econ212 exam1
When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the inflationary effect. cost effect. income effect. substitution effect.
income effect.
"Pork-barrel" legislation that contains funding for hundreds of earmarks throughout numerous states often reflects logrolling. the benefits-received principle. the paradox of voting. adverse selection.
logrolling.
The median-voter model implies that a political office seeker will favor extensive government spending because demand curves for public goods are added vertically rather than horizontally. adopt less extreme views when seeking his or her party's nomination than when running against the other party's opponent. adopt more extreme views when seeking his or her party's nomination than when running against the other party's opponent. favor the private resolution of externality problems rather than governmental intervention.
adopt more extreme views when seeking his or her party's nomination than when running against the other party's opponent.
Upon learning that his auto transmission is about to fail, Ray Roma sells his car to an unsuspecting buyer. This circumstance illustrates the principal-agent problem. moral hazard problem. free-rider problem. adverse selection problem.
adverse selection problem.
The assertion that "there is no free lunch" means that marginal analysis is used in economic reasoning. all production involves the use of scarce resources and thus the sacrifice of alternative goods. choices need not be made if behavior is rational. there are always trade-offs between economic goals.
all production involves the use of scarce resources and thus the
A recent study found that an increase in the federal tax on beer (which would increase the price of beer) would reduce the demand for marijuana. Based on this information we can conclude that marijuana is an inferior good. beer and marijuana are substitute goods. beer is an inferior good. beer and marijuana are complementary goods.
beer and marijuana are complementary goods.
If the demand for a product is perfectly inelastic, the incidence of an excise tax will be mostly on the seller. entirely on the seller. mostly on the buyer. entirely on the buyer.
entirely on the buyer.
The marginal tax rate is the difference between the total tax rate and the average tax rate. the percentage of total income paid as taxes. equal to the change in taxes/change in taxable income. equal to the total taxes/total taxable income.
equal to the change in taxes/change in taxable income.
A nation's "tax burden" is measured by the government's tax revenues as a percentage of GDP. average tax rate on taxable income in the nation. total amount of tax dollars paid by the citizens. average of personal-income and corporate-income tax rates.
government's tax revenues as a percentage of GDP.
The Latin term "ceteris paribus" means prosperity inevitably follows recession. that if event A precedes event B, A has caused B. that economics deals with facts, not values. other things equal.
other things equal.
The three most important sources of federal tax revenue in order of descending importance are personal income, corporate income, and payroll taxes. personal income, corporate income, and sales taxes. sales, payroll, and personal income taxes. personal income, payroll, and corporate income taxes.
personal income, payroll, and corporate income taxes.
Which of the following is not an important source of revenue for the federal government? payroll taxes corporate income taxes property taxes personal income taxes
property taxes
With respect to local finance, the corporate income tax is the major source of revenue and natural resource development is the major type of expenditure. sales and excise taxes are the major source of revenue and highway construction and maintenance is the major type of expenditure. property taxes are the basic source of revenue and education is the major type of expenditure. death and gift taxes are the major source of revenue and most expenditures are for hospitals and health services.
property taxes are the basic source of revenue and education is the major type of expenditure.
With respect to state finance, for most states the corporate income tax is the major source of revenue and natural resource development is the major type of expenditure. estate taxes are the major source of revenue and most expenditures are for health services. property taxes are the basic source of revenue and education is the major type of expenditure. sales and excise taxes are the major source of revenue and education is the major type of expenditure.
sales and excise taxes are the major source of revenue and education is the major type of expenditure.
Overall, the U.S. tax system (combined federal, state, and local) is highly regressive. highly progressive. slightly regressive. slightly progressive.
slightly progressive.
A progressive tax is such that entrepreneurial income is exempt from taxation. the revenues it yields are spent on transfer payments. tax rates are higher the greater one's income. the same tax rate applies to all income receivers, so that the rich pay absolutely more taxes than the poor.
tax rates are higher the greater one's income.
