ECON EXAM 3
The federal government shortfall in revenue versus spending will likely be around 5 to 7% of GDP over the next decade because (choose the best answer): A) Of increasing transfer payments for Social Security and Medicare B) Of increasing expenditures for student loans C) None of these answers is correct D) Of increasing expenditures for infrastructure
A
Which of the following factors is generally true for the countries of Africa (choose the best answer): A) All of these answers B) Instability and violence among and within many countries have created large refugee populations C) At today's low income per capita levels, it is very difficult for governments to find the funds (taxes) needed to provide public goods like infrastructure D) Almost all of the world population increase during the rest of the century will likely take place in Africa
A
Which of these items is an objective of a government tax system (choose the best answer): A) All of these answers are correct B) Keep the tax base broad C) Raise money to pay for government operations D) Keep the tax system fair, simple and enforceable
A
You are running for City Council because you believe your town needs a larger water system to support the growth being experienced in the city. You are advocating (choose the best answer): A) For the expansion of a public good B) For your company that makes water pumps C) For your friends who own property that people will buy to live on when they move to town D) None of these answers is correct
A
In comparing the US total tax system to other high income countries: A) The overall tax structure in high income countries tends to be more regressive on average than the US structure B) All of these answers are correct C) Household income taxes in the US account for about twice the share of total taxes that they do in other high income countries D) Sales (or consumption) taxes in the US account for about half the share of total taxes that they do in other high income countries
B
In thinking about challenges faced by national economies, we should (choose the best answer): A) Choose the right tool - market or government - for the circumstance faced and the goals to be achieved B) All of these answers are correct C) Be ready to accept solutions that involve compromise D) Be ready to accept solutions that solve just a part of the challenge
B
Japan and the countries of Europe face which of the following challenges (choose the best answer): A) Whether or not to allow immigration and, if so, how best to deal with immigration going forward B) All of these answers are correct C) Declining total and labor force populations D) The likelihood that military expenditures will need to increase
B
Military spending by the United States (choose the best answer): A) Equals about $400 billion per year, about the same as other countries in the world B) Equals about $800 billion per year, much higher than any other country in the world C) Equals about $400 billion per year, much higher than any other countries in the world D) Equals about $800 billion per year, about the same as other high income countries
B
Since 1970, federal, state and local government's annual share of economic resources has (choose the best answer): A) Grown from 47 to 52% of Gross Domestic Product B) Grown from 32% to 37% of Gross Domestic Product C) Grown from 52 to 57% of Gross Domestic Product D) Grown from 17 to 22% of Gross Domestic Product
B
The essential economic question about any market is (choose the best answer): A) Is the price offered by suppliers fair? B) Is there enough competition? C) Can I get it in my size? D) Is there plenty of product to go around?
B
Which of the following drives increases in productivity (choose the best answer): A) Investment in research B) All of these answers are correct C) Human capital investment D) Physical investment
B
_______________ make their economic decisions based on their goals for Profit andInvestment Returns (Target Profit and Cost of ownership
Businesses
Improved living standards are primarily a function of (choose the best answer): A) Climate B) Our feeling of general well being C) Increased productivity D) None of these answers is correct
C
In designing a tax system, tax rates should not be so high as to (choose the best answer): A) Significantly hinder incentives to work B) Significantly hinder sales of goods and services C) Both these answers are correct
C
In designing a tax system, to keep the tax base broad (choose the best answer): A) All of these answers are correct B) We should use the highest tax rates we possibly can C) We should keep exceptions and exclusions from taxation to a minimum D) We should only use income taxes to fund government programs
C
In thinking about challenges faced by national economies, we should work to understand that (choose the best answer): A) Policies and solutions will typically require tradeoffs B) Policies and solutions will likely be imperfect C) All of these answers are correct D) Policies and solutions will likely have unintended consequences
C
Over the last 75 years, US productivity growth has averaged (choose the best answer): A) About 0.25% per year B) About 5% per year C) About 1.5% per year D) None of these answers are correct
C
Over the last fifty years, the Federal Government has (choose the best answer): A) None of these answers is correct B) Spent less than it earned in taxes C) Spent more than it earned in taxes D) Spent about what it earned in taxes
C
Which of the following are public goods or services (choose the best answer): A) Law enforcement B) Basic research C) All of these answers are correct D) National currency
C
- Goods and services are Produced • Production Generates Income • Income Supports Purchases of Goods and Services
