ECON exam 3 moodle questions

question

Does it make any difference whether health-care expenditures are paid for by the consumer or by a third party (the government or an insurance company, for example)?
answer

Yes; consumers of health care will have a stronger incentive to economize when they are buying the service with their own money.
question

During the last four decades, the share of health-care expenditures paid for by third parties (either the government or insurance companies)
answer

increased from approximately 45 percent in 1960 to over 85 percent in 2007.
question

Economic theory indicates that the growth of subsidies to healthcare consumers and accompanying expansion in third-party payments will
answer

lead to higher healthcare prices.
question

Have market forces failed in keeping healthcare costs under control?
answer

No; government regulations have undermined the operation of markets and created perverse incentives that have led to rising prices and soaring healthcare expenditures.
question

Under the current structure of Medicare, economic theory indicates that the movement of the baby boom generation into the retirement phase of life during the years following 2011 will
answer

push both healthcare prices and expenditures upward.
question

When health insurance is purchased primarily through one’s employer,
answer

it is more costly for employees to switch jobs and move to areas where jobs are available.
question

When the 2010 Patient Protection and Affordable Care Act is fully implemented, it will
answer

require all Americans to purchase health care insurance from either a private or government source.
question

When the 2010 Patient Protection and Affordable Care Act is fully implemented, it will also
answer

set the prices (reimbursement rates) for more than 7,000 different medical procedures.
question

Which of the following would help control the future costs of healthcare?
answer

allowing consumers to purchase healthcare insurance from out-of-state providers
question

Which of the following would help control the future growth of healthcare prices and expenditures?
answer

an increase in the share of healthcare cost paid for either directly or from personal medical savings accounts
question

A competitive capital market is important to society because it directs resources toward projects that
answer

create wealth.
question

Compared to investing in physical capital, human capital investments are more likely to be influenced by
answer

nonmonetary considerations.
question

Economic profit
answer

motivates entrepreneurial innovation & provides an incentive for investors to undertake risky projects.
question

If the interest rate were 10 percent, the net present value of $100 to be received one year from now would be
answer

$90.91.
question

Investment in capital goods only makes sense when
answer

the capital goods can be used to increase the future output of consumption goods.
question

The money rate of interest is the
answer

real rate of interest plus the inflationary premium.
question

The net present value of $1,000 received in the future would
answer

decrease if the interest rate rose.
question

The pure interest yield
answer

is the real price one must pay for earlier availability.
question

Which of the following is true of saving and investment?
answer

If investment is going to be undertaken, someone must save.
question

You are considering the purchase of a business that is currently earning $25,000 per year in after-tax profit. If these conditions are expected to continue year after year into the future, and the interest rate is currently 10 percent, the current market value of this business is
answer

$250,000.
question

(T/F) Positive economics cannot determine how much income inequality should be present in a country.
answer

true
question

(T/F) Critics of government action to reduce income inequality argue that modifying the market process of income determination may create perverse incentives and hurt wealth creation.
answer

true
question

Compared to low-income families, a larger proportion of high-income families
answer

is headed by a person between the ages of 35 and 64 / is headed by a person with a college degree / has both a husband and a wife who work full time
question

Data on the distribution of income among individuals and families in the United States indicate that
answer

much of the inequality in annual income emanates from differences in education, age, hours worked, and family size.
question

If complete equality of income were legislated, which of the following would economics predict?
answer

The incentive to produce and perform efficiently would be virtually eliminated.
question

Imagine two cities, Engelgrad and Legreeville, where the rich, middle, and poor income recipients in one city have annual incomes identical to their counterparts’ incomes in the other city. In Engelgrad, the poorest families one year almost always end up as the richest families the next year and become middle-income families the year after that. In Legreeville, however, the poor remain poor and the rich remain rich. Which of the following is true about the two cities?
answer

Annual data on the distribution of income will indicate that the degree of income inequality in the two cities is identical.
question

In 2009, high-income families (the top 20 percent) in the United States earned approximately ____ percent of the total before-tax income.
answer

48
question

When a person who receives welfare benefits earns income, those benefits are reduced as earned income rises. This is referred to as
answer

an implicit marginal tax.
question

Which of the following best explains why so many persons with incomes below the poverty threshold income level work very little or not at all?
answer

They confront high implicit marginal tax rates.
question

(T/F) In a market economy, the link between productivity and income provides individuals with an incentive to provide resources that are highly valued by others.
answer

true
question

Which of the following would cause the poverty threshold income level for a given family to increase by 20 percent from one year to another?
answer

a 20 percent increase in the general level of prices
question

Forests in the United States have, in recent decades,
answer

expanded substantially in the amount of wood grown.
question

Generally, the elasticity of demand for an energy source in the long run will be
answer

considerably more elastic than in the short run.
question

Higher prices for natural resources are
answer

not the story of the last two centuries, because resource prices have decline through most of this period.
question

Predictions of severe shortages due to impending natural resource depletion
answer

are typically made without adequate recognition and consideration of resource price elasticities.
question

Resource markets are like any other market in that
answer

higher prices encourage people to search for substitutes, the increase in quantity supplied in response to a higher price will generally be greater in the long run than in the short run, & the amount demanded of a resource is inversely related to its price.
question

A U.S. trade policy that restricts the sale of foreign goods in the U.S. market will
answer

reduce the demand for U.S. export goods since foreigners will be less able to buy our goods if they cannot sell to us.
question

Compared to the no-trade situation, if the United States imports shoes,
answer

the price of shoes will decline in the domestic market.
question

Hong Kong and Singapore both have relatively
answer

low trade barriers and high rates of economic growth.
question

Imposing a restrictive quota on imported plasma TVs will likely
answer

increase the price of the plasma TVs and decrease the quantity consumed.
question

International trade is advantageous because trade makes it possible for people in each country to
answer

acquire goods from foreigners more economically than they could be produced domestically.
question

Measured as a share of the economy, the size of the trade sector (exports plus imports) of the United States has
answer

approximately doubled since 1980 and tripled since 1960.
question

Suppose the United States reduced the tariff on television sets, allowing foreign-produced televisions to more freely enter the U.S. market. Which of the following would most likely occur?
answer

The price of televisions to U.S. consumers would fall, and the demand for U.S. export products would rise.
question

The political popularity of a tariff on imported goods that compete with products of a well-established domestic industry is
answer

not surprising since such a tariff would generally benefit an easily recognized interest group at the expense of uninformed, uninterested consumers.
question

Trade restrictions like tariffs and quotas will
answer

reduce the value of goods and services that we will be able to produce and consume.
question

Which of the following has resulted from the North American Free Trade Agreement (NAFTA)?
answer

the joint output of the United States, Mexico, and Canada has increased, trade between the United States and Mexico increased, & trade between the United States and Canada increased.
question

“The Great Depression was caused by the 1929 stock market crash.” Which of the following is an indication that this statement is false?
answer

The stock market had regained most of its losses from the October 1929 crash by April 1930.
question

Based on the experience of the Great Depression and the New Deal, which one of the following strategies would be most likely to stimulate recovery from a serious economic recession?
answer

keep taxes low in order to stimulate production and minimize the decline in personal and business income
question

Most economists believe the severity and duration of the Great Depression was primarily the result of
answer

a sharp contraction in the money supply.
question

Which of the following resulted from the Smoot-Hawley trade bill of 1930?
answer

Many countries responded by imposing higher tariffs on American products, and the volume of international trade fell sharply.
question

Which of the following was a result of the many programs introduced as part of the New Deal?
answer

a business environment of uncertainty that reduced output and investment

Get instant access to
all materials

Become a Member