Which of the following is most likely to be an inferior good? gold watches used clothing steak ocean cruises
used clothing
If the tax on gasoline is increased, gas stations are most likely to pass most of this increase to the consumer if the demand is slightly elastic. unitary elastic. very inelastic. perfectly elastic.
very inelastic.
Chronic budget deficits can be attributed to voters wanting government programs but not wanting to pay taxes. state budget laws. unfunded liabilities. inappropriate monetary policy.
voters wanting government programs but not wanting to pay taxes.
Which of the following is the best example of a supply-side market failure? Street performers don't get full payment for the value of their output because people watch and enjoy the shows without paying the artist. A firm keeps its production costs down by dumping its waste in the nearby river, adversely affecting water quality for residents in the area. No one provides street lights in a town because, once the lights are in operation, people don't have to pay to use them. Government imposes taxes on the production of a socially desirable good.
A firm keeps its production costs down by dumping its waste in the nearby river, adversely affecting water quality for residents in the area.
Which of the following statements is correct? A decline in the price of X will increase the demand for substitute product Y. An increase in the price of C will decrease the demand for complementary product D. A decrease in income will decrease the demand for an inferior good. An increase in income will reduce the demand for a normal good.
An increase in the price of C will decrease the demand for complementary product D.
Examples of command economies are Cuba and North Korea. Sweden and Norway. Mexico and Brazil. the United States and Japan.
Cuba and North Korea.
In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X.A reduction in the number of firms producing X will increase D, increase P, and increase Q. decrease S, decrease P, and increase Q. increase S, decrease P, and increase Q. decrease S, increase P, and decrease Q.
decrease S, increase P, and decrease Q.
Assume in a competitive market that price is initially above the equilibrium level. We can predict that price will increase, quantity demanded will decrease, and quantity supplied will increase. decrease, quantity demanded will decrease, and quantity supplied will increase. decrease, quantity demanded will increase, and quantity supplied will decrease. decrease and quantity demanded and quantity supplied will both decrease.
decrease, quantity demanded will increase, and quantity supplied will decrease.
Assume that Matt, Joe, and Teresa are the only citizens in a community. A proposed public good has a total cost of $1,000. All three citizens will share an equal portion of this cost in taxes. The benefit of the public good is $500 for Matt, $280 for Joe, and $260 for Teresa. In a majority vote, this proposal will most likely be accepted, two in favor and one against. defeated, none in favor and three against. accepted, three in favor and none against. defeated, two against and one in favor.
defeated, two against and one in favor.
People enjoy outdoor holiday lighting displays and would be willing to pay to see these displays but can't be made to pay. Because those who put up lights are unable to charge others to view them, they don't put up as many lights as people would like. This is an example of a supply-side market failure. negative externality. demand-side market failure. government failure.
demand-side market failure.
Because successive units of a good produce less and less additional satisfaction, the price must fall to encourage a buyer to purchase more units of the good. This statement is most consistent with which explanation for the law of demand? diminishing marginal utility the substitution effect the income effect the rationing function of prices
diminishing marginal utility
The relationship between quantity supplied and price is ________, and the relationship between quantity demanded and price is ________. inverse; direct direct; inverse inverse; inverse direct; direct
direct; inverse
The term government failure refers to the economically inefficient outcomes caused by voting problems or incentive structures in government. inability of government agencies to provide adequate police protection in low-income neighborhoods. large number of bankruptcies that have occurred recently among local governments. large losses suffered by publicly owned water, gas, and electric companies.
economically inefficient outcomes caused by voting problems or incentive structures in government.
Property rights are important because they allow the government to control how resources are allocated. guarantee that any exchange will make all parties better off than prior to the exchange. ensure an equal distribution of income. encourage cooperation by improving the chances of mutually agreeable transactions.
encourage cooperation by improving the chances of mutually agreeable transactions.
