Economic Policy Test
Preparation
Course Introduction
Economic Policy examines the principles, tools, and outcomes of government intervention in the economy. Through the study of fiscal, monetary, and regulatory policies, students analyze the objectives behind these measures, such as promoting growth, reducing unemployment, and controlling inflation. The course covers policy design, implementation challenges, and the evaluation of economic outcomes, with an emphasis on both global and domestic contexts. Students will engage with historical and contemporary case studies to understand the effectiveness and unintended consequences of various policy decisions, preparing them to critically assess current economic issues and policy debates.
Recommended Textbook
Economics and Contemporary Issues 8th Edition by Ronald Moomaw
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18 Chapters
1602 Verified Questions
1602 Flashcards
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Page 2
Chapter 1: Economic Growth: an Introduction to Scarcity and Choice
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89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/32407
Sample Questions
Q1) Oil deposits found on the north slope in Alaska would be an example of:
A) land.
B) labor.
C) capital.
D) natural resources.
Answer: A
Q2) During 1970s and 1980s, a period of rapid scientific advances:
A) technical change grew at an unprecedented rate in the manufacturing sector.
B) technical change all but disappeared from the U.S. economy.
C) there were positive changes in technical efficiency in the manufacturing sector.
D) labor productivity growth in the manufacturing sector was greater than it was during the 1960s.
Answer: B
Q3) Refer to Housing. The sacrifice of moving from point B to point A is:
A) 850 units of housing.
B) 75 units of housing.
C) 100 units of cars.
D) 200 units of cars.
Answer: C
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Chapter 2: An Introduction to Economic Systems and the Workings
of the Price System
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94 Verified Questions
94 Flashcards
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Sample Questions
Q1) One of the economic outcomes determined by the choices people make in an economic system is the quantities of various goods and services to be produced.
A)True
B)False
Answer: True
Q2) In a market economy, consumers are assumed to:
A) pursue profits.
B) pursue their self-interest.
C) pursue revenues.
D) pursue what is best for society.
Answer: B
Q3) Prices changed very little in the former command economies. Why do you think this to be the case?
Answer: The student should discuss the fact that it is costly to change prices because a single price change causes many other prices to change. In addition, because the price changes can be traced to a specific individual or agency, it can be costly politically to change prices.
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Page 4
Chapter 3: Competitive Markets and Government Policy: Agriculture
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138 Verified Questions
138 Flashcards
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Sample Questions
Q1) Members of Congress trading votes to pass legislation of interest to each other is called Logrolling.
A)True
B)False
Answer: True
Q2) Suppose the price of wheat used in producing bread decreases. The equilibrium price of bread will decrease and the equilibrium quantity of bread will increase.
A)True
B)False
Answer: True
Q3) Suppose the price of cheese increases. This will result in:
A) a decrease in demand.
B) a decrease in quantity demanded.
C) an increase in supply.
D) a decrease in quantity supplied.
Answer: B
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Chapter 4: Efficiency in Resource Allocation:
We Have How Much Do We Want
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49 Verified Questions
49 Flashcards
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Sample Questions
Q1) Refer to Diagram 4-2. In the above diagram, counting the external benefits increases total costs by area:
A) Q BCQ
B) Q ACQ
C) ABC
D) P AQ
Q2) Which of the following is an example of market failure?
A) Monopoly.
B) Rent controls.
C) Agricultural price support.
D) Taxes.
Q3) Pollution is an example of external costs.
A)True
B)False
Q4) Refer to Wages. Employment loss from government imposing a minimum wage is given by:
A) N<sub>1</sub>.
B) N<sub>2</sub>.
C) N<sub>3</sub>-N<sub>1</sub>.
D) N<sub>2</sub>-N<sub>1</sub>.
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Chapter 5: Market Power: Does It Help or Hurt the Economy
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93 Verified Questions
93 Flashcards
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Sample Questions
Q1) The benefit the monopolist receives when it produces and sells an additional unit of output is measured by:
A) the monopolist's demand price.
B) the monopolist's total revenue.
C) the monopolist's marginal revenue.
D) the monopolist's profit.
