Question

4.07

Answer 1

Question 1 (Worth 5 points)

[04.02 MC]

Which describes a benefit from government regulation of a natural monopoly?

After flooding destroys homes in a small town, rent goes up.

Livy's gas utility bill does not go up during a natural gas shortage. <---

The corn syrup in Marcus's candy was cheaper to use than sugar.

Two lumber suppliers compete to offer the best price for paper mills.

Points earned on this question: 5
In the 2000s, Venezuelan President Hugo Chàvez instituted economic policies that caused smuggling and hoarding of food. What did Chàvez do to create this behavior, and which zone (represented by a letter) on the graph represents the result?

Chàvez set a price floor (letter A), which resulted quantity supplied exceeding quantity demanded for food.

Chàvez set a price ceiling (letter B), which resulted in an increase in supply and demand for food.

Chàvez set a price ceiling (letter C), which resulted in quantity demanded exceeding quantity supplied for food. <-----

Chàvez set a price floor (letter D), which resulted in a decrease in the supply and demand for food.

Points earned on this question: 5
The government increases taxes. What might be a reason for this change in fiscal policy?

A deficit due to improving nationwide public transportation

A deficit due to more monies flowing in from investors

A surplus due to greater amounts of income from exports <----

A surplus due to more government spending on building roads

Points earned on this question: 0

Answer 2

I believe the last one is A. I misread the question when I took this test.

Answer 3

Question 4 (Worth 5 points)

[04.05 HC]

The country of Lilliput has high unemployment and low consumer spending, and small businesses are closing. What should Lilliput's government do to improve the economy?

Lower the income tax, which gives citizens less money to spend, and buy services from civilian-owned businesses, which creates more jobs.

Raise the income tax, which gives citizens less money to spend, and stop buying services from civilian-owned businesses, which eliminates jobs.

Lower the income tax, which gives citizens more money to spend, and buy more services from civilian-owned businesses, which creates more jobs. <----

Raise the income tax, which gives citizens less money to spend, and buy more services from civilian-owned businesses, which creates more jobs.

Points earned on this question: 5

Question 5 (Worth 5 points)

[04.03 MC]

The Federal Open Market Committee promotes price stability and economic growth through

management of the money supply <-----

oversight of the financial services industry

provision of direct services to consumers

supervision of regional banking operations

Points earned on this question: 5

Question 6 (Worth 5 points)

[04.01 MC]

Inflation is low but the unemployment rate is the highest seen in several years. Economists report signs that show in six months the economy is likely to improve. The economy is likely in

contraction

expansion

a peak

a trough <-----

Points earned on this question: 5

Question 7 (Worth 5 points)

[04.05 MC]

What would most likely happen if Congress decreased taxes and increased spending?

Economic contraction

Economic expansion <----

Economic stability

Economic stagnation

Points earned on this question: 5