Question 1

An unintended effect of a tax credit given to first-time home buyers would be a _____________ shift in the ______________ curve for housing,which would result in a(n)_____________ in the price of housing.

Accepted Answer

A)   leftward; supply; increase
B)   leftward; demand; decrease
C)   rightward; supply; decrease
D)   rightward; demand; increase
E)   none of the above D

Question 2

The federal government and many state governments gave tax credits to first-time home buyers in 2009 and 2010. An effect of these tax credits was to

Accepted Answer

A)   make the price of houses higher than they would have been without the tax credit.
B)   lower house prices.
C)   shift the demand curve for houses leftward.
D)   b and c
E)   none of the above A

Question 3

Tiffany gives $50 to Jeremy for his birthday. This is an example of a(n)

Accepted Answer

A)   involuntary transfer.
B)   involuntary-voluntary transfer.
C)   voluntary transfer.
D)   gift.
E)   c and d E

Question 4

A negative externality exists and government wants to impose a tax in order to bring about an efficient outcome.To accomplish its objective,government must set the tax equal to marginal

Accepted Answer

A)   private cost.
B)   social benefit.
C)   external cost.
D)   social cost.
E)   external benefit.

Question 5

In the case of a negative externality,the government can use a ________________ to turn an inefficient outcome into an efficient one. In the case of a positive externality,the government can use a ________________ to turn an inefficient outcome into an efficient one.

Accepted Answer

A)   tax; subsidy
B)   subsidy; tax
C)   tax; tax
D)   subsidy; subsidy

Question 6

Suppose health-care reform X makes it unlawful for insurance companies to deny insurance to persons with a preexisting disease. One unintended effect of this reform is that some people

Accepted Answer

A)   will buy more health insurance than they would have without reform X.
B)   may wait until they have a particular disease before they buy health insurance.
C)   will try to work longer hours, to earn more income, to pay for increasing health insurance premiums.
D)   a and c
E)   none of the above

Question 7

It is possible for the government to remove individuals from a prisoner's dilemma setting and make them better off.

Accepted Answer

A) True 
 B)False

Question 8

When the government imposes a tariff on imported goods,it _____________ prices for domestic consumers,________________ consumers' surplus and _________________ the producers' surplus for domestic producers.

Accepted Answer

A)   raises; lowers; raises
B)   lowers; raises; raises
C)   lowers; raises; lowers
D)   raises; lowers; lowers
E)   none of the above

Question 9

Economist A believes that the case for government is a strong one,but she doesn't always say,when it comes to negative externalities,that government can turn an inefficient market outcome into an efficient outcome. Which statement is economist A most likely to make?

Accepted Answer

A)   If the tax placed on the activity that generates the negative externality is too large, we are not likely too move from inefficiency to efficiency.
B)   If the subsidy placed on the activity that generates the negative externality is too small, we are not likely to move from inefficiency to efficiency.
C)   If there is a free rider problem, then government cannot solve the problem of negative externalities.
D)   a and b
E)   none of the above

Question 10

In making the case against government,discuss the two main points about special interest groups.

Accepted Answer

The answer of In making the case against government,discuss the...

Question 11

Describe the intended effects of the first-time home buyer tax credits granted by Congress and many state governments in 2009 and 2010.In addition,describe in detail the unintended effect of this type of legislation.

Accepted Answer

The answer of Describe the intended effects of the first-time...

Question 12

Which of the following is usually discussed in the case against government?

Accepted Answer

A)   special interest groups and transfers
B)   the unintended effects of governments actions
C)   removal from the prisoner's dilemma
D)   a and b
E)   none of the above

Question 13

Which economist said,"This focus on distribution makes the significance of distributional issues (transfer issues)in political life relatively greater and the significance of widespread common interest in political life relatively smaller."?

Accepted Answer

A)   John Maynard Keynes
B)   Milton Friedman
C)   David Friedman
D)   Mancur Olson
E)   David Ricardo

Question 14

Special interest group X receives a 1/150thslice of the economic pie. Its net benefits from an economic growth policy are $7,000,which are the same as its net benefits from a transfer policy. What is the change in the size of the economic pie (Real GDP)that is required to bring about this result?

Accepted Answer

A)   $1,050,000
B)   $46.67
C)   $150,000
D)   $2,500,000
E)   none of the above

Question 15

A nonexcludable public good is

Accepted Answer

A)   rivalrous in consumption and nonexcludable
B)   nonrivalrous in consumption and excludable
C)   nonrivalrous in consumption and nonexcludable
D)   rivalrous in consumption and excludable
E)   none of the above

Question 16

Government provides a nonexcludable public good that no one wants. This situation is most closely related with:

Accepted Answer

A)   government solving a market failure.
B)   government failure.
C)   market failure.
D)   the market solving a government failure.

Question 17

Which of the following statements is false?

Accepted Answer

A)   A government with the power to tax can solve the free rider problem.
B)   A government with the power to tax can set a tax greater than the MEC when trying to change the market outcome into the efficient outcome.
C)   A government with the power to subsidize can set a subsidy greater than the MEB when trying to change the market outcome into the efficient outcome.
D)   Government can remove individuals from a prisoner's dilemma setting by changing the payoffs in the payoff matrix.
E)   none of the above

Question 18

Government can overcome the free rider problem by collecting taxes and using the funds to provide individuals with nonexcludable public goods that they want to buy but the market cannot provide.

Accepted Answer

A) True 
 B)False

Question 19

Critics of government frequently assert that special interest groups favor transfer policies rather than economic growth policies.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is false?

