5.11 Unit Test: The Government Gets Involved - Part 1

Why does the free-market system require government regulation? The free-market system cannot exist without government regulation for what reason?

Producers are driven by the profit motive to work against competition. The profit motive undermines competition unless competition is protected.

Why do government regulations lead to higher prices for consumers? Why do government regulations lead to higher prices for consumers?

Producers pass along the costs of compliance. The costs of compliance are passed on to the consumer.

Which step occurs last in the creation of the federal budget? Which government official is required by law to deliver a budget to the U.S. Congress?

The president signs spending bills into law. The president

Which is intended to protect competition? Which is intended to collect revenue?

antitrust law taxation

Which is not something the government must use to enforce consumer-protection legislation? Which government behavior is not involved in consumer-protection regulations?

censorship

Taxes differ from tariffs because taxes are what? Which of the following is true about tariffs?

collected on domestic economic activity They are paid on international trade only.

Parental freedom is limited by laws requiring what? Censorship is a government-imposed limit on which of the following?

compulsory education individuals' freedom of expression

Consumer-protection regulations are beneficial because they increase what? One drawback to consumer-protection regulations is that they lead to what?

consumer confidence higher prices

The government must force people to pay taxes so that it can do what? Why is taxation necessary?

control the money supply and manage economic growth

What does price fixing involve? What does production limitation involve?

group of companies agreeing on a particular price to charge for their products cartel setting a maximum output for the good that all members sell

What is the justification for the progressive taxation method? Which describes a regressive tax?

idea that taxation should be based on the ability-to-pay principle puts greater burden on those with lower incomes

Environmental-protection laws can be bad for the economy because they may do what? The passage of environmental-protection laws results in what?

increase unemployment higher prices

What does increasing consumer confidence do? What does the enforcement of antitrust laws do?

increases purchases from producers speeds up the flow of capital and wages

How can recent government spending be best described? Which of these has been a trend in the twentieth century?

increasing growing levels of government spending

Which is provided by consumers in the circular flow of the free-market system? Which is provided by governments in the circular flow of the free-market system?

labor and investment public goods

Which is an example of a land-use law?

limitation of two houses per acre in the residential section of a town residential zoning ordinance

What do banking regulations prohibit? What do capital controls prevent?

money laundering hasty movements of money into and out of a country's economic system

The World Trade Organization was formed in order to accomplish what? Countries are better able to negotiate free-trade agreements because of the existence of which of the following?

promote free trade World Trade Organization

Government corporations can be described as which of the following? Government agencies are which of the following?

public sector corporations part of the public sector

The government can prevent the shortages that accompany price ceilings by doing what? The government might enact a price ceiling in order to accomplish what?

rationing protect the poor

Which is an example of a labor law?

restriction of underage workers to 20 hours per week minimum-wage requirement

Which merit good does the U.S. government provide through a payroll tax? What merit good does the U.S. government pay for through the Medicaid payroll tax?

retirement benefits health care

Which is a public good?

road national defense

Which describes an excise tax? Which describes a sales tax?

tax charged on each pack of cigarettes percentage charged on the purchase of goods

Politicians approve pork barrel spending for what purpose? Politicians can gain added support for themselves by approving what?

win political support pork barrel projects