Deck 21: Economics, Ethics, and Public Policy

Question 1

Which is NOT a normative economic statement?

A) Import restrictions on sugar will increase sugar prices.
B) The government should limit imports of sugar.
C) Schools need to limit their students' sugar intake.
D) Import quotas on sugar are unfair to foreign sugar sellers.

Answer 1

A

Question 2

Which statement is an example of normative economics?

A) Tariffs increase deadweight loss.
B) Trade increases economic efficiency.
C) Tariffs should be lower.
D) Wealth-maximizing countries focus on producing their comparative advantage.

Answer 2

C

Question 3

Which statement is an example of positive economics?

A) A free market in kidneys would end the shortage of kidneys.
B) People should not sell organs for profit.
C) The United States should not trade with countries with human rights abuses.
D) All three of these statements are examples of positive economics.

Answer 3

A

Question 4

In a now infamous leaked memo, Larry Summers argued for what?

A) keeping the price of kidneys at $0
B) encouraging the importation of kidneys from less-developed countries
C) importing pollutants from less-developed countries
D) exporting pollutants to less-developed countries

Question 5

Which is a normative economic statement?

A) Raising the price of new textbooks will lead students to seek more used textbooks.
B) Raising the price of new textbooks will lead students to buy fewer new textbooks.
C) Publishers should not raise the price of new textbooks.
D) The price of new textbooks will rise if transportation costs and costs of paper rise.

Question 6

Normative economics is about:

A) verifying and confirming economic policy.
B) describing, explaining, or predicting economic events.
C) prescribing and making a claim on the economy.
D) making recommendations about what economic policy should be.

Question 7

Which is a positive economic statement?

A) The government should limit imports of sugar.
B) Import restrictions on sugar will increase sugar prices.
C) Sugar is not good for you.
D) Import quotas on sugar are unfair to foreign sugar sellers.

Question 8

Positive economics is:

A) about morals and values.
B) the method used to assess justice.
C) description of facts.
D) impossible to accomplish.

Question 9

The difference between positive and normative economics is that:

A) positive economics is what you are learning in school whereas normative economics is what you will learn in the real world.
B) normative economics is based on proven fact whereas positive economics is based on what should be.
C) positive economics describes, explains, and predicts economic events whereas normative economics recommends what economic policies should look like.
D) economists always use positive economics whereas politicians always use normative economics.

Question 10

Positive economics is about:

A) verifying and confirming economic policy.
B) describing, explaining, or predicting economic events.
C) prescribing and making a claim on the economy.
D) making recommendations about what economic policy should be.

Question 11

Which statement is an example of normative economics?

A) The Americans with Disabilities Act reduced employment opportunities for the disabled.
B) Rent controls reduce the housing stock.
C) Workers pay the majority of corporate taxes in the form of lower wages.
D) The government should not have bailed out the domestic automobile market.

Question 12

Presidential campaign speeches about economic policy are largely filled with:

A) poor economics.
B) normative economics.
C) positive economics.
D) false promises.

Question 13

A positive economic statement is:

A) a testable statement.
B) an opinion-based statement.
C) a recommendation on what policy should be.
D) impossible to prove true or false.

Question 14

Which is an example of a positive economic statement?

A) The minimum wage should be higher.
B) It would be more efficient, and therefore preferable, to legalize drugs.
C) The government should restrict deficit spending and balance the budget.
D) Higher interest rates will lead to lower rates of inflation.

Question 15

Larry Summers argued that it makes economic sense for:

A) poor people to pay higher taxes.
B) rich countries to export their pollution to poor countries.
C) poor countries to pay higher taxes.
D) unemployment to be lower in heavily unionized states.

Question 16

Gary Becker, a Nobel Prize-winning economist, argued for what?

A) keeping the price of kidneys at $0
B) encouraging the importation of kidneys from less-developed countries
C) importing pollutants from less-developed countries
D) exporting pollutants to less-developed countries

Question 17

Which is a normative economic statement?