Barter is used to circumvent the problem of a lack of coincidence of wants among potential buyers and sellers. is the major means of exchange in centrally planned economies. accounts for over 30 percent of the dollar volume of all exchange in the U.S. economy. entails the exchange of goods for goods.
entails the exchange of goods for goods.
Innovation lagged in the centrally planned economies because there was too much competition from foreign firms. there was too much domestic business competition. enterprises resisted innovation in fear that their production targets would be raised. exports had to equal imports for the plan to work.
enterprises resisted innovation in fear that their production targets
If competitive industry Z is making substantial economic profit, output will fall in all industries except industry Z. expand in industry Z, but no new firms will enter the market. fall in industry Z and firms will likely leave the market. expand in industry Z, as more resources will move to that industry.
expand in industry Z, as more resources will move to that industry.
The reason why, under majority voting and consistent voter preferences, the median voter's choice will tend to predominate is because voters' preferences are bell-shaped, with most of them falling on the median. most voters strongly prefer the median view. the median voter has the strongest preferences compared to the other voters. extreme voters on either side of the median would prefer the median over the opposite extreme.
extreme voters on either side of the median would prefer the median over the opposite extreme.
In the resource market, businesses sell services to households. households sell resources to businesses. businesses borrow financial capital from households. firms sell raw materials to households.
households sell resources to businesses.
Which of the following statements is not true? The free-rider problem results from the characteristics of nonrivalry and nonexcludability. Public goods are only provided by government. Private provision of public goods is usually unprofitable. Some public goods are paid for by private philanthropy.
Public goods are only provided by government.
"Consumer sovereignty" refers to the idea that the decisions of producers must ultimately conform to consumer demands. idea that the pursuit of self-interest is in the public interest. fact that a federal agency exists to protect consumers from harmful and defective products. fact that resource prices are higher than product prices in capitalistic economies.
idea that the decisions of producers must ultimately conform to consumer demands.
n the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X.Consumer expectations that the price of X will rise sharply in the future will increase S, increase P, and increase Q. increase D, increase P, and increase Q. decrease S, increase P, and increase Q. increase D, decrease P, and increase Q.
increase D, increase P, and increase Q.
If the demand and supply curves for product X are stable, a government-mandated increase in the price of X will increase the demand for X and decrease the supply of X. increase the supply of X and decrease the demand for X. decrease the quantity supplied of X and increase the quantity demanded of X. increase the quantity supplied of X and decrease the quantity demanded of X.
increase the quantity supplied of X and decrease the quantity
Assume in a competitive market that price is initially below the equilibrium level. We can predict that price will decrease, quantity demanded will decrease, and quantity supplied will increase. increase, quantity demanded will decrease, and quantity supplied will increase. increase, quantity demanded will increase, and quantity supplied will decrease. decrease and quantity demanded and quantity supplied will both decrease.
increase, quantity demanded will decrease, and quantity supplied will increase.
Running shoes and staplers are complementary goods. inferior goods. independent goods. substitute goods.
independent goods.
A demand curve shows the relationship between income and spending. shows the relationship between price and quantity supplied. graphs as an upsloping line. indicates the quantity demanded at each price in a series of prices.
indicates the quantity demanded at each price in a series of prices.
Government officials tend to make better economic decisions than private individuals because of the efficient processes and flexibility built into the government bureaucracy. inefficient choices because the invisible hand directs them away from the resource allocation where marginal benefits equal marginal costs. better economic decisions than private individuals because of the wealth of information at their disposal. inefficient choices because they lack the information necessary to accurately weigh marginal benefits and marginal costs.
inefficient choices because they lack the information necessary to accurately weigh marginal benefits and marginal costs.
Which of the following is the best example of rent-seeking behavior? Consumers try to get flying cars produced by telling automakers they are willing to pay for them. Senators vote for what their constituents want so they can get reelected. Students at a university lobby the administration to improve dorms and reduce class sizes without increasing tuition. Voters consider a ballot measure that would increase taxes to better fund schools.
Students at a university lobby the administration to improve dorms and reduce class sizes without increasing tuition.