Accepted Answer

A)   Government can remove individuals from a prisoner's dilemma setting and make both participants better off.
B)   Government can define and enforce the property rights that individuals actually want defined and enforced.
C)   Individuals in a prisoner's dilemma setting may want to get out of the prisoner's dilemma setting.
D)   a and b
E)   none of the above

Exam 37: The Economic Case For and Against Government: Five Topics Considered

An unintended effect of a tax credit given to first-time home buyers would be a _ shift in the curve for housing,which would result in a(n) ___ in the price of housing.

The federal government and many state governments gave tax credits to first-time home buyers in 2009 and 2010. An effect of these tax credits was to

Tiffany gives $50 to Jeremy for his birthday. This is an example of a(n)

A negative externality exists and government wants to impose a tax in order to bring about an efficient outcome.To accomplish its objective,government must set the tax equal to marginal

In the case of a negative externality,the government can use a to turn an inefficient outcome into an efficient one. In the case of a positive externality,the government can use a to turn an inefficient outcome into an efficient one.

Suppose health-care reform X makes it unlawful for insurance companies to deny insurance to persons with a preexisting disease. One unintended effect of this reform is that some people

It is possible for the government to remove individuals from a prisoner's dilemma setting and make them better off.

When the government imposes a tariff on imported goods,it _ prices for domestic consumers, consumers' surplus and _____ the producers' surplus for domestic producers.

Economist A believes that the case for government is a strong one,but she doesn't always say,when it comes to negative externalities,that government can turn an inefficient market outcome into an efficient outcome. Which statement is economist A most likely to make?

In making the case against government,discuss the two main points about special interest groups.

Describe the intended effects of the first-time home buyer tax credits granted by Congress and many state governments in 2009 and 2010.In addition,describe in detail the unintended effect of this type of legislation.

Which of the following is usually discussed in the case against government?

Which economist said,"This focus on distribution makes the significance of distributional issues (transfer issues) in political life relatively greater and the significance of widespread common interest in political life relatively smaller."?

Special interest group X receives a 1/150^thslice of the economic pie. Its net benefits from an economic growth policy are $7,000,which are the same as its net benefits from a transfer policy. What is the change in the size of the economic pie (Real GDP) that is required to bring about this result?

A nonexcludable public good is

Government provides a nonexcludable public good that no one wants. This situation is most closely related with:

Which of the following statements is false?

Government can overcome the free rider problem by collecting taxes and using the funds to provide individuals with nonexcludable public goods that they want to buy but the market cannot provide.

Critics of government frequently assert that special interest groups favor transfer policies rather than economic growth policies.

Which of the following is false?

Exam 37: The Economic Case For and Against Government: Five Topics Considered

An unintended effect of a tax credit given to first-time home buyers would be a _____________ shift in the ______________ curve for housing,which would result in a(n) _____________ in the price of housing.

The federal government and many state governments gave tax credits to first-time home buyers in 2009 and 2010. An effect of these tax credits was to

Tiffany gives $50 to Jeremy for his birthday. This is an example of a(n)

A negative externality exists and government wants to impose a tax in order to bring about an efficient outcome.To accomplish its objective,government must set the tax equal to marginal

In the case of a negative externality,the government can use a ________________ to turn an inefficient outcome into an efficient one. In the case of a positive externality,the government can use a ________________ to turn an inefficient outcome into an efficient one.

Suppose health-care reform X makes it unlawful for insurance companies to deny insurance to persons with a preexisting disease. One unintended effect of this reform is that some people

It is possible for the government to remove individuals from a prisoner's dilemma setting and make them better off.

When the government imposes a tariff on imported goods,it _____________ prices for domestic consumers,________________ consumers' surplus and _________________ the producers' surplus for domestic producers.

Economist A believes that the case for government is a strong one,but she doesn't always say,when it comes to negative externalities,that government can turn an inefficient market outcome into an efficient outcome. Which statement is economist A most likely to make?

In making the case against government,discuss the two main points about special interest groups.

Describe the intended effects of the first-time home buyer tax credits granted by Congress and many state governments in 2009 and 2010.In addition,describe in detail the unintended effect of this type of legislation.

Which of the following is usually discussed in the case against government?

Which economist said,"This focus on distribution makes the significance of distributional issues (transfer issues) in political life relatively greater and the significance of widespread common interest in political life relatively smaller."?

Special interest group X receives a 1/150thslice of the economic pie. Its net benefits from an economic growth policy are $7,000,which are the same as its net benefits from a transfer policy. What is the change in the size of the economic pie (Real GDP) that is required to bring about this result?

A nonexcludable public good is

Government provides a nonexcludable public good that no one wants. This situation is most closely related with:

Which of the following statements is false?

Government can overcome the free rider problem by collecting taxes and using the funds to provide individuals with nonexcludable public goods that they want to buy but the market cannot provide.

Critics of government frequently assert that special interest groups favor transfer policies rather than economic growth policies.

Which of the following is false?

An unintended effect of a tax credit given to first-time home buyers would be a _ shift in the curve for housing,which would result in a(n) ___ in the price of housing.

In the case of a negative externality,the government can use a to turn an inefficient outcome into an efficient one. In the case of a positive externality,the government can use a to turn an inefficient outcome into an efficient one.

When the government imposes a tariff on imported goods,it _ prices for domestic consumers, consumers' surplus and _____ the producers' surplus for domestic producers.

Special interest group X receives a 1/150^thslice of the economic pie. Its net benefits from an economic growth policy are $7,000,which are the same as its net benefits from a transfer policy. What is the change in the size of the economic pie (Real GDP) that is required to bring about this result?