Q2) According to the marginal principle, profits are maximized when marginal revenue exceeds marginal cost.
A)True
B)False
Q3) Most U.S. industries with market power are oligopolies.
A)True
B)False
Q4) The existence of market power:
A) makes markets impersonal because the firms are so large.
B) gives consumers greater choice.
C) makes firms more responsive to consumer demand.
D) give consumers less choice.
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Chapter 6: Air Pollution: Balancing Benefits and Costs
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85 Verified Questions
85 Flashcards
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Sample Questions
Q1) On a nationwide basis, many areas of the country still do not meet the NAAQS.
A)True
B)False
Q2) Refer to Miles. In the absence of any government regulation individuals will travel:
A) 1,000 miles.
B) 1,500 miles.
C) 2,000 miles.
D) between 1,500 and 2,000 miles.
Q3) The provisions of the Clean Air Act Amendments of 1990 that are designed to achieve ground-level ozone standards probably imposes a net loss on society.
A)True
B)False
Q4) Which of the following is not an external cost attributed to the automobile?
A) air pollution
B) congestion
C) noise
D) purchase price of gasoline
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8
Chapter 7: Health Care: How Much for Whom
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70 Verified Questions
70 Flashcards
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Sample Questions
Q1) Federal tax exemptions for health insurance benefits can cause the individual's bottom line cost of health insurance to decline.
A)True
B)False
Q2) The physician practice of prescribing medical procedures in order to avoid malpractice suits is known as:
A) physician sovereignty.
B) physician-induced demand.
C) protective medicine.
D) defensive medicine.
Q3) What policies might be undertaken in an attempt to increase the efficiency of the health care system?
Q4) Dr. Smith orders Robert to undergo medical tests of questionable effectiveness in order to increase his income. This is an example of:
A) physician sovereignty.
B) physician-induced demand.
C) protective medicine.
D) defensive medicine.
Q5) What factors are the largest contributors to excess health care spending?
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Chapter 8: Crime and Drugs: a Modern Dilemma
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104 Verified Questions
104 Flashcards
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Sample Questions
Q1) "If relatively more drug users are addicts rather than casual users, prohibition will be more effective." Is this statement true or False? Defend your answer.
Q2) "Responsible individuals should have the right to engage in drug use as long as no substantial, involuntary harm is imposed on a third party." This is an example of:
A) the libertarian principle that favors the legalization of drugs.
B) the relative paternalistic principle that favors the legalization of drugs.
C) a rationalization used by users of drugs in order to justify their actions.
D) an irresponsible argument for drug use often put forth by the press and politicians who envision the generation of substantial governmental revenues as a result of legalization.
Q3) The marginal social benefit of crime control:
A) increases as additional units are provided.
B) decreases as additional units are provided.
C) is constant as additional units are provided.
D) increases as additional units are provided, but increases at a decreasing rate.
Q4) Evaluate the following statement. "In order for society to function efficiently, drug use needs to be eliminated."
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Page 10
Chapter 9: College Education: Is It Worth the Cost
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71 Verified Questions
71 Flashcards
Source URL: https://quizplus.com/quiz/32415
Sample Questions
Q1) Often, subsidies to education are justified because of the external benefits created by education. Using this argument, do you think it would be easier to justify the subsidies going to secondary or higher education?
Q2) The rate of return is defined as:
A) the discount rate that makes present value of costs equal to present value of benefits.
B) the discount rate that makes the present value of net benefits greater than 1.
C) the discount rate that makes present value of benefits greater than the present value of costs.
D) the discount rate that makes the present value of net benefits less than 1.
Q3) Which is not a nonmonetary benefit to the student?
A) better health
B) increased lifetime earnings
C) enhanced value of leisure
D) better decision making.
Q4) Spillover benefits can easily be value.
A)True
B)False
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11
Chapter 10: Educational Reform: the Role of Incentives and Choice
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79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/32416
Sample Questions
Q1) Teachers in the U.S. must operate in a system where government interferes with their professional judgment by imposing mandates and non-academic objectives.
A)True
B)False
Q2) Which of the following is true about privatization?