Which of the following is a microeconomic statement? The price of smartphones declined 2.8 percent last year. The real domestic output increased by 1.6 percent last year. The general price level increased by 1.1 percent last year. Unemployment was 5.2 percent of the labor force last year.
The price of smartphones declined 2.8 percent last year.
The alternative combinations of two goods that a consumer can purchase with a specific money income is shown by a demand curve. a production possibilities curve. a budget line. a consumer expenditure line.
a budget line.
If consumer desire for product X increases, all of the following will occur except an increase in the profits of industry X. an increase in the quantity of resources employed by industry X. a decrease in the quantity of resources employed in industry X. an increase in the output of industry X.
a decrease in the quantity of resources employed in industry X.
A well-tested economic theory is often called a hypothesis. an anomaly. a principle. a prototype.
a principle.
Which of the following would not shift the demand curve for beef? a widely publicized study that indicates beef consumption increases one's cholesterol a change in the incomes of beef consumers an effective advertising campaign by pork producers a reduction in the price of cattle feed
a reduction in the price of cattle feed
Government officials tend to make inefficient choices because they lack the information necessary to accurately weigh marginal benefits and marginal costs. better economic decisions than private individuals because of the efficient processes and flexibility built into the government bureaucracy. inefficient choices because the invisible hand directs them away from the resource allocation where marginal benefits equal marginal costs. better economic decisions than private individuals because of the wealth of information at their disposal.
inefficient choices because they lack the information necessary to accurately weigh marginal benefits and marginal costs.
A market is an institution that brings together buyers and sellers. reflects upsloping demand and downsloping supply curves. always requires face-to-face contact between buyer and seller. entails the exchange of goods, but not services.
is an institution that brings together buyers and sellers.
A normative statement is one that applies only to macroeconomics. is based on the law of averages. applies only to microeconomics. is based on value judgments.
is based on value judgments.
"Vote for my special local project and I will vote for yours." This political technique is called "logrolling." undermines the benefits-received principle. illustrates the paradox of voting. illustrates the median voter model.
is called "logrolling."
An efficiency loss (or deadweight loss) can result from underproduction, but not from overproduction. results from producing a unit of output for which the maximum willingness to pay exceeds the minimum acceptable price. can result from overproduction, but not from underproduction. is measured as the combined loss of consumer surplus and producer surplus from over- or underproducing.
is measured as the combined loss of consumer surplus and producer surplus from over- or underproducing.
The economizing problem is one of deciding how to make the best use of virtually unlimited resources to satisfy virtually unlimited wants. limited resources to satisfy virtually unlimited wants. unlimited resources to satisfy limited wants. limited resources to satisfy limited wants.
limited resources to satisfy virtually unlimited wants.
The median-voter model implies that political voting will be as economically efficient as "dollar voting" in competitive markets. all voters have about the same preferences for various public goods and services. many people will be dissatisfied with the size of government in the economy. with majority voting, there can never be a consistent ordering of public good preferences.
many people will be dissatisfied with the size of government in the economy.
At the optimal quantity of a public good, marginal benefit equals marginal cost. marginal benefit is zero. total benefit equals total cost. marginal benefit exceeds marginal cost by the greatest amount.
marginal benefit equals marginal cost.
Majority voting fails to incorporate the strength of the preferences of individual voters and therefore creates the opportunity for the fallacy of limited decisions. may produce economically inefficient outcomes. is the primary reason for public sector failure. reduces the power of the median voter.
may produce economically inefficient outcomes.
Majority voting fails to incorporate the strength of the preferences of individual voters and therefore reduces the power of the median voter. may produce economically inefficient outcomes. creates the opportunity for the fallacy of limited decisions. is the primary reason for public sector failure.
may produce economically inefficient outcomes.
When voters have different opinions about an issue, the position that is most likely to be adopted is that of the rent seeker. median voter. lobbyist. logroller.
median voter.
