Deck 27: The Changing Role of the Federal Government: Consumer Safety, Agriculture, the Environment, and Housing

Question 1

By 1994, the percentage of the U.S. labor force employed in agriculture was

A) less than 3 percent.
B) between 5 and 7 percent.
C) about 10 percent.
D) 15 percent.

Answer 1

less than 3 percent.

Question 2

Which most accurately describes The Farm Security and Rural Investment Act of 2002?

A) It continued the subsidies tied to farm prices that comprised the major share of transfers to farmers.
B) It totally eliminated direct subsidies to farmers, because they are more likely to distort production decisions.
C) It continued large subsidies to American farmers, which makes the US very different from most industrialized nations, which offer few agricultural subsidies and whose farmers are in a competitive market.
D) It drastically reduced both direct subsidies and subsidies tied to farm prices.

Answer 2

It continued the subsidies tied to farm prices that comprised the major share of transfers to farmers.

Question 3

In the 1960s and 1970s the U.S. passed several major consumer safety laws, including the Flammable Fabrics Act and the Child Protection Act.  The economic impact of such legislation may include all of the following except :

A) reducing the price of the regulated product.
B) increasing the cost of producing the regulated product.
C) reducing the supply of the regulated product.
D) reducing competition within the regulated industry.

Answer 3

reducing the price of the regulated product.

Question 4

All of the following changes characterize the postwar agricultural sector except

A) the rise of corporate farms.
B) increasing reliance on expensive, large-scale machinery.
C) innovations by federal and state laboratories that increased output.
D) increasing numbers of tenant farms in the South.

Question 5

In the early 1980s, many people found themselves unable to purchase new homes because of

A) rising prices and interest rates.
B) rising prices and falling interest rates.
C) new government restrictions on mortgages for first-time buyers.
D) increases in income tax rates.

Question 6

Following WWII, savings and loan associations (S&Ls) emerged as serious competitors of commercial banks, especially in the market for

A) loans to new businesses.
B) home mortgages.
C) trust funds.
D) government bond sales.

Question 7

Fiscal and monetary policies adopted by the Carter administration in the first half of his term resulted in

A) stable prices and low unemployment.
B) deflation.
C) a rapid rise in the inflation rate.
D) a balanced federal budget.

Question 8

Alfred Kahn's plan for airline deregulation emphasized

A) marginal cost pricing of tickets.
B) average cost pricing of tickets.
C) federal subsidies for certain airlines.
D) increased federal taxes on airline profits.

Question 9

New Deal environmental policies included all of the following except :

A) withdrawal of much of the public domain from private entry.
B) the use of the "soil bank" to encourage agricultural conservation.
C) projects such as the TVA that simultaneously protected many resources in a region.
D) the establishment of Yellowstone as a national park.

Question 10

Under the deficiency payments system, which was used to subsidize grain production,

A) the government purchased all surplus grain and destroys it.
B) deficiency payments were increased when farmers cultivated their land more intensively.
C) farmers were required reduce cultivated acreage by 10 percent.
D) farmers had a greater incentive to engage in beneficial crop rotation.

Question 11

The Federal Reserves responses to the financial crisis that began in 2007 include

A) cautious cuts in the Federal funds rate.
B) large expansions of credit.
C) underwriting lending in many markets.
D) All of the above are correct.
E) Only b and c are correct.

Question 12

The financial crisis that began in 2007

A) was predicted in detail by Alan Greespan and Ben Bernanke.
B) was centered on subprime lending and the complex financial instruments based on subprime loans.
C) was caused by a downturn in the stock market.
D) None of the above are correct.

Question 13

During the postwar period, changing patterns of consumer demand led to changes in the distribution of jobs in the US economy.  In particular, the income elasticity of demand for many consumer products was ____________ the income elasticity of demand for services, such as medical care and insurance.

A) less than
B) greater than
C) equal to

Question 14

Market-oriented economists favor the use of _____ to solve the global warming problem.

A) explicit emission targets
B) taxes on emissions
C) tradable rights
D) Both (a) and (b)
E) Both (b) and (c)

Question 15

The passage of major pieces of consumer protection legislation in the postwar period

A) was one of the most dramatic development of that period.
B) was influenced by the "red scare," and other hysteria over rumors of deliberate sabotage of consumer products.
C) often were the result of highly visible public tragedies.
D) Both a and b are correct.
E) Both a and c are correct.

Question 16

In early 1996, Congress passed the "Freedom to Farm Bill."  Following the bill's enactment,

A) farmers found that competition from international agriculture declined.
B) farm prices rose steadily for the next 4 years.
C) agriculture was completely deregulated, and farmers began to operate without any government subsidies or assistance.
D) farm prices fell, leading Congress to authorize emergency payments to farmers in 1998 and 1999.

Question 17

After 1960, all of the following declined except

A) the number of U.S. farms.
B) the portion of U.S. labor force employed by the agricultural sector.
C) the total amount of U.S. land devoted to farming.
D) the average acreage per U.S. farm.

Question 18

The income elasticity of demand for agricultural products is typically

A) less than zero.
B) greater than zero, but less than one.
C) greater than one.
D) infinity.

Question 19

A comparison of a traditional price support program and the Brannan plan shows that

A) consumers would clearly prefer the traditional program.
B) farmers would clearly prefer the Brannan plan.
C) losses due to inefficiency are completely avoided under the Brannan plan.
D) the more elastic the supply and demand curves, the lower the relative cost of the Brannan plan will be.
E) All of the above.

Question 20

Which of the following federal farm programs was successful in reducing agricultural surpluses?

A) The Agricultural Act of 1948
B) The Emergency Act of 1978
C) The Emergency Feed Grain Bill of 1961
D) The Soil Bank Act of 1956

Question 21

Federal support for road building into publicly owned commercial forests has caused

A) an increase in the supply of timber.
B) an increase in the demand for timber.
C) higher timber prices.
D) a shortage of timber.
E) All of the above.

Question 22

Comparisons between industrialized nations and less-developed countries indicates that as income rises, the demand for a clean and well-preserved environment

A) increases by a proportional amount.
B) decreases by a proportional amount.
C) increases by a more than proportional amount.
D) decreases by a less than proportional amount.

Question 23

If the government-imposed price of corn is greater than the market price,

A) the quantity of corn supplied will exceed the quantity of corn demanded.
B) the quantity of corn supplied will be less than the quantity of corn demanded.
C) the demand curve for corn will increase.
D) the supply curve for corn will increase.

Question 24

The existence of external costs means that

A) the producer's marginal cost is greater than the marginal social cost of production.
B) the producer's marginal cost is less than the marginal social cost of production.
C) the consumer's marginal benefit is greater than the marginal social benefit of the good.
D) the consumer's marginal benefit is less than the marginal social benefit of the good