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| 1 | |
A good example of a public good is ___________. |
| | A) | public transport |
| | B) | the national health service |
| | C) | national defence |
| | D) | rail transport |
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| 2 | |
A ________ payment requires no good or service in return during that time period. |
| | A) | positive |
| | B) | negative |
| | C) | unfair |
| | D) | transfer |
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| 3 | |
The marginal tax rate is the fraction of the ___________________ paid in tax. |
| | A) | last pound of income |
| | B) | last pound spent |
| | C) | last pound saved |
| | D) | first pound of income |
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| 4 | |
Direct taxes are taxes on _________________. Indirect taxes are taxes on _________________. |
| | A) | spending and output, income and wealth |
| | B) | income and wealth, spending and output |
| | C) | income and spending, wealth and output |
| | D) | wealth and output, income and spending |
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| 5 | |
If you eat an ice cream nobody else can eat that particular ice cream, so it must be a _______ . |
| | A) | merit good |
| | B) | public good |
| | C) | private good |
| | D) | indifferent good |
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| 6 | |
If the consumption of a good by one person does not reduce the quantity available by others and nobody can be easily excluded from consumption, we are referring to a _______ . |
| | A) | private good |
| | B) | merit good |
| | C) | public good |
| | D) | abundant good |
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| 7 | |
Satellite television subscription and television detection devices are ways in which broadcasting companies address the ____________ problem. |
| | A) | externality |
| | B) | market imperfection |
| | C) | deadweight burden |
| | D) | free-rider |
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| 8 | |
An example of a merit good is: |
| | A) | a system of justice |
| | B) | a dose of medicine |
| | C) | a bar of chocolate |
| | D) | compulsory education |
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| 9 | |
The __________________ quantity of a public good equates the marginal social cost of production to the sum of the marginal private benefits over all people at this output level. |
| | A) | individual demand |
| | B) | individual inefficient |
| | C) | socially efficient |
| | D) | socially undesirable |
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| 10 | |
A politician will improve his chances of holding office by offering policies appealing to the _________. |
| | A) | middle income groups |
| | B) | poor |
| | C) | median voter |
| | D) | minority groups |
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| 11 | |
Except for taxes to offset ____________, taxes are _____________. |
| | A) | imperfect competition, popular |
| | B) | externalities, distortionary |
| | C) | inequality, a first best option |
| | D) | poor health, unnecessary |
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| 12 | |
Taxes create a wedge between the sales price and purchase price that prevents the price system equating _________ and ____________. |
| | A) | marginal costs, marginal benefits |
| | B) | demand, supply |
| | C) | marginal cost, marginal revenue |
| | D) | marginal cost, average cost |
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| 13 | |
The effect of a tax to offset a negative externality will be to ___________ price and ____________ quantity. |
| | A) | reduce, reduce |
| | B) | increase, increase |
| | C) | increase, reduce |
| | D) | reduce, increase |
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| 14 | |
Supply-side economics analyses how taxes and other incentives affect national output when the economy is at full capacity. |
| | A) | True |
| | B) | False |
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| 15 | |
The Laffer curve shows that beyond some ________ tax revenue will __________. |
| | A) | income, increase |
| | B) | consumption, decline |
| | C) | growth rate, increase |
| | D) | tax rates, decline |
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| 16 | |
The Tiebout model considers that people choose to live in areas providing the package of ________ and ___________ they want. |
| | A) | public spending, taxes |
| | B) | schools, hospitals |
| | C) | public order, health care |
| | D) | housing, shops |
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| 17 | |
Political economy is the study of how committees make decisions. |
| | A) | True |
| | B) | False |
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| 18 | |
When politicians trade votes, it is called _______ . |
| | A) | log tumbling |
| | B) | tree bending |
| | C) | log rolling |
| | D) | tree trimming |
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| 19 | |
A credible promise about future action is one that is optimal to carry out when the future arrives. |
| | A) | True |
| | B) | False |
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