Which of the following is a distinguishing feature of laissez-faire capitalism? a circular flow of goods, resources, and money minimal government intervention central planning public ownership of all capital
minimal government intervention
If one person's consumption of a good does not preclude another's consumption, the good is said to be rival in consumption. nonexcludable. nonrival in consumption. excludable.
nonrival in consumption.
The sales tax is a regressive tax because the percentage of income paid as taxes falls as income rises. tax tends to reduce the total volume of consumption expenditures. percentage of income paid as taxes is constant as income rises. administrative costs associated with the collection of the tax are relatively high.
percentage of income paid as taxes falls as income rises.
An income tax is progressive if the percentage of income paid as taxes is the same regardless of the size of income. absolute amount paid as taxes varies directly with income. percentage of income paid as taxes increases as income increases. tax rate varies inversely with income.
percentage of income paid as taxes increases as income increases.
The largest source of tax revenue for the U.S. federal government is corporate income taxes. personal income taxes. property taxes. sales and excise taxes.
personal income taxes.
The law of demand states that, other things equal, consumers will buy more of a product at high prices than at low prices. the larger the number of buyers in a market, the lower will be product price. price and quantity demanded are directly related. price and quantity demanded are inversely related.
price and quantity demanded are inversely related.
The demand curve shows the relationship between price and quantity demanded. consumer tastes and quantity demanded. price and production costs. money income and quantity demanded.
price and quantity demanded.
The law of supply indicates that, other things equal, consumers will purchase less of a good at high prices than at low prices. the product supply curve is downsloping. producers will offer more of a product at high prices than at low prices. producers will offer more of a product at low prices than at high prices.
producers will offer more of a product at high prices than at low prices.
Allocative efficiency is concerned with reducing the concavity of the production possibilities curve. producing every good with the least-cost combination of inputs. producing the combination of goods most desired by society. achieving the full employment of all available resources.
producing the combination of goods most desired by society.
The location of the product supply curve depends on the number of buyers in the market. production technology. the tastes of buyers. the location of the demand curve.
production technology.
Public choice theorists contend that public bureaucracies are inherently more efficient than private enterprises. the existence of cost-benefit analysis has brought about the efficient use of resources in the public sector. public bureaucracies are inherently less efficient than private enterprises. government can efficiently correct instances of market system failure.
public bureaucracies are inherently less efficient than private enterprises.
Which of the following will not produce an outward shift of the production possibilities curve? upgrading the quality of a nation's human resources reducing unemployment increasing the quantity of a society's labor force improving a society's technological knowledge
reducing unemployment
Suppose American winemakers convince the federal government to issue a directive to serve only domestically produced wine at government functions. This would be an example of moral hazard. the principal-agent problem. logrolling. rent-seeking behavior.
rent-seeking behavior.
Specialization in production is important primarily because it allows society to avoid the coincidence-of-wants problem. allows society to have fewer capital goods. allows society to trade by barter. results in greater total output.
results in greater total output.
In deciding whether to study for an economics quiz or go to a concert, one is confronted by the idea(s) of scarcity and opportunity costs. full production. complementary economic goals. money and real capital.
scarcity and opportunity costs.
As voters "vote with their feet" and move to political districts where the median voter's preference is closer to their own, the median voter's preference will weaken. shift. strengthen. stagnate.
shift.
An increase in money income increases the slope of the budget line. shifts the consumer's budget line to the left. shifts the consumer's budget line to the right. has no effect on the budget line.
shifts the consumer's budget line to the right.
An increase in money income shifts the consumer's budget line to the left. shifts the consumer's budget line to the right. increases the slope of the budget line. has no effect on the budget line.
shifts the consumer's budget line to the right.
The economic function of profits and losses is to bring about a more equal distribution of income. signal that resources should be reallocated. eliminate small firms and reduce competition. tell government which industries need to be subsidized.
signal that resources should be reallocated.
Economics may best be defined as the social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity. empirical testing of value judgments through the use of logic. study of why people are rational. interaction between macro and micro considerations.
social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.
