eco-110

An example of an external cost of alcohol is

traffic fatalities attributable to drunk driving.

Economists refer to the problem that exists when public property is treated poorly because it is in no one's private interest to protect it as the

tragedy of the commons.

An example of an external cost of tobacco is

unnecessary deaths induced by second-hand smoke.

An example of an externality associated with drugs is a drug

user ruining a spouse's life.

Suppose a plant has 1000 employees, half of whom are from a minority population. Suppose further that, in order to cut costs, a manager must layoff 100 employees. If she chooses only non-minority workers to lay off, because an analysis of productivity data suggests they are, on average, 5% less efficient then she is

using statistical discrimination and it is illegal.

The large decrease in gasoline prices during 2014-2015 was attributable to

-directional drilling - hyperaccurate seismologic mapping -hydraulic fracturing

Which period saw the biggest increase in systemic income inequality measured conventionally?

1980s and 1990s

If the deductible is $500 and the co-payment is 20%, on a covered expense of $1000 the individual will pay ________, and their insurance company will pay ________.

600;400

Which of the following is a significant change in public policy in the U.S. since the 1980s?

Decline in tax rates on capital gains

Which of the following is the group with the highest poverty rate?

Female-headed households with children

Which of the following is a reason behind increase in household income and wealth inequalities in the U.S?

Increase in robotic production

Which of the following is a benefit of income inequality?

It motivates people to be at the high end of income distribution.

Which of the following is true of the relationship between income inequality and public policy in the U.S. since the 1980s?

Public policy has been more favorable to those at the high end of the income distribution resulting in an increase in income inequalities.

Which of the following is a cost of high-income inequality?

Social disorder

Which of the following would economists label as an example of the "tragedy of the commons?"

The over-grazing of public land by ranchers

Which of the following is true about poor populations?

The poor are less likely to have graduated from high school.

Which of the following statements is true of wealth share of the bottom half and the upper-middle class households in the United States?

The wealth shares of both household types have seen a systematic decline since 1989.

The capital-gains tax rate reached its all-time low during 2003-2012 in the U.S.

True

The stimulus package proposed in 2009 by newly-elected President Obama included

a combination of tax changes and significant increases in federal government spending.

A physician whose job is to determine if a patient needs to be referred to a specialist is called

a primary care physician.

Which of the following forms of affirmative action is unconstitutional?

a quota for hiring minority teachers in a public school district seeking to have a more diverse faculty

The key reason hurricanes affect gasoline prices is

a significant portion of U.S. refining capacity is located along the Gulf of Mexico.

Doing something that is not necessarily discriminatory on its face but impacts some groups more negatively than others is called

adverse impact discrimination.

Suppose a shipping company required all applicants to lift fifty-pound boxes on and off a truck for an hour to test their strength and endurance and suppose that resulted in 50-out-of-100 black applicants being hired and 10-out-of-100 white applicants being hired. If this test measured the performance required on the job then this would be an example of

adverse impact discrimination.

A deductible is the

amount of covered expense that an individual will have to pay before the insurance company pays anything.

When government agents are sent as actors into a bank to test whether loans are more likely to be granted to whites than blacks, they are using a statistical technique called

auditing

Housing prices peaked

before the recession of 2007-2009 began.

Since the 1980s, mortgages allowing less than 20% down payment have appeared, requiring

borrowers to insure the lender against loss in case of default.

An asset price "bubble" is created when

buyers base their purchase decision upon their expectation that the asset's price will rise.

Prohibiting the legal sale of a good because of the good's external costs

could lead to more negative consequences of the good's sale and use because of criminal activity.

Prohibition as a strategy for controlling externalities might actually

create new problems, such as turf wars among gangs or increased incarceration.

The incentives built into nearly all welfare programs

discourage work.

Externalities are effects of a transaction that ________ people who are not part of that transaction.

either hurt or help

After accounting for externalities with a social cost curve, the new equilibrium would be such that equilibrium price is

higher than before and equilibrium quantity is lower than before.

External costs are modeled by creating a new social cost curve that is

higher than the original supply curve.