A) Tests should always be hard to ensure that students are challenged.
B) Quantity demanded for steak will fall if the price of steak rises.
C) Hot dogs and hot dog buns are generally complementary goods.
D) Each of these three statements uses normative economics.

Question 18

Which is a positive economic statement?

A) Shortages in the kidney trade are a necessary phenomenon.
B) Animal rights activists are to blame for the high prices of real furs.
C) We should encourage the importation of kidneys from the less-developed countries.
D) A government-imposed price of zero for kidneys helps create a black market in kidneys.

Question 19

Which is a positive economic statement?

A) Raising the price of steak should be a priority for a government that wishes to protect animal rights.
B) An export market that transports pollutants to less-developed countries will increase their short-run GDP.
C) The government should limit earnings for top management in corporations.
D) The government should not provide bailouts to corporations in financial trouble.

Question 20

Which is an example of a normative economic statement?

A) Consumer spending is nearly two-thirds of total GDP.
B) Increased government spending might lead to higher interest rates.
C) The government should increase spending on education.
D) Increased education spending could lead to higher test scores.

Question 21

The case for exporting pollution from rich countries to poor countries is based on:

A) the power of politics.
B) the power of coercion.
C) the power of trade.
D) monopoly power.

Question 22

People that suggest we should export pollution to poorer countries argue that:

A) only the rich country would be better off as a result of this policy.
B) poor countries value money more than the cost of the pollution.
C) rich countries value money more than their health.
D) each country values pollution equally.

Question 23

At a price of zero, there is a(n):

A) kidney surplus.
B) equilibrium quantity exchanged for kidneys.
C) kidney shortage.
D) increased kidney demand.

Question 24

One of the objections to standard economic reasoning is the problem of _____.

A) exploitation
B) exploration
C) explanation
D) expiration

Question 25

Which is an example of a normative economic statement?

A) The United States should have a single-payer health care system because there are 44 million people uninsured.
B) People with more years of schooling live longer than people with fewer years of schooling.
C) The government subsidizes the purchase of health insurance through our place of employment.
D) People with below-average intelligence are more likely to get into car accidents.

Question 26

The economic reasoning for exporting pollution from rich to poor countries is that:

A) the rich value health more than money and the poor value money more than health.
B) the rich value money more than health and the poor value health more than money.
C) pollution is a more severe problem in the rich countries than in the poor countries.
D) the poor countries can use the money they make to resolve the problems of pollution.

Question 27

______ is about describing, explaining, or predicting economic events.

A) Normative economics
B) Real economics
C) Nominal economics
D) Positive economics

Question 28

Why would a poor country accept pollution from a rich country?

A) The money payment is more valuable than the costs of having the pollution.
B) The poor country values health less than rich countries.
C) Poor countries have better technologies for storing pollution.
D) Poor countries have more space for storing pollution.

Question 29

Gary Becker supports:

A) legal kidney trade.
B) illegal kidney trade.
C) no kidney trade.
D) uncompensated kidney trade.

Question 30

Which is NOT a so-called problem of economic reasoning?

A) meddlesome preferences
B) fair and equal treatment
C) exploitation
D) prices as information signals

Question 31

When he was chief economist at the World Bank, Larry Summers argued that:

A) multinational companies should be restricted from locating in less-developed countries because it creates less employment in developed countries.
B) rich countries should send their pollution-creating industries to poor countries because the costs of bad health are lower for poor people.
C) there are more men working in science because women are discriminated against.
D) health insurance mandates do not change the position of either the demand or supply curve of labor.

Question 32

Nobel Prize-winning economist Gary Becker:

A) opposes a market for human organs because it will lead to poor people selling their organs to rich people.
B) proposes a market for human organs to help eliminate the shortage of organs.
C) supports raising the minimum wage to reduce inequality.
D) favors occupational licensing standards to prevent consumers from being harmed by incompetent providers.

Question 33

A standard market for kidneys is currently ______ in the United States.

