1. Microeconomics essentially looks at how governments raise and spend their mon
ID: 452579 • Letter: 1
Question
1. Microeconomics essentially looks at how governments raise and spend their money as well as how they use their fiscal authority. (105)
a. True
b. False
2. Macroeconomics is the science that looks at how whole national economies work. (106)
a. True
b. False
3. Although classic microeconomics deals with “perfect markets,” these assumptions fail in the following cases: (106)
a. Monopolies
b. Price fixing
c. Financing of armies
d. All of the above
e. None of the above
4. The trick in microeconomic policy for the US, according to the text, is to decide how much regulation is necessary to establish a relatively fair “playing field” and very stable market environment, but balance it with as much market freedom as possible. (106)
a. True
b. False
5. What is the best term used for the economies of Russia and China before 1980? (107)
a. Absolute economy
b. Communist economy
c. Command economy
d. Socialist economy
e. Capitalist economy
6. Socialist systems still survive, but their record in the economic sphere is uniformly poor. (107)
a. True
b. False
7. Today, and for the last quarter century, capitalism has been under severe attack and its principles have been substantially eroded. (107)
a. True
b. False
8. Government can run three types of operations: those that are primary funded by taxes, those that are partially self-funded by fees and other revenues, and those that act as profit centers such as public lotteries. (108)
a. True
b. False
9. The UK took advantage of the North Sea oil reserves in the 1980s to set up a sovereign fund that today helps funds their public universities. (108-109)
a. True
b. False
10. The US state with the largest sovereign wealth fund is: (109)
a. Texas
b. Nevada
c. Alaska
d. Alabama
e. Delaware
11. A regulatory framework can be composed of different approaches. Which one is NOT discussed in the text in this regard: (110-111)
a. Safeguarding the environment
b. Safeguarding contracts and debts
c. Safeguarding labor and employees
d. Safeguarding national defense
e. Safeguarding consumers in terms of health and access to valid information
12. In addition to regulation, government can influence the private sector by financial methods such as tax breaks, subsidies, services to support business, etc. However, this approach is less used in Anglophone countries such as the US because it is out of sync with societal perceptions of how things should be done. (111)
a. True
b. False
13. An example (or examples) provided by the text of government using its “bully pulpit” includes: (111-112)
a. Supporting watchdog groups
b. Fostering neighborhood and do-good associations
c. Encouraging philanthropy
d. All of the above
e. None of the above
14. While the “buyer beware” philosophy works relatively well in simple markets, it works much less well when the goods being purchased are highly complex or ill effects of products are difficult to detect by individual buyers. (112)
a. True
b. False
15. In the last 50 years, the US and other advanced economies have largely moved from efforts to protect consumers via information symmetry, to a primary reliance on “buyer beware.” (112-113)
a. True
b. False
16. When monopolies are broken up, there is often a reduction in regulation. (113)
a. True
b. False
17. Which industry was not subject to a government-enforced break-up: (114)
a. Oil industry
b. Aluminum industry
c. Tobacco industry
d. Steel industry
e. None of the above
18. A problem for some countries with Communist parties such as Russia and China is that in the conversion to capitalist economies, they have substituted private sector monopolies for public sector monopolies. (114)
a. True
b. False
19. Which company was the subject of a price fixing scheme that resulted in many of its executives going to jail? (115)
a. Archer Daniels Midland
b. Boeing
c. American Harvester
d. Intel
e. Microsoft
20. In order, which countries held property rights in the highest regard to the lowest regard? Highestà lowest (115)
a. Germany, US, pre-1985 Soviet Union
b. US, Germany, pre-1985 Soviet Union
c. Pre-1985 Soviet Union, Germany, US
21. Which of these famous documents is a part of the US tradition of creating contracts: (116)
a. Mayflower Compact
b. Charters granted by kings of England to found and run colonies
c. The US Constitution
d. All of the above
e. None of the above
22. Tariffs constituted the vast bulk of the federal revenue before the Civil War, but today are a very minor part of the federal revenues. (116)
a. True
b. False
23. “Flat taxes” charge the same amount for a product or service. (117)
a. True
b. False
24. In terms of actual tax payments, most people pay a higher effective rate than a marginal rate. (118)
a. True
b. False
25. Federal taxes on the rich today are relatively low compared to historic highs in the twentieth century. (118)
a. True
b. False
26. The proportional size of government has been growing since World War II, from 23% in 1950 to the mid 30’s in 2012. However, the rapid expansion of the increase was slowed starting in the 1980s. (118-120)
a. True
b. False
27. The US has one of the lowest levels of taxation in the world. (121)
a. True
b. False
28. In 2013, total government employment was the smallest percentage of the population since the 1960s. (121)
a. True
b. False
29. Which statement is true since World War II: (122)
a. Federal employment has grown the most
b. State government employment has grown the most
c. Local government employment has grown the most
d. The growth of federal and local government employment has been nearly equivalent
e. None of the above
30. Which country leads the world in incarceration rates: (122)
a. Russia
b. China
c. UK
d. South Africa
e. US
31. The deficit is annual and the debt is cumulative. (123)
a. True
b. False
32. The US spends as much as the next X countries. What is X? (123)
a. The next three countries
b. The next five countries
c. The next seven countries
d. The next nine countries
e. The rest of the world
33. Fiscal constraint, resulting in reduced debt levels was greatest during the 1990s (in the last forty years), when fiscal conservatives and New Democrats cooperated on fiscal policy. (124)
a. True
b. False
34. Monetary policy is largely affected in the US by the level of interest rates making borrowing easier or harder, thus expanding or contracting the money supply. (125)
a. True
b. False
35. The problem of fiscal discipline in good times is a problem for supply side economics, just as there is the problem of inevitable downswings in the economy in Keynesian economics. (126)
a. True
b. False
36. An exception (exceptions) to the US open trade policy has been (have been): (128)
a. Wine
b. Computers
c. Corn
d. All of the above
e. None of the above
37. When the rich people in a poor country invest most of their capital in other countries because those economies are more stable and safer, it is called: (128)
a. Foreign direct investment
b. Capital flight
c. Capital conversion
d. Currency exchange transfer
e. None of the above
38. As a percentage of its economy, the US has the highest foreign direct investment of any major country in the world. (128)
a. True
b. False
Explanation / Answer
1) False
2) True
3) c ( financing of armies. they lie outside of mircroeconomics because they are not paid for by individuals.)
4) True
5) c ( Command economy )
6) false ( they have been known to be successful ranging to the most successful economies in the world)
7) false (it is seeing a lot of resurgence since the roaring 20s)
8). true
9) false (the primeminister did not elect to have a state owned oil company or sovereign fund)
10) c (alaska)
11) d (safeguarding national defense)
12) false (this is especially true for Anglophone countires)
13) d (supporting watchdog groups, fostering neighborhood and do-good associates , encouraging philanthropy)
14) true
15) false
16) false
17) d (steal industry)
18) false (conversion to capitalism is followed by the rapid ascendance of corporate empires pieced together and re-created from former state industries)
19) a (archer daniels)
20) c (Pre-1985 Soviet Union, Germany, US)
21) d (all of the above)
22) true (stared at 90% then down to 50 and now only 1%)
23) false (regressive taxes charge the same amount for product or service)
24) false (most people pay an effective rate lower than the official marginal rate)
25) true
26) false
27) false ( is is in the middle)
28) true
29) c ( local government employment has grown the most)
30) e (US)
31) true (debt is collective measure of how much is owed, deficit is annual concept.)
32) e (the rest of the world)
33) false
34) false
35) true
36) e (none of the above)
37) e (none of the above)
38) true
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