Economics Unit 3

A laissez-faire approach to the economy can best be described as follows:

A minimal amount of government intervention, as the economy is best left alone

A government setting a maximum price on a new drug is an example of:

A price ceiling

In most markets for goods and services:

Consumer outnumber suppliers

A general increase in prices that results in a fall in the purchasing value of money is known as:

Inflation

There is a debate over government spending:

Many people have different ideas on how the government should spend money.

Governments must make choices on how to spend money:

Money is limited.

Which of the following would be an example of a negative externality?

Pollutions from a factory that drifts into a populated neighborhood

A tax in which the tax rate increases as the taxable amount increases is known as:

a progressive tax

A city government might use this extra revenue to pay off debt, save for the future, or to make a needed purchase that has been delayed:

budget surplus

Rent controls are most likely to result in all of the following EXCEPT for:

fewer condos in the market

An organized group that tries to influence the government to enact certain policies is known as a/an

: Interest group

Social Security is a program that would be categorized as:

A cash transfer program

The term describing a situation in which every resource is optimally allocated is known as:

Efficiency

The right of a government or its agents to seize private property for public use is known as:

Eminent domain

The following federal agency enforces federal laws that make it illegal to discriminate against a job applicant or a worker:

Equal Employment Opportunity Commission

Macroeconomics can best be defined as follows:

The study of a national (or global) economy as a whole

Microeconomics can best be defined as follows:

The study of economics at an individual, group, or company level

Sometimes governments must borrow money:

There are severe consequences if the government runs out of money.

The concept that buyers and sellers freely and willingly engage in market transactions is known as:

Voluntary exchange

The following term describes the concept that buyers and sellers freely and willingly engage in market transactions:

Voluntary exchange

A budget __________ occurs when expenditures are greater than revenues.

Deficit

Regular expenses like salaries and facility maintenance costs are part of a:

Operating budget

A government's annual income from which public expenses are paid is known as:

Revenue

A tax that stays at the same rate no matter a person's income is known as:

a proportional tax

A tax levied against the estate of a deceased person before it is distributed to heirs is known as:

an estate tax

Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF):

enforces laws on weapons and certain controlled substances

Federal Aviation Administration (FAA):

regulates and oversees American air travel system

Federal Communications Commission (FCC):

regulates interstate and international radio, television, wire, satellite and cable

A limit the government puts on how high the price of a product or service can be is known as:

A price ceiling

A minimum wage is an example of:

A price floor

The act of a retailer increasing prices when no alternative is available is known as:

A price gouging

A government subsidy for milk producers would be an example of:

A price suppor

Rent controls are most likely to result in the following:

A shortage of rental units

Public housing would best be categorized as:

An in-kind benefits program

If cigarette taxes in Colorado were $3 per pack, and the state raised the tax to $3.10 a pack, most consumers of cigarettes would:

Be unlikely to change their behavior

A market in which goods or services are traded illegally is known as a:

Black Market

The most common way agricultural price supports work is that the government enters the market and:

Buys up the product

The cost to society created by market inefficiency is known as:

Deadweight loss

A reduction of the general level of prices in an economy is known as:

Deflation

The following federal agency prevents business practices that are anti-competitive, deceptive or unfair to consumers:

Federal Trade Commission

What can governments do to promote full employment, stable prices, and stable growth? Answer the question in at least one complete paragraph.

I feel the government should be continuing to watch both at the micro and macro economic level. This will allow for prediction of trends, avoiding periods of recession which would result in decrease of prices/decreased employment, and prevent further growth. With government support companies can remain open, consumers can remain employed, and our economic growth won't decreased. I think the pandemic is a perfect example of why the government needs to remain involved and stay ahead of trends. Many local business in my area did not survive through the height of the pandemic and I think this may have been prevented or at least lessened if the government had more involvement with the smaller businesses.

Which of the following would NOT be considered a primary reason for a government to intervene in the economy?

Improving corporate profits

The idea that individuals seeking their economic self-interest actually benefit society more than if they tried to benefit society directly is expressed by the following term:

Invisible hand

If the government decided that consumers could no longer put any metallic objects in the trash and issued $200 fines for violators, all of the following would be likely to occur EXCEPT:

Most consumers would not change their behavior.

If a local government tried to ban the wearing of athletic shoes in public spaces, issuing $1 citations to anyone wearing them (but waiving the fine if the person changed shoes) what would be the most likely outcome?

Most people would not change their behaviors

If the government decided to require an easy-to-install $10 device on all cars to catch exhaust from the tail pipe to reduce air pollution (let's call it a "pipe canister"), and the pipe canister did not affect the car's performance or visual appeal, and car owners without the pipe canister faced a $200 fine, what would be the most likely outcome?

Most people would probably purchase and install the device.

The idea that all persons can compete in economic markets is known as:

Open opportunity

What are price controls and why do governments put them in place? Include specific examples in your response. Write at least one complete paragraph:

Price controls are controls but into place and regulated by the government. These price controls are meant to protect both the seller and the consumer. Price controls include price ceiling, price floor, and price rent. The item I fell might be the most important would be the price of minimum wage. Minimum wage is the lowest paid amount an employer must pay an employee. I think this wage should be reviewed often as the cost of living continues to change frequent.

A limit the government puts on how low the price of a product or service can be is known as a:

Price floor

A store owner who charges $20 for a gallon of milk right before a blizzard is an example of:

Price gouging

Subsidies or price controls used by the government to artificially increase or decrease prices are known as:

Price supports

The idea that people and businesses seek to better their well-being through economic activity is known as:

Profit Motive

In-kind benefits are aid programs where the government:

Provides goods and services to the needy for free or at greatly reduced prices.

The following term describes rules by a government, backed by use of penalties, intended to modify the economic behavior of individuals and firms in the private sector:

Regulation

Summarize how governments decide on what programs to fund. What are some specific examples of such programs? Write at least one complete paragraph.

State and local government have a large number of programs to fund. These include items like hospitals, police stations, and education system. The programs are funded via sales tax, income taxes, corporate taxes, and other taxes. A large portion of the programs funded is directly towards the public school system. I feel the use of funds to the public school system impacts the largest portion of citizens and benefits the masses.

Politicians are reluctant to cut Social Security:

The elderly are a powerful voting segment

Explain the role of the government in the protection of consumers. Write at least one complete paragraph:

The government has developed several agencies to help protect the consumers of The United States. The Drug Enforcement Administration oversees the growing, administration, dispensing, and illegal drug trade. I feel the DEA is vital to the consumers but also the safety of our country. Without the DEA there would be many unknown ingredients in our medications and our illegal drug volumes would be greatly increased.

If the government decided that Twinkies were unhealthy and should face a $3 per Twinkie "sin tax," all of the following would be likely to occur EXCEPT:

The number of Twinkie suppliers would likely increase

A tax that takes a larger percentage of a lower income and a smaller percentage of a higher income is known as:

a regressive tax

The following term describes a tax paid when purchases are made on a specific good, such as gasoline:

an exercise tax

Funds set aside for major improvements to items like buildings and roads are part of a:

capital budget

Equal Employment Opportunity Commission (EEOC):

enforces federal laws that make it illegal to discriminate against a job applicant or a worker

Drug Enforcement Administration (DEA):

enforces laws and regulations related to most controlled substances

Federal Trade Commission (FTC):

prevents business practices that are anti-competitive, deceptive or unfair to consumers

Environmental Protection Agency (EPA):

protects human health and the environment by writing and enforcing environmental regulations

Securities & Exchange Commission (SEC):

protects investors and stockholders.