antitrust laws were designed to

Accepted Answer

A) encourage the production of public goods 
B) prevent natural monopolies 
C) prevent collusion among firms 
D) regulate natural monopolies 
E) correct the outcomes of positive and negative externalities in private markets 
A) encourage the production of public goods 
B) prevent natural monopolies 
C) prevent collusion among firms 
D) regulate natural monopolies 
E) correct the outcomes of positive and negative externalities in private markets

Question 2

What part of federal government spending has grown the most slowly in recent decades?

Accepted Answer

A) national defense 
B) welfare 
C) interest on the national debt 
D) social security and medicare 
E) all other forms of federal government spending 
A) national defense 
B) welfare 
C) interest on the national debt 
D) social security and medicare 
E) all other forms of federal government spending

Question 3

Which of the following is not a not-for-profit institution?

Accepted Answer

A) Columbia Broadcasting System (CBS) 
B) American Red Cross 
C) Salvation Army 
D) a public library 
E) a typical college or university 
A) Columbia Broadcasting System (CBS) 
B) American Red Cross 
C) Salvation Army 
D) a public library 
E) a typical college or university

Question 4

Which form of business organization is the most common in the United States?

Accepted Answer

A) sole proprietorship 
B) partnership 
C) corporation 
D) nonprofit organization 
E) S-corporation 
A) sole proprietorship 
B) partnership 
C) corporation 
D) nonprofit organization 
E) S-corporation

Question 5

Revenue for the state governments in the United States comes primarily from income taxes.

Accepted Answer

A) True 
 B)False

Question 6

Since 1930,U.S.government spending as a percent of GDP has

Accepted Answer

A) increased 
B) decreased 
C) stayed the same 
D) showed no particular trend 
E) increased by the same percent each year 
A) increased 
B) decreased 
C) stayed the same 
D) showed no particular trend 
E) increased by the same percent each year

Question 7

Which of the following is the category to which the largest portion of households' personal income is allocated?

Accepted Answer

A) taxes collected by government 
B) savings 
C) purchases of services 
D) purchases of durable goods 
E) purchases of nondurable goods 
A) taxes collected by government 
B) savings 
C) purchases of services 
D) purchases of durable goods 
E) purchases of nondurable goods

Question 8

A tax is said to be progressive if

Accepted Answer

A) the absolute size of the tax (in dollars)increases as income increases 
B) the wealthy pay a smaller percentage of their income than the poor 
C) the average tax rate falls as income rises 
D) the proportion of income paid as taxes increases as income increases 
E) the proceeds are used to pay for liberal political programs 
A) the absolute size of the tax (in dollars)increases as income increases 
B) the wealthy pay a smaller percentage of their income than the poor 
C) the average tax rate falls as income rises 
D) the proportion of income paid as taxes increases as income increases 
E) the proceeds are used to pay for liberal political programs

Question 9

Gasoline taxes illustrate the benefits-received principle of taxation.

Accepted Answer

A) True 
 B)False

Question 10

The personal income tax is based on the benefits-received principle of taxation.

Accepted Answer

A) True 
 B)False

Question 11

Household production is more likely to occur when

Accepted Answer

A) it requires many specialized resources 
B) technology makes it more costly than market production 
C) tax avoidance is undesirable 
D) more control over the final product is desirable 
E) all of the above 
A) it requires many specialized resources 
B) technology makes it more costly than market production 
C) tax avoidance is undesirable 
D) more control over the final product is desirable 
E) all of the above

Question 12

Natural monopolies occur when

Accepted Answer

A) government antitrust laws are too weak or not enforced 
B) negative externalities are present 
C) firms collude to set prices and divide the market among themselves 
D) one firm can service the market more cheaply than two or more firms can 
E) a public good is produced by a private firm 
A) government antitrust laws are too weak or not enforced 
B) negative externalities are present 
C) firms collude to set prices and divide the market among themselves 
D) one firm can service the market more cheaply than two or more firms can 
E) a public good is produced by a private firm

Question 13

Household production is more likely to occur when

Accepted Answer

A) it requires few specialized resources 
B) technology makes it more costly than market production 
C) tax avoidance is undesirable 
D) less control over the final product is desirable 
E) the opportunity cost of household production is high 
A) it requires few specialized resources 
B) technology makes it more costly than market production 
C) tax avoidance is undesirable 
D) less control over the final product is desirable 
E) the opportunity cost of household production is high

Question 14

A tax collects $3,000 per year from a family with an income of $25,000 and takes $4,000 per year from a family with an income of $50,000.This tax plan is

Accepted Answer

A) regressive 
B) proportional 
C) progressive 
D) based on the ability-to-pay principle 
E) impossible to determine with the information provided 
A) regressive 
B) proportional 
C) progressive 
D) based on the ability-to-pay principle 
E) impossible to determine with the information provided

Question 15

Which of the following represents the best example of wages and salaries?