To get at the large pool of oil embedded in porous rock deep below North Dakota, a process known as ________ is employed.

hydraulic fracturing (fracking)

The majority of people with private health insurance get it

in groups

The majority of proven world oil reserves are

in the Persian Gulf region.

The costs of income inequalities in an economy can be reduced to an extent if there is ________.

income mobility

Publicly provided health insurance for the poor will

increase the total amount of health care consumed.

Discretionary fiscal policy designed to counteract a reduction in aggregate demand might include

increased government infrastructure spending.

The decrease in gasoline price volatility in 2015 and 2016 was a result of

increased supply elasticity.

Evidence suggests that the 1996 Welfare reform laws increased work by welfare recipients through

increased use of work requirements and incentives.

HMO insurance

is less expensive than fee-for-service insurance.

Many economists suggest that absent legal mechanisms of discrimination, the wage paid to whites and blacks will converge because

it will be in the interest of profit-minded employers to hire blacks, thus bidding up their wages.

Compared to the traditional mortgage amortization schedule, "interest-only" mortgages and "negative-amortization" mortgages require

larger principal payments later in the mortgage.

Among the most important demand side factors explaining homes prices would be the

level of mortgage interest rates

If a health economist is worried that a system of health insurance will break down because of the problem of adverse selection, that economist may focus on ________ as a solution to that problem.

mandation

Which Federal Government program(s) pay(s) for the health needs of people who are old and poor?

medicaid and medicare

Looking at differences in median income to find evidence of current employment discrimination overlooks the fact that

men work more hours per week on average.

Which of the following nations is NOT part of OPEC?

mexico

When neither the patient nor the doctor is cost conscious as a result of health insurance, economists label this the

moral hazard problem.

In comparing the traditional way of structuring mortgages and the newer structure of providing mortgages that securitized them and insured those securities with credit-default swaps, it is clear that the ________ structure increased homeownership rates and that the ________ structure was riskier to the health of the overall economy.

newer; newer

The 1960s "war on poverty" is generally credited with

only a part of the drop in the poverty rate during the decade.

A cartel is formed when

perfect competitors in the same industry collude to form a monopoly.

Because of an increase in the work-force participation rate for women, the availability of uncompensated child care (free care by aunts, sisters, and grandmothers) has become less available to poor women. So, as a consequence, the fact that child care must now be paid for suggests that the

poverty line should be revised upward.

Cartels are not stable because it is in the interest of each of the members to ________ beyond what is in the cartel's general interest.

raise production

A tax on a good whose production causes pollution will

raise the equilibrium price and lower the equilibrium quantity.

In order to maintain high prices, a cartel must get its members to

reduce production

The main effect on the economy of the financial sector crisis in late 2008 was

reduced aggregate demand.

When government agents use real-life data on bank loans to determine if whites and blacks are treated equally, they are using the statistical technique called

regression

Nations with single payer systems typically have

relative equality in the access to basic care.

The unemployment rate for African-Americans is, across age categories,

several percentage points higher than that of whites.

Externalities are effects of a transaction on

someone other than the buyer or seller.

If a job requires a level of strength that the average woman cannot typically achieve, then interviewing and hiring no women would be an example of

statistical discrimination.

poverty line

that level of income just sufficient to provide a family with a minimally adequate standard of living.

In-cash transfers differ from in-kind transfers in that

the former is more cost-effective and less bureaucratic.

The cost to taxpayers of smoking include

the increased cost of Medicaid patients who smoke.

When tax filings increase faster than increases in population, and when nearly all the extra filings are from individuals in the lower 99 percent income group,

the number of people in the top 1 percent group increases more than it would otherwise.

Which of the following is true about poor populations?

the percentage of people in households with income under the poverty line.

The negative impacts of high income inequality on the society will be less significant if

the poor believe that their poverty is a result of choices they made.

The lowering of the federal funds rate to nearly zero in 2008 is an example of the use of

the traditional tools of monetary policy.

Global environmental problems are less easily solved than those confined to a single country because

there is no effective enforcement mechanism available for solving global problems.

The stability of cartel prices is challenged because

though they increase profits, they are vulnerable to those that seek to make more profit by breaking the agreements that generated them.