114. An industry can be defined as
a.
the group of all firms that sell a product.
b.
any company that produces and sells something.
c.
the set of buyers of a particular good or service.
d.
the top companies that sell something.
115. Government plays a role in which type of economy?
a.
only free market economies like the United States
b.
only socialist economies
c.
only mixed economies
d.
all economies
116. The role of government in a market economy includes all of the following except
a.
providing services such as national defense.
b.
collecting taxes.
c.
extensive ownership of productive resources.
d.
making and enforcing laws.
117. Comparing the United States to other economies, the United States is one of the ____ economy in the world.
a.
b.
c.
d.
118. Which of the following illustrates government acting as a referee?
a.
taxing high income persons
b.
enforcing contract provisions between buyer and seller
c.
buying new weapons for defense
d.
mailing checks to social security recipients
e.
collecting data on imports and exports
119. As Americans have become more health conscious, rules about food labels have become more complex and
stringent. This is an example of government acting as
a.
regulator.
b.
redistributor.
c.
taxer.
d.
defender.
e.
referee.
120. Which of the following is a valid reason to consider government regulation?
a.
Seeking some social objective that markets do not achieve.
b.
Fear that capitalism will prove too productive.
c.
Desire on the part of government to be useful.
d.
Requests for protection from an industry.
e.
All of the above.
121. When government defines and enforces property rights, this is an example of government as
a.
referee.
b.
regulator of business.
c.
buyer of goods and services.
d.
tax collector.
e.
redistributor.
122. Antitrust laws are designed to
a.
preserve competition.
b.
protect the environment.
c.
protect the public’s trust in the government.
d.
all of the above.
123. America’s antitrust laws are used to protect competition against possible encroachment by monopoly. This is an
example of government as
a.
regulator of businesses.
b.
buyer of goods and services.
c.
tax collector.
d.
redistributor.
124. During fiscal year 2012, the most recent mentioned in the text, the federal government spent approximately
a.
$1.7 billion
b.
$1.9 trillion
c.
$3.7 trillion
d.
$14.0 trillion
125. The largest single portion of the federal budget is devoted to
a.
National defense.
b.
Medicare and Medicaid.
c.
Social Security and unemployment compensation.
d.
Education.
e.
Interest payments on the national debt.
126. The largest single portion of state and local budgets is devoted to
a.
State and local defense.
b.
Health and public welfare programs.
c.
State and local unemployment compensation.
d.
Education.
e.
Interest payments on state and local debt.
127. Compared to people in other nations, people in the United States pay
a.
much higher taxes.
b.
somewhat higher taxes, on average.
c.
about the same amount taxes.
d.
lower taxes.
128. Despite the monies spent by the federal and state governments, many observers believe which of the following?
a.
public infrastructure such as bridges and roads is only adequate
b.
our educational system is lacking
c.
not enough monies are spent on homeland defense
d.
all of these are correct
129. In the U.S., the share of taxes ____ during the early years of George W. Bush’s presidency and ____ since then.
a.
decreased; increased somewhat
b.
decreased; further decreased
c.
increased; further increased
d.
increased; decreased somewhat
e.
increased; remained constant
130. A transfer payment is a sum of money
a.
spent by government for new goods and services.
b.
shifted between members of a household.
c.
given by government without a good or service in exchange.
d.
moved between companies for goods and services.
e.
required to pay taxes.
131. The concept of government as redistributor is
a.
approved by many, but questioned by many as well.
b.
generally rejected as against “the American way.”
c.
largely approved by a vast majority of Americans.
d.
unnecessary in the United States because income disparities are small.
e.
a conservative idea that many liberals reject.
132. The issue of inequality has become prominent because of:
a.
an increased sense of justice
b.
a decrease in the strength of capitalism
c.
the widening wage disparity
d.
none of these
133. A central government collected taxes totaling $120 billion in the previous year. It’s expenditure during the year was
roughly the same. This is an example of a
a.
balanced budget.
b.
surplus budget.
c.
deficit budget.
d.
zero budget.
134. The government redistributes income to the poor, primarily through
a.
progressive taxes.
b.
transfer payments.
c.
government purchases.
d.
both a and b.
135. Progressive income taxes are designed to
a.
make the distribution of income less equal.
b.
leave unchanged the distribution of income.
c.
let the market determine the distribution of income after taxes.
d.
make the distribution of income more equal.
136. Annual incomes of James, Jack, and Stanley are $30,000, $50,000, and $80,000 and their tax rates are 10%, 20%,
and 30% respectively. Which tax structure is this an example of?
a.
Proportional tax
b.
Progressive tax
c.
Regressive tax
d.
Digressive tax
137. A mixed economy is one in which
a.
a mixture of businesses exist and function.
b.
there is a mixture of public influence over government.
c.
government plays a dominant role, and private markets are secondary.
d.
there is some public influence over free markets.
138. The United States is a fairly good example of
a.
a mixed economy.
b.
a pure market system.
c.
a government-dominated economy.
d.
a manufacturing economy.
e.
a transitioning economy.
139. All of the following are associated with a mixed economy except
a.
some public influence over the workings of free markets.
b.
public ownership mixed in with private property.
c.
homogenization.
d.
different countries blending the state and market sectors in different ways.
140. In a mixed economy
a.
all economies choose the same mix of private and public involvement in the economy.
b.
the government is more important than the private sector in generating output.
c.
there is some government influence over the workings of the free market.
d.
all of the above.
141. Unemployment rates in the U.S. are generally:
a.
higher than in Europe
b.
lower than in Europe
c.
about the same asin Europe
d.
there are no unemployed in Europe
142. A typical American family sends about _____% of its budget on services.
a.
20%
b.
32%
c.
66%
d.
70%
143. The largest share of the typical American family budget goes to:
a.
goods
b.
health care
c.
housing
d.
transportation
Essay
144. The U.S. economy is the largest in the world. What two factors primarily explain this? What makes the U.S.
economy unique?
145. Differentiate between an open and a closed economy? Do you agree that US economy is more open among the
advanced industrial countries in the world?
146. What important changes have occurred in the composition of the labor force since 1960? Is the popular image of the
American worker as a factory worker accurate? Describe the types of jobs Americans are working in today.
147. Between 1960 and 2013 U.S. GDP, measured in dollars of constant purchasing power, expanded about 5.0 times.
However, the standard of living only increased by 4 times over this period. Explain the difference.
148. List five major economic activities of government, and give an example of each.
149. Is the image of the typical American worker as a blue-collar worker true? Substantiate your answer with facts.
150. How does the United States compare to other nations on a per capita scale as far as government production and
taxation?
151. It is often asserted that the United States no longer manufactures anything, and that instead it imports manufactured
goods from countries like China. Critically evaluate this claim.
152. A nation’s citizens often dislike the economy’s distribution of income. Explain two methods for creating a more equal
distribution of income.
153. What you mean by business cycles? What are their consequences?
154. All industrialized countries have become “service economies” in recent decades. Explain the reasons behind this
shift.
155. Define the following terms:
a.
Recession
b.
Mixed economy
c.
Transfer payments
d.
Progressive taxation
a.
A recession is a period of time during which the total output of the economy falls.
d.
A tax is progressive if the ratio of taxes to income rises as income rises.