Economic Issues and Public Policy
Final Test Solutions
Course Introduction
This course explores the interplay between economic theories and real-world public policy challenges, equipping students with an understanding of how governments address issues such as poverty, unemployment, inflation, healthcare, education, and environmental sustainability. Through the analysis of contemporary case studies and economic models, students examine the rationale and effectiveness of various policy interventions, as well as their impact on different segments of the population. Emphasis is placed on critical thinking, ethical considerations, and the interpretation of empirical data to understand the complexities involved in creating and evaluating public policies aimed at promoting economic welfare.
Recommended Textbook
Economics of Social Issues 20th Edition by Ansel Sharp
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15 Chapters
1882 Verified Questions
1882 Flashcards
Source URL: https://quizplus.com/study-set/3066
Page 2
Chapter 1: Alleviating Human Misery: The Role of Economic
Reasoning
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) To correct for inflation,GDP numbers must be converted using the price level in a given year known as the
A)Base year
B)Real year
C)Current year
D)Constant year
E)Inflation year
Answer: A
Q2) The term capital as used by an economist
A)True
B)False Answer: False
Q3) The expression,"There ain't no such thing as a free lunch," only applies to goods,such as cars,not to services,such as health care and education.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Economic Systems, Resource Allocation, and
Social Well-Being: Lessons From Chinas Transition
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) Which of the following is least consistent with the pure market economy?
A)An established legal system that arbitrates contract disputes
B)An individual accepting a job for $1 per hour
C)The institution of private property rights
D)The existence of a minimum wage
E)Private property rights
Answer: D
Q2) Equilibrium price and quantity are
A)20 and 100
B)20 and 200
C)15 and 300
D)15 and 200
E)10 and 200
Answer: D
Q3) Which of the following is NOT one of the "other things equal" underlying the demand curve?
A)Prices of resources
B)Purchasing power of buyers
C)Buyers' tastes and
Answer: A
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Chapter 3: Government Control of Prices in Mixed Systems:
Who Are the Winners and Losers
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123 Verified Questions
123 Flashcards
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Sample Questions
Q1) A firm increases the number of workers it hires from 50 to 52 and,as a result,output increases from 100 to 110.Each of the additional units of output can be sold for $2.What is the marginal product of the 52<sup>nd</sup> worker?
A)2
B)5
C)10
D)20
E)50
Answer: B
Q2) In a mixed economy,markets adjust freely and all markets are cleareD.
A)True
B)False
Answer: False
Q3) There are examples of rent controls from as early as the 1700s.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Pollution Problems: Must We Foul Our Own Nests
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128 Verified Questions
128 Flashcards
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Sample Questions
Q1) When pollution is not regulated in the market,polluting firms will
A)Under-utilize resources and charge high prices
B)Under-utilize resources and charge low prices
C)Use the appropriate level of resources,but charge high prices
D)Be very profitable
E)Over-utilize resources and charge low prices
Q2) Which of the following could explain a shift in the production possibilities curve from TT<sub>1</sub> to TT<sub>2</sub>?
A)Over-utilization of pollution control activities
B)Better techniques of pollution control
C)Higher prices for other goods and services
D)Increased benefits from pollution control
E)Better technology for producing other goods and services
Q3) The level of pollution increases when
A)A person breathes
B)Wastes are dumped into the environment
C)Wastes are dumped into the environment at a higher rate than wastes are recycled
D)New industrial plant opens
E)Recycling increases
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Page 6
Chapter 5: Economics of Crime and Its Prevention: How
Much Is Too Much
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) Suppose a poor person steals $10,000 from a middle income person.Economic analysis tells us that
A)There is an economic loss for the society as a whole
B)There is an economic gain for the society as a whole
C)A public good will usually be purchased with the money
D)We cannot be sure whether there is economic gain or loss for the society as a whole
E)The benefit to the poor person exceeds the cost to the middle income person
Q2) The efficient number of units of crime prevention is
A)1
B)2
C)3
D)4
E)5
Q3) Crime prevention is a public good and is subject to the free-rider problem.
A)True
B)False
Q4) Public goods include things like concerts and theater performances.
A)True
B)False
7
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Chapter 6: The Economics of Education: Crisis and Reform
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) Ninety percent of school-aged children attend public schools in the United States.
A)True
B)False
Q2) Increased competition in K-12 education can lead to an improved education system.
A)True
B)False
Q3) High-income students and their families are more likely to benefit from voucher programs.
A)True
B)False
Q4) What is the equilibrium number of years of education the market will provide?
A)0
B)1
C)11
D)12
E)16
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Page 8
Chapter 7: Poverty Problems and Discrimination: Why Are
so Many Still so Poor
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121 Verified Questions
121 Flashcards
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Sample Questions
Q1) The Earned Income Tax Credit (EITC)lifts millions of people out of poverty each year.
A)True
B)False
Q2) Which of the following best describes the trend in the share of income received by the lowest 20% of families in the United States? The lowest 20% of families receive
A)15% of the income,and their share has been rising since WWII
B)25% of the income,and their share has been falling since the 1960s
C)Less than 5% of the income,and their share has been slowly declining since the 1970s
D)A share of income approximately equal to that received by the top 20% of families,and their share has remained stable since the 1960s
E)10% of the income,but their share has been falling since WWII
Q3) The distribution of income among persons is determined by
A)The distribution of resource ownership
B)The prices paid for resources of different kinds in different employments
C)Government income-support programs
D)Both (a)and (b).