A) Privatizing public schools would increase the political influence in the education system.
B) Private incentives distort costs and benefits hence reduce efficiency.
C) Privatization would introduce market incentives into the U.S. educational system.
D) Privatization would not introduce market incentives into the U.S. educational system.
Q3) Refer to MBA. High-stakes testing is incorporated into public schools, what might be the expected result?
A) Marginal benefits shift from MBA<sub>1</sub> to MBA<sub>2</sub>.
B) Achievement declines from A<sub>2</sub> to A<sub>1</sub>.
C) No change is predicted.
D) Marginal benefits shift from MBA<sub>2</sub> to MBA<sub>1</sub>.
Q4) What are the two arguments for government support of secondary education?
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Chapter 11: Poverty: Old and New Approaches to a
Persistent Problem
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96 Verified Questions
96 Flashcards
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Sample Questions
Q1) Evidence indicates that the unexplained differences in pay between white males and other workers is:
A) relatively large.
B) relatively small.
C) growing at a relatively rapid rate.
D) is nonexistent.
Q2) Congress, under the Family Support Act of 1988,
A) required states to expand Medicaid coverage for up to 12 months for families leaving AFDC for work.
B) broke the direct link between eligibility for cash assistance and Medicaid.
C) provides coverage to all children younger than six living in families with incomes below 133 percent of the federal poverty level, once the TMA is exhausted.
D) All of the above.
Q3) Suppose the basic benefit is 300, the benefit reduction rate is 70 percent, and net income is zero. What is the amount of the benefit?
Q4) Suppose the benefit is $400, the basic benefit is $600, and the benefit reduction rate is 20 percent. What is net income?
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Chapter 12: Tracking and Explaining the Macroeconomy
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116 Verified Questions
116 Flashcards
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Sample Questions
Q1) Refer to GDP. In the diagram above, unemployment is likely to be the greatest problem at point:
A) A.
B) B.
C) C.
D) D.
Q2) Expansionary monetary policy refers to:
A) an increase in the growth rate of the money supply.
B) a decrease in the growth rate of the money supply.
C) a decrease in the growth rate of bank deposits.
D) increased taxes.
Q3) As the price level increases, consumers increase their borrowing in order to maintain purchasing power. As a result of this increased borrowing, the interest rate rises and investment falls. This is an example of:
A) the interest rate effect.
B) the real balance effect.
C) the valuation effect of prices.
D) the substitution effect.
Q4) Refer to Imports. What is GDP?
Q5) Refer to Imports. What is net investment?
Page 14
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Chapter 13: Unemployment: the Legacy of Recession, Technological
Change, and Free Choice
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101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/32419
Sample Questions
Q1) Expansionary monetary policy refers to:
A) an increase in the growth rate of the money supply.
B) a decrease in the growth rate of the money supply.
C) a decrease in the growth rate of bank deposits.
D) increased taxes.
Q2) Individuals are considered unemployed if they do not have a job.
A)True
B)False
Q3) Suppose the population 16 of years of age or older is 3,000,000, the number of people in the civilian labor force is 2,225,000, and the number of unemployed is 117,925. The unemployment rate is:
A) 7.4 percent.
B) 5.3 percent.
C) 3.9 percent.
D) 3 percent.
Q4) Evaluate the following statement. "A computerized national job bank would significantly reduce frictional unemployment."
Q5) Refer to Labor Force. Calculate the unemployment rate to the nearest hundredth.
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Q6) Refer to Labor Force. Calculate the number of persons in the civilian labor force.
Chapter 14: Inflation: a Monetary Phenomenon
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103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/32420
Sample Questions
Q1) Demand deposits are:
A) time deposits that banks must pay to depositors upon demand.
B) checking accounts at commercial banks, savings institutions, and credit unions.
C) checking accounts at commercial banks.
D) commercial bank deposits at one of the twelve Federal Reserve Banks.
Q2) According to the quantity theory of money:
A) the growth rate in the money supply is constant.
B) velocity is constant.
C) the price level is constant.
D) the growth rate in nominal GDP is constant.