A) legal but failing
B) illegal
C) legal and emerging
D) illegal in some cases but legal in others

Question 34

The text describes Larry Summers as supportive of the exportation of ______ to the ______.

A) toxic waste; less-developed countries
B) toxic waste; developed countries
C) solar technology; less-developed countries
D) solar technology; developed countries

Question 35

The problems of standard economic reasoning that need to be examined include all of the following EXCEPT:

A) the problem of exploitation.
B) meddlesome preferences.
C) unfair and unequal treatment.
D) cultural goods and paternalism.

Question 36

Larry Summers was chief economist of:

A) Google.
B) the IMF.
C) the World Bank.
D) the CBO.

Question 37

______ is about making recommendations on what economic policy should be.

A) Normative economics
B) Real economics
C) Nominal economics
D) Positive economics

Question 38

If kidney trades were legal, then those people that voluntarily gave up one of their kidneys for money:

A) still value their kidney more than any amount of money.
B) would be worse off as a result of this trade.
C) must value the money more than their extra kidney.
D) must not understand the risks involved.

Question 39

Which is an example of a positive economic statement?

A) A country as rich as the United States should not have any poverty.
B) Minimum wage laws should be increased to counteract the power of monopoly businesses.
C) As government spending increases, economic growth decreases.
D) A market of human organs is not necessary and would lead to the commoditization of organs.

Question 40

Most economists support:

A) uncompensated kidney trade.
B) illegal kidney trade.
C) no kidney trade.
D) legal kidney trade.

Question 41

The question of whether selling kidneys is exploitative boils down to the question of whether:

A) we could save more lives by allowing the sale of kidneys.
B) it is wrong to buy things from the poor just because they are poor.
C) it is risky to sell kidneys.
D) the poor would be better off with or without the additional income.

Question 42

PETA opposes the purchase of purebred dogs as pets. This is an example of:

A) meddlesome preferences.
B) exploitative preferences.
C) externality preferences.
D) marginal preferences.

Question 43

It is sometimes difficult to see the difference between:

A) inequality and the distribution of wealth.
B) risk and fair treatment.
C) exploitation and exchange.
D) fair treatment and equality.

Question 44

Which statement is TRUE?

A) It is illegal to sell horsemeat in European restaurants.
B) It is illegal to sell horsemeat in Japanese restaurants.
C) It is illegal to sell horsemeat in California restaurants.
D) All of these statements are correct.

Question 45

Those that argue that allowing kidney sales is not exploiting poor people argue that:
I. poor people can always say "no" if they value their kidney more than the money offered.
II. only low prices are exploitive.
III. voluntary trade can make both parties better off.

A) I only
B) I and II only
C) I and III only
D) I, II, and III

Question 46

A priest who has maintained a vow of celibacy and believes in abstinence before marriage is said to have ______ preferences.

A) exploitative
B) aggravated
C) transported
D) meddlesome

Question 47

Which case is the most exploitative?
I. Phil buys a kidney from Ron.
II. Phil pays Ron to cut his lawn.
III. Phil pays Ron for tax advice.

A) I only
B) II only
C) III only
D) None of the cases are exploitative; they all represent voluntary market exchanges that make both parties better off.

Question 48

Many economists argue that kidney sales are ________ exploitative because ________.

A) not; they are a market exchange that leaves both recipients and donors better off
B) always; the rich on average benefit at the expense of the poor
C) not; the government could set low prices
D) always; you cannot put a price on life

Question 49

The economic reasoning for importing kidneys is that:
I. trade may save many kidney-failure patients' lives.
II. people who are allowed to sell their kidneys earn more income.
III. buyers and sellers of kidneys can both be made better off by trade.

A) II only
B) II and III only
C) I and III only
D) I, II, and III

Question 50

In May 2010, the New York Times ethicist, Randy Cohen, described a scenario of one person donating his kidney to another person. Later, the donor experiences some financial trouble and the receiving person considers helping them out with a financial gift. Economist Greg Mankiw continues: "So what does the Ethicist say about all this? Apparently, both of these gifts are noble acts, worthy of the highest praise and admiration. Unless, that is, there is some reason to think they are linked together. In that case, the reallocation of resources (kidney, cash) would be a despicable market transaction."
Based on this information, which is the most likely explanation for the Ethicist's disapproval of selling kidneys?