Cycle of the economy
According to research done by The Tax Foundation (choose the best answer): A) The US tax system is fair B) The US tax system completely funds all government expenditures C) None of these answers is correct D) Including transfers, the overall US tax system is progressive with regard to households
D
As a percentage of Gross Domestic Product, the United States (choose the best answer): A) Spends about the same on healthcare than other high income countries and obtains better health outcomes B) Spends much less on healthcare than other high income countries and obtains no worse health outcomes C) None of these answers is correct D) Spends much more on healthcare than other high income countries and obtains no better health outcomes
D
Because of their structure and our political process (choose the best answer): A) Focused special interests can capture resources for their own benefit at the expense of the general interests of society B) Governments often struggle to be efficient in their operations because they don't face the pressures of competition C) Governments struggle to offer the diversity and variety of products and services that competitive markets can offer D) All of these answers are correct
D
High per capita income countries tend to (choose the best answer): A) Also have robust freedoms, rights and liberties B) Be attractive destinations for immigrants from an economic standpoint C) Have a very low percentage of their labor force working in agriculture D) All of these answers are correct
D
In determining the total burden of taxation on households (choose the best answer): A) None of these answers is correct B) We should only include federal taxes C) We should include only state and local taxes D) We must consider all the taxes and transfers paid and received by households as a percentage of income
D
In high income countries with advanced financial sectors (choose the best answer): A) Government doesn't need to raise funds through taxation for public investment B) None of these answers is correct C) Savings is usually misallocated through speculative investments in the stock market D) Banks serve the purpose of allocating savings into private investment through loans
D
In the competition between the United States and China for influence among the nations of the world: A) Smart leadership among non-aligned countries will attempt to play the United States against China and vice versa in order to gain benefits and resources B) The rational leaders of both countries understand that world stability and order are in the best interest of themselves and their peoples C) Africa's importance will increase due to its resources D) All of these answers
D
Our government has coercive power (choose the best answer): A) That is directed and also constrained by our political process B) To lay and collect taxes C) To redirect resources within our economy away from the private sector in order to address social priorities D) All of these answers are true
D
Over the next decade, the Federal Government (choose the best answer): A) Is likely to take some share of economic resources away from State and Local Governments B) None of these answers is correct C) Is likely to command a smaller share of resources as a percent of GDP than in the past D) Is likely to command a higher share of resources as a percent of GDP than in the past
D
The current average African fertility rate (choose the best answer): A) Is among the lowest in the world B) Is about the same as the average fertility rate for India and China C) None of these answers is correct D) Is about twice that of the natural replacement rate of 2.1 children per woman
D
The largest sources of federal tax revenues are (choose the best answer): A) Sales taxes and property taxes B) Corporate income taxes C) Import taxes D) Individual income taxes, social security and Medicare taxes
D
Which of the following are characteristics of public goods (choose the best answer): A) Their use by one person does not exclude use by others B) They will not be supplied by private firms on their own C) They are available to everyone D) All of these answers are correct
D
Which of these products and services is a public good or service (choose the best answer): A) Our professional baseball, basketball and football leagues B) Semiconductor manufacturing C) Video streaming services D) The lock and dam system on the Mississippi River
D
Total and labor force population beginning a steady decline Net migration rate - Disruptive in many countries; heavy refugee volume from Africa,Middle East and Ukraine Gross Domestic Product - Combined, third largest economy in the world Healthcare expenditure per capita - 1/3 to ½ lower than US with equal or betteroutcomes
Europe
Over the last fifty years, State and Local Governments have (choose the best answer): A) Spent about what they earned in taxes B) Spent more than they earned in taxes C) Spent less than they earned in taxes D) None of these answers is correct
A
The change in the allocation of resources going through US Federal, State and Local Government over the last fifty years has been driven by (choose the best answer): A) All of the above answers are correct B) A decrease in the share going to defense spending C) An increasing share of resources going to transfer payments D) A small increase in share going to pay interest on government debt
A
The essential question in macroeconomics is (choose the best answer): A) How active should the government be in managing the economy? B) How much taxation can citizens stand? C)How low can we push the unemployment rate? D) What will the Federal Reserve do with interest rates?