Which of the following is a capital resource? software used by a firm silicon (sand) used to make computer chips a corporate bond issued by a computer manufacturer a computer programmer
software used by a firm
A leftward shift of a product supply curve might be caused by an improvement in the relevant technique of production. some firms leaving an industry. a decline in the prices of needed inputs. an increase in consumer incomes.
some firms leaving an industry.
"Regulatory capture" refers to the situation where a government agency charged with supervising and regulating a particular industry is strongly influenced by the firms in the very industry that it is regulating. headed by unelected government officials who have no strong desire to regulate. completely dominating and controlling the actions of firms in the industry. headed by bureaucrats who have a "lock" on their positions, without any rivals.
strongly influenced by the firms in the very industry that it is regulating.
In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are substitute goods, and the higher price for oil increased the demand for natural gas. substitute goods, and the higher price for oil decreased the supply of natural gas. complementary goods, and the higher price for oil decreased the supply of natural gas. complementary goods, and the higher price for oil increased the demand for natural gas.
substitute goods, and the higher price for oil increased the demand for natural gas.
An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the demand curve for cigarettes rightward. supply curve for cigarettes leftward. demand curve for cigarettes leftward. supply curve for cigarettes rightward.
supply curve for cigarettes leftward.
Fiscal policy refers to the government's attempt at stabilizing the economy through the use of changes in exchange rates and foreign trade. interest rates and borrowing. taxes and government spending. wage rates and employment contracts.
taxes and government spending.
Monetary stimulus is most helpful to an economy that is in recession. experiencing significant negative externalities. that is experiencing high inflation. with few public goods.
that is in recession.
If government levies a tax or fee on hunting licenses and uses the resulting revenue for wildlife stocking programs, this would be an example of the ability-to-pay principle of taxation. a progressive tax. a regressive tax. the benefits-received principle of taxation.
the benefits-received principle of taxation.
A nation's production possibilities curve might shift to the left (inward) as a result of the depletion of its soil fertility due to overplanting and overgrazing. increases in the size of the labor force. investing in more capital goods. technological advance.
the depletion of its soil fertility due to overplanting and overgrazing.
A fundamental difference between the command system and laissez-faire capitalism is that, in command systems, all economic decisions are made by the government, whereas there is no government in laissez-faire capitalism. the division of output is decided by central planning rather than by individuals operating freely through markets. money is not used, whereas it is in laissez-faire capitalism. scarcity does not exist, whereas it does in laissez-faire capitalism.
the division of output is decided by central planning rather than by individuals operating freely through markets.
Macroeconomics approaches the study of economics from the viewpoint of governmental units. the operation of specific product and resource markets. the entire economy. individual firms.
the entire economy.
Because of the free-rider problem, government has increasingly yielded to the private sector in producing public goods. the market demand for a public good is overstated. the market demand for a public good is nonexistent or understated. public goods often create serious negative externalities.
the market demand for a public good is nonexistent or understated.
A production possibilities curve shows combinations of capital and labor necessary to produce specific levels of output. that people prefer one of the goods more than the other. the maximum amounts of two goods that can be produced, assuming the full use of available resources. that resources are unlimited.
the maximum amounts of two goods that can be produced, assuming the full use of available resources.
In moving along a given budget line, the prices of both products are assumed to vary, but money income is constant. each point on the line will be equally satisfactory to consumers. the prices of both products and money income are assumed to be constant. money income varies, but the prices of the two goods are constant.
the prices of both products and money income are assumed to be constant.
Some agricultural sub-Saharan nations of Africa have overfarmed and overgrazed their land to the extent that significant portions of it have turned into desert. This suggests that the production possibilities curves of such nations have shifted outward. the production possibilities curves of such nations have shifted inward. these nations are operating at some point outside of their production possibilities curves. the production possibilities curves of such nations are more bowed out from the origin.
the production possibilities curves of such nations have shifted inward.