E)all of the above
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Page 9
Chapter 8: The Economics of Monopoly Power: Can Markets
Be Controlled
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) The 6-firm concentration ratio in this industry is
A)0.6
B)0.7
C)0.8
D)0.9
E)1.0
Q2) Like other demand curves,the demand curve facing a competitive firm slopes downwarD.
A)True
B)False
Q3) The more sellers there are in,the less control any one seller has over the price it can chargE.
A)True
B)False
Q4) Monopolies will have higher production costs than competitive firms.
A)True
B)False
Q5) Unlike in competition,the monopolist is driven by a desire to maximize profit. A)True
B)False
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Chapter 9: The Economics of Professional Sports: What Is the
Real Score
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) All professional sports clubs must operate independently to guarantee a competitive economic environment.
A)True
B)False
Q2) If a player's MRP> MCL,the player should be hired by the team.
A)True
B)False
Q3) This graph represents the labor market for a(n)
A)Monopolist
B)Competitive firm
C)Product market cartel
D)Monopsonist
E)Oligopoly
Q4) Economic analysis suggests that a free agent baseball player will earn less than an equally talented player who is not a free agent.
A)True
B)False
Q5) Antitrust laws make most cartels legal forms of business in the United States.
A)True
B)False
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Chapter 10: Competition in the Global Market-Place: Should
We Protect Ourselves From International Trade
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) Without trade,the Republic of Alpha's production possibilities curve is AB.With no trade,Alpha's consumption possibilities curve is
A)AB
B)A<sub>1</sub>B
C)CB
D)C<sub>1</sub>B
E)CC<sub>1</sub>
Q2) What do you call taxes placed on imports?
A)Tariffs
B)Quotas
C)Voluntary restraint agreements
D)Exchange rates
E)Dumping taxes
Q3) The United States currently enforces an embargo against
A)Cuba
B)Saudia Arabia
C)The European Union
D)a)and b)only
E)All of the above
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Chapter 11: Economic Growth: Why Is
Bumpy
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138 Verified Questions
138 Flashcards
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Sample Questions
Q1) Which of the following statements is true about economic growth?
A)Economic growth is a short-run process
B)Growth of an economy is generally a smooth process that occurs over time
C)Economic growth is a long-run process resulting from the compounding of many events
D)To measure economic growth,economists analyze changes in the national debt
E)The U.S.economy has never experienced a year of negative economic growth
Q2) Relative to the past,business cycles in the U.S.are becoming
A)Shorter in duration
B)More severe
C)Longer in duration
D)(a)and (b)
E)Non-existent
Q3) Which theories concerning the business cycle focus on factors outside of the economy?
A)Expectations theories
B)Inventory theories
C)Exogenous theories
D)Monetary theories
E)Theories of innovation
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Chapter 12: Money,Banking and the Financial System: Old
Problems With New Twists
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) The definition of the money supply called M1 includes all of the assets included in the definition of M2.
A)True
B)False
Q2) Silversmiths became banks when they started lending out money based upon the excess silver that they held for their customers.
A)True
B)False
Q3) A credit union is a cooperative banking venture where the members or owners of the organization have a common employer or union.
A)True
B)False
Q4) Prior to the creation of the Federal Reserve System,the money supply
A)Was very stable and highly valued
B)Was comprised of currency printed by the Department of the Treasury
C)Was produced by local banks and often traded at a discount
D)Was available only to bank depositors
E)Was comprised of gold
Page 14
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Chapter
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) The consumer price index is a true cost-of-living index.
A)True
B)False
Q2) The marginal propensity to consume is
A)Consumption divided by Income
B)The change in consumption
C)The change in consumption divided by the change in income
D)Unaffected by changes in income
E)All of the above
Q3) Which of the following individuals is part of the labor force?
A)A 15-year-old worker at a fast food restaurant
B)A paid prison worker at the prison carpentry shop
C)A college student attending school full-time
D)A stay-at-home dad
E)None of the above
Q4) An equilibrium level of national income implies the economy is operating at full employment.
A)True
B)False
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Chapter 14: Government Spending,Taxation,and the
National Debt: Who Wins and Who Loses
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125 Verified Questions
125 Flashcards
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Sample Questions
Q1) Tax equity would probably be reduced if federal tax exclusions,such as interest on state and local government securities,were eliminateD.
A)True
B)False
Q2) To assure consumers purchase the efficient quantity when there are positive external benefits,the government would lower price to
A)P<sub>2</sub>
B)P<sub>1</sub>
C)P<sub>2</sub>- P<sub>1</sub>
D)P<sub>0</sub>- P<sub>1</sub>
E)P<sub>0</sub>
Q3) Given demand curve D,if a tax independent of output is levied on this good,how much of the tax will be shifted forward?
A)None
B)One-fourth
C)Half
D)All
E)Cannot be determined
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Chapter 15: Social Security and Medicare: How Secure Is Our
Safety Net for the Elderly
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) The most simple and direct way to postpone the looming Social Security financial crisis is to
A)Invest Social Security taxes in the stock market
B)Raise Social Security taxes and/or lower benefits
C)Privatize the Social Security Administration
D)Eliminate the Social Security system and force everyone to buy private insurance
E)Subsidize Social Security with general tax revenues
Q2) Today,in the aggregate,Social Security accounts for over 35% of senior citizens' incomE.
A)True
B)False
Q3) A modest increase in taxes could postpone Social Security's financial crisis for decades.
A)True
B)False
Q4) Because Social Security increases savings,more funds are available for investment in the overall economy.
A)True
B)False
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