Accepted Answer

A) the paycheck that Freeda brings home from her job as a computer programer 
B) the interest that Hans earns from the savings account he has with USA Bank 
C) the revenue that Janet has left over after she pays all the expenses associated with running her software development business 
D) the check that Hunter receives each month for leasing his land to the natural gas company that is drilling on his land 
E) the check that Trisha gets each month from the Social Security Administration 
A) the paycheck that Freeda brings home from her job as a computer programer 
B) the interest that Hans earns from the savings account he has with USA Bank 
C) the revenue that Janet has left over after she pays all the expenses associated with running her software development business 
D) the check that Hunter receives each month for leasing his land to the natural gas company that is drilling on his land 
E) the check that Trisha gets each month from the Social Security Administration

Question 16

The primary reason why individuals are willing to pay entrepreneurs to organize production is

Accepted Answer

A) that they have to guarantee that the entrepreneur will make a profit 
B) they avoid taxation when activities are organized by someone else 
C) that it is better for businesses to pay taxes than individuals 
D) that it reduces transaction costs 
E) that entrepreneurs are more vulnerable in the case of the owner 
A) that they have to guarantee that the entrepreneur will make a profit 
B) they avoid taxation when activities are organized by someone else 
C) that it is better for businesses to pay taxes than individuals 
D) that it reduces transaction costs 
E) that entrepreneurs are more vulnerable in the case of the owner

Question 17

Federal individual income taxes illustrate the ability-to-pay principle of taxation.

Accepted Answer

A) True 
 B)False

Question 18

Suppose you form a legal partnership with your best friend,and she purchases consulting services calling for a $100,000 fee.Your business is broke,and you never wanted the consultants to work for you -- only your partner did.For how much of this debt are you legally liable?

Accepted Answer

A) none of it 
B) all of the $100,000 
C) the proportion reflected by the proportion of the business owned 
D) only an amount equal to the assets of the business 
E) $50,000 
A) none of it 
B) all of the $100,000 
C) the proportion reflected by the proportion of the business owned 
D) only an amount equal to the assets of the business 
E) $50,000

Question 19

The main source of revenue for the U.S.federal government is

Accepted Answer

A) personal income taxes 
B) corporate income taxes 
C) sales taxes 
D) borrowing on financial markets 
E) revenue from the sale of government goods and services 
A) personal income taxes 
B) corporate income taxes 
C) sales taxes 
D) borrowing on financial markets 
E) revenue from the sale of government goods and services

Question 20

When the social cost of production is greater than the private cost,we have a

Accepted Answer

A) positive externality 
B) negative externality 
C) public good 
D) private good 
E) positive spillover 
A) positive externality 
B) negative externality 
C) public good 
D) private good 
E) positive spillover

Exam 3: Economic Decision Makers

Government antitrust laws were designed to

What part of federal government spending has grown the most slowly in recent decades?

Which of the following is not a not-for-profit institution?

Which form of business organization is the most common in the United States?

Revenue for the state governments in the United States comes primarily from income taxes.

Since 1930,U.S.government spending as a percent of GDP has

Which of the following is the category to which the largest portion of households' personal income is allocated?

A tax is said to be progressive if

Gasoline taxes illustrate the benefits-received principle of taxation.

The personal income tax is based on the benefits-received principle of taxation.

Household production is more likely to occur when

Natural monopolies occur when

Household production is more likely to occur when

A tax collects $3,000 per year from a family with an income of $25,000 and takes $4,000 per year from a family with an income of $50,000.This tax plan is

Which of the following represents the best example of wages and salaries?

The primary reason why individuals are willing to pay entrepreneurs to organize production is

Federal individual income taxes illustrate the ability-to-pay principle of taxation.

Suppose you form a legal partnership with your best friend,and she purchases consulting services calling for a $100,000 fee.Your business is broke,and you never wanted the consultants to work for you -- only your partner did.For how much of this debt are you legally liable?

The main source of revenue for the U.S.federal government is

When the social cost of production is greater than the private cost,we have a

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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