Professional sports teams will sometimes seek public subsidies for stadium financing projects that produce large benefits for a relatively small number of fans and impose small costs on a relatively large number of people. Sometimes these efforts to secure public funding are successful even though the decision is not efficient. This is an example of the special-interest effect. log-rolling. pork-barrel politics. market failure.
the special-interest effect.
When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike soccer balls? the price effect the substitution effect an increase in the demand for Nike soccer balls the income effect
the substitution effect
When the price of a product rises, consumers with a given money income shift their purchases to other products whose prices are now relatively lower. This statement describes the substitution effect. an inferior good. the rationing function of prices. the income effect.
the substitution effect.
Because majority voting fails to incorporate the strength of the preferences of individual voters, it leads to market failure. creates negative externalities. under some circumstances produces economically inefficient outcomes. leads to politics dominated by special-interest groups.
under some circumstances produces economically inefficient outcomes.
For the music industry, the rise of Internet file-sharing of music has eliminated the problem of digital piracy. worsened the free-rider problem. diminished or alleviated the free-rider problem. reduced the options for musicians to have their music heard.
worsened the free-rider problem.
When congressional representatives vote on an appropriations bill, they must vote yea or nay, taking the bad with the good. This statement best reflects the paradox of voting. benefits-received principle. regulatory capture effect. concept of limited and bundled choices.
concept of limited and bundled choices.
"Under central planning, some group has to decide how to get the necessary inputs produced in the right amounts and delivered to the right places at the right time. This is a nearly impossible task without markets and profits." This quotation best identifies the self-sufficiency dilemma under communism. incentive problem under central planning. resource overcommitment problem under communism. coordination problem under central planning.
coordination problem under central planning.
The median-voter model implies that a political office seeker will favor the private resolution of externality problems rather than governmental intervention. adopt less extreme views when seeking his or her party's nomination than when running against the other party's opponent. adopt more extreme views when seeking his or her party's nomination than when running against the other party's opponent. favor extensive government spending because demand curves for public goods are added vertically rather than horizontally.
adopt more extreme views when seeking his or her party's nomination than when running against the other party's opponent.
Freedom of enterprise allows businesses, within broad limits, to choose what goods to produce. in a market system means that entrepreneurs can obtain and use economic resources without any legal restraint. refers primarily to the right of consumers to purchase what they want. is a characteristic that is common to most economic systems.
allows businesses, within broad limits, to choose what goods to produce.
Which of the following is associated with macroeconomics? an examination of the incomes of professional athletes a case study of pricing and production in the textbook industry a study of the trend of pecan prices since the Second World War an empirical investigation of the general price level and unemployment rates since 1990
an empirical investigation of the general price level and unemployment rates since 1990
Which of the following is associated with macroeconomics? a study of the trend of pecan prices since the Second World War a case study of pricing and production in the textbook industry an examination of the incomes of professional athletes an empirical investigation of the general price level and unemployment rates since 1990
an empirical investigation of the general price level and unemployment rates since 1990
Economic theories are useless because they are not based on laboratory experimentation. that are true for individual economic units are never true for the economy as a whole. are abstractions and therefore of no application to real situations. are generalizations based on hypotheses tested and supported with observed facts.
are generalizations based on hypotheses tested and supported with observed facts.
Pigovian taxes are used to correct negative externalities. are primarily designed to fund public goods. are used to correct positive externalities. are a form of income tax.
are used to correct negative externalities.
"Earmarks" refer to authorized expenditures benefiting a narrow, specifically designated group that are included in more comprehensive spending legislation. taxes that redistribute wealth or income from one income group to another. legislation focused on correcting negative externalities. the additional votes that must be taken when a voting paradox occurs.
authorized expenditures benefiting a narrow, specifically designated group that are included in more comprehensive spending legislation.
In the simple circular flow model, there are real flows of goods, services, and resources, but not money flows. households are buyers of resources. businesses are sellers of final products. households are sellers of final products.
businesses are sellers of final products.