economics final

Which of the following is an example of a public good?

A radio station, which cannot establish a one-to-one link between receipt of its programming and payment for the service.

Which of the following is the best definition of money?

Anything that is widely used as a medium of exchange, unit of account, and store of value.

Entreprenuers have a strong incentive to

Avoid projects that reduce the value of the resources

Which of the following would help protect taxpayers and consumers from the disproportionate influence of special-interest groups?

Constitutional restrictions that prohibit federal spending on programs designed to benefit subgroups of the population at the expense of the general taxpayer.

Which of the following can be learned from the investment rates of Eastern Europe and the former Soviet Union during 1950-1990?

High rates of investment do not automatically guarantee economic progress.

The protective function of government includes imposition of taxes in order to expand government investment. enforcement of the law in an unbiased manner. protection of people and their property against aggressors.

II and III

Which of the following statements about voting is true?

The incentive of voters to be well informed on candidates and issues is weak.

Suppose that the producers of copper are permitted to emit harmful pollutants, free of charge, into the air. How will the price and output of copper products in a competitive market compare with their values under conditions of ideal economic efficiency?

The price will be too low, and the output will be too large

Which of the following occurred during the 12 months following passage of the 1930 Smoot-Hawley trade bill?

The volume of trade declined sharply and the unemployment rate rose.

Which of the following statements about government taxing and spending is true?

When transfer benefits are reduced as income expands, both transfer recipients and taxpayers financing the programs will have less incentive to earn.

Which of the following is most clearly an example of an externality?

When you drive to school or work, your car releases harmful pollutants and greenhouse gases, but most of the costs of these emissions fall on other people—not you.

If the Federal Reserve is going to establish an environment for economic growth and prosperity, it should focus on

keeping inflation low and the general price level relatively stable

People are least careful about spending

someone else's money on someone else

Very few taxpayers attended Congressional hearings on the government bailout of General Motors and Chrysler Corporation because

they did not have a big enough stake in the decision to justify the cost of attending.

When the War on Poverty programs were instituted and transfer payments expanded in the last half of the 1960s, what happened to the poverty rate?

After falling for several decades, the official poverty rate has been relatively constant since the late 1960s.

Which of the following would be most likely to reduce the inefficiencies associated with monopoly and insufficient competition?

Enactment of antitrust laws

Why does the federal government spend so much money on farm subsidies?

Farmers lobby the government for the subsidies in order to keep the prices of farm products high and the earnings of farmers strong.

If students who earn an A in a class were asked to transfer some of their points to low-performing students, which of the following would be most likely to occur?

Neither high nor low-performing students would work as hard to earn additional points.

Which of the following is a reason why the political process sometimes results in inefficient or counter-productive outcomes?

Politicians have a strong incentive to support policies favored by well-organized interest groups.

How does the invisible hand ensure that an economy will not run out of a renewable resource?

Price increases due to the diminishing supply of a resource will both curb consumption and provide incentive for producers to expand supply.

In recent years, Americans tended to move

away from high tax states toward those with lower taxes.

In a market economy, when the government uses subsidies to keep a company in business even though it is unprofitable, the result will be

continuation of the employment of resources in an unproductive and inefficient manner.

If large budget deficits push government debt as a share of the economy to higher and higher levels, this will eventually lead to

higher interest rates on the government's bonds because it will be more risky to loan the government funds.

Entrepreneurs will increase their efforts to develop economical alternative energy sources

if current energy supply decreases and prices rise.

Efficient and unbiased enforcement of contracts will

increase the volume of trade and decrease the risk and uncertainty associated with trade.

When the money supply of a nation increases rapidly relative to the growth of the economy, the result is

inflation

Federal spending is something like a common pool resource, because

interest groups will figure that if they do not grab more of the federal budget, other groups will.

Government promotes economic progress when

it is limited to the protective and productive functions

When legislators trade their vote on one issue for the votes of other legislators on another issue, this is called

logrolling

Budget deficits are attractive to politicians because the deficits

make it possible to provide benefits to voters without having to impose corresponding taxes.

The directors and managers of government-operated firms will be primarily driven by

obtaining larger budgets and other favors from the legislative bodies that oversee their operations.

Which of the following is most likely to occur when markets are open and competitive?

production of goods and services consumers value highly relative to cost

In the long run, tariffs

reduce both imports and exports.

Regulations that make it costly to dismiss workers

reduce total employment because they also make it more costly to hire workers.

When the government becomes more heavily involved in imposing regulations and taxes on some in order to provide favors to others

resources will move away from productive projects and toward counterproductive favor seeking activities.

Private entrepreneurs are likely to make better investment decisions than central planners because

the entrepreneurs who make mistakes must bear the costs of these mistakes personally.

Brazil spent billions of dollars to host the Soccer World Cup and the Summer Olympics. The opportunity cost of hosting these events is

the next best alternative bundle of goods and services that could be provided.

Realization of gains from trade, entrepreneurial discovery, and investment are largely dependent on

the presence of institutions and policies consistent with economic freedom

If people work fewer hours, retire early, or forego risky business ventures because of high marginal tax rates,

the size and productivity of the labor supply will be reduced and output will decline.

When government failure is present,

there is a conflict between what is best for individual decision-makers and getting the most value out of resources.