A
World population is expected to top out at about ______ billion people during the last quarter of the century
10 t0 11
The US Federal, State and Local Government's current allocation of economic resources (choose the best answer): A) Is on the low end of the distribution of government spending in high income countries B) Is about in the middle of the distribution of government spending in high income countries C) Has ranged from the high end to the low end of the distribution of government spending in high income countries D) Is on the high end of the distribution of government spending in high income countri
A
The world average fertility rate will likely drop below the _____ replacementlevel sometime in the middle of the century
2.1
A unique feature associated with correcting the negative externalities of green house gases World-wide is (choose the best answer): A) There is no governmental institution in the world that can compel and enforce corrections B) Governments have so far been very willing to give up a major portion of their sovereignty in order to declare and enforce corrections C) The tax payers of high income countries are totally in agreement with paying for the costs of corrections for emerging economy nations
A
For an economy as a whole, where do the funds come from to pay for investment (choose the best answer): A) All of these answers are correct B) Taxes that go to fund public investment C) Savings out of the profits of businesses D) Savings from households
A
In thinking about the role of competitive markets and government in the US economy, since the end of WWII, society has tended to (choose the best answer): A) Alternate its emphasis between one or the other B) Always emphasize government over competitive markets C) Emphasize both about equally D) Always emphasize competitive markets over government
A
An owner determines that a business should earn a Target Profit of $20 million on a Total Investment of $100 million (choose the best answer): A) The business owner's Actual Profit is $20 million B) The business owner's Cost of Ownership is 20% C) The business owner's Return on Investment is 20% D) None of these answers is correct
B
Government spending on public goods in 2022 was (choose the best answer): A) Roughly 5% of the $27 trillion total gross expenditures for the US economy B) Roughly 20% of the $27 trillion total gross expenditures for the US economy C) Roughly 75% of the $27 trillion total gross expenditures for the US economy D) Roughly 50% of the $27 trillion total gross expenditures for the US economy
B
If United Nations population projections are correct (choose the best answer): Hide answer choices The average age of the world's population will decline over the coming decades A) All of these answers are correct B) The world's population of work force age will level out later in the 21st century C) Correct answer D) The world's population will grow to 15 billion people by the end of the 21st century
B
In a progressive structure for income taxes (choose the best answer): A) As household incomes rise, taxes as a percentage of income remain stable B) As household incomes rise, taxes as a percentage of income rise C) None of these answers is correct D) As household incomes rise, taxes as a percentage of income decline
B
In an economy as a whole, if people and businesses don't save out of income and profits and public investment isn't funded by taxes (choose the best answer): A) None of these answers is correct B) Productivity and living standards won't improve C) Housing costs would be lower D) Everybody will be richer
B
In comparing China and India (choose the best answer): A) Both have about the same populations today B) All these answers are correct C) China's per capita income is about three times that of India today D) India's total and labor force populations are expected to grow while China's are expected to decline
B
____________ makes its economic decisions based on prioritiesdetermined through the political process
Government
How much was earned?
Gross domestic income
How much was produced?
Gross domestic product
How much was purchased?
Gross domestic purchases
4 primary categories of participants in a national economy
Households • Businesses • Government (Federal, State and Local) • Other countries (US exports and imports)
Improved ____________ are a function of increasing productivity
Standards of living
Positive migration supports continued growth and offsets low fertility rate• Refugee streams from Central America to US border are heavy Healthcare expenditure per capita - 1.5 to 2x high income countries• Military expenditures in total dollars are far higher than any other country
U.S.
About half of the CO2 emitted in the world in 2017 came from the_____ the ______ and _________
US, the EU and China
Our economy is primarily focused on providing goods and services for ___________
households
____________ make their economic decisions based on their individual andvarious needs, wants, preferences and ability to pay
households
Gross Domestic Product = Gross Domestic ___________
income
