Question 1

The amendment to the U.S. Constitution that granted the federal government the authority to collect income taxes was the

Accepted Answer

A)   8th.
B)   16th.
C)   26th.
D)   28th.

Question 2

Social demand is equal to

Accepted Answer

A)   Market demand plus or minus externalities.
B)   Public demand plus or minus externalities.
C)   Tax revenue plus or minus externalities.
D)   Private goods plus or minus externalities.

Question 3

Antitrust activity addresses

Accepted Answer

A)   Market power.
B)   Inequity.
C)   Macro instability.
D)   Public goods.

Question 4

A proportional tax is one that

Accepted Answer

A)   Rises as income rises.
B)   Falls as income rises.
C)   Is collected voluntarily for specific expenditure purposes.
D)   Collects the same rate on every dollar of income.

Question 5

An externality affecting demand can be measured graphically as the

Accepted Answer

A)   Horizontal distance between the market demand curve and the social demand curve.
B)   Vertical distance between the market demand curve and the social demand curve.
C)   Height of the social demand curve at all points.
D)   Height of the market demand curve at all points.

Question 6

If you burn garbage in your backyard and the smoke damages a neighbor's house, the damage is considered an externality.

Accepted Answer

A) True 
 B)False  True

Question 7

Approximately what percentage of state and local expenditures do bond referenda account for?

Accepted Answer

A)   1 percent.
B)   10 percent.
C)   25 percent.
D)   50 percent.

Question 8

Markets will underproduce goods that yield external benefits and overproduce those that generate external costs.

Accepted Answer

A) True 
 B)False  True

Question 9

In the United States, direct expenditures for governments between 1933 and 1943

Accepted Answer

A)   Trended up for state and local governments and down for the federal government.
B)   Trended down for state and local governments and up for the federal government.
C)   Trended down for all governments.
D)   Trended up for all governments.

Question 10

Which of the following occurs when the economy experiences inflation?

Accepted Answer

A)   Government failure.
B)   Micro instability.
C)   Macro instability.
D)   The free-rider problem.

Question 11

Externalities

Accepted Answer

A)   Occur because of government failure.
B)   Are the costs or benefits of market activities that "spill over" onto third parties.
C)   Occur because of selfish consumers.
D)   Occur because demand is hidden.

Question 12

Social demand equals market demand plus externalities when there are positive external benefits.

Accepted Answer

A) True 
 B)False

Question 13

A progressive tax system is one in which tax rates rise as incomes rise.

Accepted Answer

A) True 
 B)False

Question 14

According to cost-benefit analysis, a government project should be undertaken as long as the

Accepted Answer

A)   Opportunity costs exceed the welfare benefits.
B)   Benefits exceed the opportunity costs.
C)   Benefits equal the costs.
D)   Voters approve the project.

Question 15

Which of the following is most likely a private good?

Accepted Answer

A)   Cars.
B)   National defense.
C)   Sidewalks.
D)   The administration of justice.

Question 16

Which of the following justifies the federal government's role in antitrust enforcement?

Accepted Answer

A)   Inequity.
B)   Public goods and externalities.
C)   Market power.
D)   Macro failure.

Question 17

Government waste implies that the public sector is not producing as many services as it could with the resources at its disposal.

Accepted Answer

A) True 
 B)False

Question 18

As long as a public sector activity will generate benefits regardless of the costs, the activity should definitely be undertaken.

Accepted Answer

A) True 
 B)False

Question 19

If public goods were marketed like private goods, then

Accepted Answer

A)   Public goods would be efficiently produced.
B)   People would wait for others to pay.
C)   Market failure would not occur.
D)   Society would be closer to achieving the optimal mix of output.

Question 20

Monopolies

Accepted Answer

A)   Have great productive efficiency and are always beneficial to society.
B)   May be beneficial to society if they are allowed to act like monopolies without government interference.
C)   May be beneficial to society if they are natural monopolies and are regulated.
D)   Are never beneficial to society. C

Exam 4: The Role of Government

The amendment to the U.S. Constitution that granted the federal government the authority to collect income taxes was the

Correct AnswerverifiedShow Answer

Social demand is equal to

Correct AnswerverifiedShow Answer

Antitrust activity addresses

Correct AnswerverifiedShow Answer

A proportional tax is one that

Correct AnswerverifiedShow Answer

An externality affecting demand can be measured graphically as the

Correct AnswerverifiedShow Answer

If you burn garbage in your backyard and the smoke damages a neighbor's house, the damage is considered an externality.

Correct AnswerverifiedTrue

Approximately what percentage of state and local expenditures do bond referenda account for?

Correct AnswerverifiedShow Answer

Markets will underproduce goods that yield external benefits and overproduce those that generate external costs.

Correct AnswerverifiedTrue

In the United States, direct expenditures for governments between 1933 and 1943

Correct AnswerverifiedShow Answer

Which of the following occurs when the economy experiences inflation?

Correct AnswerverifiedShow Answer

Externalities

Correct AnswerverifiedShow Answer

Social demand equals market demand plus externalities when there are positive external benefits.

Correct AnswerverifiedShow Answer

A progressive tax system is one in which tax rates rise as incomes rise.

Correct AnswerverifiedShow Answer

According to cost-benefit analysis, a government project should be undertaken as long as the

Correct AnswerverifiedShow Answer

Which of the following is most likely a private good?

Correct AnswerverifiedShow Answer

Which of the following justifies the federal government's role in antitrust enforcement?

Correct AnswerverifiedShow Answer

Government waste implies that the public sector is not producing as many services as it could with the resources at its disposal.

Correct AnswerverifiedShow Answer

As long as a public sector activity will generate benefits regardless of the costs, the activity should definitely be undertaken.

Correct AnswerverifiedShow Answer

If public goods were marketed like private goods, then

Correct AnswerverifiedShow Answer

Monopolies

Correct AnswerverifiedC

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True

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True

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C