FINAL EXAM STUDY GUIDE

Question 1

Tax Freedom Day

Answer 1

April 24th

Question 2

Combined Gov’t Purchases

Answer 2

18% of output or GDP

Question 3

Transfer Payments

Answer 3

15% of output

Question 4

Government Borrowing

Answer 4

Can crowd out the private sector

Question 5

Most federal government expenditures

Answer 5

go to pensions and income security

Question 6

Maximum federal personal income tax rate

Answer 6

39.6%

Question 7

A progressive tax

Answer 7

one in which people with higher incomes pay a larger percentage if their income as taxes than do people with lower income

Question 8

The average tax rate

Answer 8

total tax paid divided by total taxable

Question 9

The marginal tax rate

Answer 9

the change in tax paid divided by the change in income

Question 10

Taxable income

Answer 10

Is the income of households and unincorporated businesses after certain exemptions and deductions are taken into account

Question 11

Formula for taxable income

Answer 11

taxable income=income-deductions and exemptions

Question 12

A gov’t lottery

Answer 12

is used by states to supplement tax revenue

Question 13

Local governments

Answer 13

obtain most of their tax revenue 73% from property taxes

Question 14

The primary source of tax revenue for state gov’t

Answer 14

is sales taxes

Question 15

Both state and local governments

Answer 15

spend the most on education

Question 16

14% of the U.S labor force

Answer 16

works for all types of government

Question 17

The benefits received principle asserts

Answer 17

that those who benefit most from gov’t supplied goods or services should pay the taxes necessary to finance them

Question 18

A tax is regressive if

Answer 18

it’s average rate declines as income increases

Question 19

The Wheeler-Lea Act established

Answer 19

the FTC as a independent antitrust agency and made unfair deceptive sales practices illegal

Question 20

The Sherman Act of 1890 was

Answer 20

the first anti trust legislation stating that every contract combo in the form of a trust or conspiracy in restraint of trade or commerce among several States with foreign nations is declared to be illegal

Question 21

Price fixing

Answer 21

Is a per se violation meaning it is “in and of itself”

Question 22

Antitrust laws are based

Answer 22

On the idea that competition is better the monopoly

Question 23

Joint enforcement of antitrust laws

Answer 23

is carried out by the U.S Department of Justice and the Federal Trade Commission

Question 24

The Microsoft case

Answer 24

was when Microsoft was found guilty of violating the Sherman Act by taking several unlawful actions designed to maintain it’s monopoly of operating systems for PC’s and prohibited from engaging in a set of specific anticompetitive business practices

Question 25

The Herfindahl index

Answer 25

increases with horizontal mergers

Question 26

A vertical merger

Answer 26

Is a merger between films at different stages of the production process

Question 27

A horizontal merger

Answer 27

Is a merger between 2 competitors that sell similar products in the same geographic market

Question 28

A conglomerate merger

Answer 28

is officially defined as any merger that is not horizontal or vertical

Question 29

A conspiracy to fix prices

Answer 29

is a per se violation

Question 30

A natural monopoly exist

Answer 30

when economies of scale are so extensive that a single firm can supply the entire market at a lower average total cost than a number of competing firms

Question 31

Most of the efficiency gains from deregulation

Answer 31

Occurs in airlines, railroads, and trucking industries

Question 32

The underlying purpose of antitrust policy and laws

Answer 32

Is to prevent monopolization

Question 33

19 million people

Answer 33

work in the healthcare industry

Question 34

What is the difference between Medicare and Medicaid?

Answer 34

Medicare is a nationwide federal health care program available to Social Security beneficiaries and persons with disabilities. Medicaid provides payment for medical benefits to low income people on public assistance

Question 35

The U.S

Answer 35

spends 17.5% of GDP on healthcare

Question 36

The economic implications of rising healthcare costs are

Answer 36

slower wage growth, use of part time and temporary workers, and outsourcing

Question 37

If we have Medicaid then why are so many poor people still uninsured?

Answer 37

because they are not poor enough for Medicaid but are too poor enough to buy their own health insurance

Question 38

Most health insurance

Answer 38

comes from the employer

Question 39

Health care

Answer 39

is a normal good

Question 40

Health care demand

Answer 40

is increased by rising incomes, asymmetric information, an aging population, unhealthy lifestyles, supplier induced demand, defensive medicine, ethics

Question 41

Asymmetric information

Answer 41

Is when the seller knows more than the buyer

Question 42

The moral hazard problem

Answer 42

is the tendency of one party to an agreement to alter his or her behavior in a way that is costly to the other party.

Question 43

A tax subsidy

Answer 43

Lets employees not pay federal income or payroll tax on health insurance

Question 44

Deductibles and copayments

Answer 44

reduce healthcare costs by discouraging overuse

Question 45

A health maintenance organization

Answer 45

provides health care services to a specific group of enrollees in exchange for a set annual fee per enrollee employ their own physicians and contract for specialized services with outside providers and hospitals and then contract with firms or gov't units to provide medical care for their workers

Question 46

Preferred provider organizations

Answer 46

require that hospitals and physicians accept discounted prices for their services as a condition for being included in the insurance plan

Question 47

What is the purpose of HMOs and PPOs?

Answer 47

The purpose is to reduce cost

Question 48

PPACA (Obamacare)

Answer 48

Was suppose to provide healthcare insurance for everyone

Question 49

Singapore's health system is competitive

Answer 49

Thereby increasing efficiency and effectiveness