Q3) The consumer price index (CPI) is:
A) a weighted average of the prices of goods and services purchased by a typical urban household.
B) a weighted average of the prices of goods and services purchased by all consumers in the economy.
C) a weighted average of the prices of all final goods and services produced in the economy.
D) a weighted average of the prices of all intermediate goods and services produced in the economy.
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Page 16
Chapter 15: Sustained Budget Deficits:
Run a Government
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84 Verified Questions
84 Flashcards
Source URL: https://quizplus.com/quiz/32421
Sample Questions
Q1) Medicare, medicaid, and Social Security are the major sources of the forecasted long run deficit.
A)True
B)False
Q2) Can deficits can have a positive effect on the economy?
A) No, never.
B) Yes, in the short-run if the economy is at less than full employment.
C) Yes, in the long-run if the economy is at less than full employment.
D) Yes, in the short-run if the economy is at more than full employment.
Q3) One of the main problems with a large national debt is the fact that:
A) it may cause the government to go bankrupt.
B) large sums of money must be raised to ultimately repay the debt.
C) the debt may drive up interest rates and slow the rate of capital formation.
D) the repayment of interest causes a burden in that there will be fewer goods and services available.
Q4) It is desirable for the federal government to borrow, provided that the money is spent on projects that yield a flow of future benefits sufficient to repay the loan.
A)True
B)False
Page 17
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Chapter 16: Social Security: Leading Issues and Approaches to Reform
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65 Verified Questions
65 Flashcards
Source URL: https://quizplus.com/quiz/32422
Sample Questions
Q1) Social Security is indexed for inflation, while private insurance is not.
A)True
B)False
Q2) Which of the following statements concerning Social Security is correct?
A) Workers and employers appear to share the burden of the payroll tax equally.
B) Rates of return based only on monetary benefits and costs average 4-5%.
C) Rates of return based only on monetary benefits and costs average 1-2%.
D) There are no non-monetary benefits associated with Social Security.
Q3) The ratio of primary insurance amount (PIA) to average indexed monthly earnings (AIME) decreases as income increases.
A)True
B)False
Q4) Refer to Payroll. In the absence of a payroll tax, labors' earning will equal the area:
A) G + K + F
B) G + K
C) F
D) G + K + F + B + C
Q5) Who bears the burden of the Social Security payroll tax?
Page 18
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Chapter 17: International Trade: Beneficial, but
Controversial
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88 Verified Questions
88 Flashcards
Source URL: https://quizplus.com/quiz/32423
Sample Questions
Q1) Which economist developed the idea of comparative advantage:
A) John M. Keynes
B) David Ricardo
C) Adam Smith
D) Alfred Marshall
Q2) The U.S. government has agreed with the Rubber Thread Industry of America that a 15% tax should be levied on all rubber thread that enters the United States from foreign countries. This is an example of a:
A) quota.
B) tariff.
C) voluntary export restraint.
D) global approach to international trade agreements.
Q3) Suppose the U.S. demand for Japanese cars increases. Which of the following would most likely result in the greatest increase in price?
A) tariff.
B) quota.
C) export tax.
D) voluntary import restraint.
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Chapter 18: Financing Trade and the Trade Deficit
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77 Verified Questions
77 Flashcards
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Sample Questions
Q1) Suppose the exchange rate is $0.01 per ¥ 1. A SONY television selling for ¥ 30,000 in Tokyo would be sell for ____ in New York.
A) $100.
B) $300.
C) $350.
D) $400.
Q2) Refer to Exchange Rate. Suppose the exchange rate is currently E . In this case, there is:
A) an excess demand for dollars and the exchange rate will fall.
B) an excess demand for dollars and the exchange rate will increase.
C) an excess supply of dollars and the exchange rate will fall.
D) an excess supply of dollars and the exchange rate will increase.
Q3) Suppose a country has $500 million in exports, $600 million in imports, and $50 million in net unilateral transfers. The balance in its capital account must be:
A) -$100 million.
B) +$100 million.
C) -$50 million.
D) +$50 million.
Q4) If 1 dollar can be traded for 5 francs, how many dollars will 1 franc buy?
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