Microeconomics Ch 5 Quiz – Flashcards
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One major role that the government plays in the market economy of the U.S. is:
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Setting laws governing economic activity
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Government can use its ability to coerce towards improving economic efficiency by:
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Increasing the production of output with external benefits
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Making blackmail, extortion, and other forms of private coercion illegal is one way that government:
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Reduces private-sector economic risk
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Government can raise economic efficiency through all of the following policies, except:
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Fixing the prices of various resources and products
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Government's ability to reduce private-sector economic risks through laws and regulations would encourage all of the following, except:
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Reduction of private goods and services
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The difficulties in managing government in a market economy include the following, except:
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The close resemblance of government to the "invisible hand"
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The information-aggregation problem faced by the top layers of government can make it hard for the high-level officials to: Discern
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Comprehensively assess the marginal costs and benefits of specific programs
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In assessing the efficiency of government policy, economic analysis would focus on:
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Marginal benefits versus costs of government policy and action
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Rent-seeking behavior in public choice theory refers to:
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Specific groups appealing to government for special benefits at someone else's expense
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The government would be running a budget surplus if:
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Government spends less than it collects in taxes
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Many governments end up with chronic budget deficits because:
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Many government programs are popular with voters, but hardly any voter likes paying taxes
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In the U.S., the Federal government runs a chronic budget deficit, whereas many state and local governments do not, because:
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Many state and local governments have balanced-budget laws that make deficits illegal, while the Federal government does not
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The 2010 health-care reform law commonly known as Obamacare required large companies to provide costly health insurance to their full-time workers. In response, some large companies started preferring to employ part-time workers rather than full-time employees. This is an example of:
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Unintended consequences
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One primary reason why regulatory capture may occur in an industry is that:
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People who are qualified to supervise and regulate the industry often come from the industry itself
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Loan guarantees provided by the government for specific private-sector investments tend to:
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Attract private investors into the specific project
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The provision of loan guarantees can improve economic efficiency when:
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The project supported has significant external benefits
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Political corruption occurs in the following instances, except when:
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Businesses pay property taxes and license fees
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The study of public choice theory involves the economic analysis of the following, except:
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Impact of budget deficits on the public debt
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In the U.S., society makes decisions on the direction of government policies and the provision and financing of public goods through a process that relies heavily on:
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Universal voting
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Even in a democratic government, elected officials may end up pursuing policies that go against the preferences of the people due to the following reasons, except:
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The invisible hand of the market
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Assume that Abby, Ben, and Clara are the only citizens in a community. A proposed public good has a total cost of $1000. All three citizens will share an equal portion of this cost in taxes. The benefit of the public good is $400 each to Abby, Ben, and Clara. Based on economic analysis, the public good should:
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Be produced, because the benefits are greater than the costs
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Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community. A proposed public good has a total cost of $1000. All five citizens will share an equal portion of this cost in taxes. The benefit of the public good is $220 to Abby, $210 to Ben, $210 to Clara, $180 to Joe, and $120 to Matt. Who are likely to vote in favor of this proposal?
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Abby, Ben, and Clara
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Majority voting may produce economically inefficient outcomes because it:
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Does not consider the strength of individual voters' preferences
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Inefficiencies associated with majority voting may get resolved through:
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Political logrolling
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Refer to the above table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. In a paired-choice vote between a stadium and a park:
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A majority of the voters would favor the park, 2-to-1
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Refer to the above table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. In a paired-choice vote between a jail and a stadium:
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A majority of the voters would favor the stadium, 2-to-1
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Refer to the above table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. In a paired-choice vote between a park and a jail:
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A majority of the voters would favor the jail, 2-to-1
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The sometimes inconsistent results coming from a series of paired-choice voting is due to:
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A normal consequence of majority voting
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The median-voter model indicates that political parties will:
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Try to appeal to the sentiments of the voter holding the middle position
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Assume that voters are asked to vote for either more police protection or more schools in a community. More schools are likely to win if:
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Median voters prefer that choice