A) meddlesome preferences
B) fair and equal treatment
C) cultural goods
D) distribution of income

Question 51

An infertile person who lobbies against abortion is said to have ______ preferences.

A) exploitative
B) aggravated
C) transported
D) meddlesome

Question 52

Opponents of kidney sales argue that:

A) paying someone to donate a kidney is exploitative.
B) poor people would benefit from a market in kidneys.
C) rich people would be exploited by paying large sums of money to the poor.
D) Opponents of kidney sales make all three of these arguments.

Question 53

A meddlesome preference is a preference:

A) that prevents other people form harming your personal property.
B) for liberty to be maximized.
C) for other people's certain behaviors, even when their current actions do not have a direct effect on you.
D) for tolerant and respectful differing viewpoints.

Question 54

Someone who believes that the sale of kidneys by the poor is exploitative would find which of the following price tags for a kidney most exploitative?

A) $0
B) $250
C) $10,000
D) $50,000

Question 55

Suppose the sale of human kidneys was legal. If the seller of kidneys is well informed of the risks of the exchange, then:

A) some people believe this is not exploitation, but instead simply a voluntary trade.
B) the price of kidneys will be lower.
C) wealthy individuals will be just as likely to sell their kidneys as poor individuals.
D) these types of exchanges would happen only in poor countries.

Question 56

Preferences over what other people do, even when those other people do not interfere in any direct way with what you do, are sometimes called ______ preferences.

A) exploitative
B) aggravated
C) meddlesome
D) transported

Question 57

Which is an example of meddlesome preferences?

A) College students volunteer time building homes for the poor.
B) People lobby politicians for laws restricting religious proselytizing.
C) A rich person donates money to a homeless shelter.
D) A poor individual believes the rich should pay more in taxes.

Question 58

Some people believe that trade such as the buying and selling of human kidneys is exploitative because:

A) poor people have less information than wealthy individuals.
B) wealthy individuals choose to buy kidneys from poor people only because they are willing to sell them for less.
C) poor people have little choice but to sell things (such as their own kidneys) which they would really rather keep.
D) these types of risky exchanges happen only in poor countries.

Question 59

Many things, like trading kidneys, are illegal because of:

A) global trade restrictions.
B) meddlesome preferences.
C) wealth inequalities.
D) too low a market price.

Question 60

The real question behind the exploitation argument is:

A) Can rich people be exploited?
B) Can poor people be exploited?
C) Is it wrong to offer to buy something from the poor just because they are poor?
D) Is the price of a kidney high enough?

Question 61

What principle was the basis for equipping buses in New York City for wheelchair service?

A) efficiency
B) paternalism
C) poverty reduction
D) fair and equal treatment

Question 62

Which of the following statements is TRUE?
I. A moral argument against government support for the arts is that people should not be forced to spend their money on things they would not voluntarily choose.
II. When artists receive government support, their incentives might change from trying to satisfy consumers to trying to satisfy government bureaucrats.
III. The American government uses cultural considerations to exempt certain groups from taxation.

A) I, II, and III
B) I only
C) II only
D) I and III only

Question 63

Trade-offs often include:

A) only monetary costs and benefits.
B) only one side of the trade.
C) ethical tensions that may result from a decision.
D) only the opportunity cost of the richer party.

Question 64

Which statement is TRUE?
I. Economics can answer questions about which value judgments are most important.
II. Economics cannot answer questions about what is sacred.
III. Economists fail to distinguish between normative and positive economics.

A) II and III only
B) I and II only
C) II only
D) I and III only

Question 65

A meddlesome preference is a(n):

A) interpersonal opinion about one's self-discipline.
B) interpersonal opinion about one's motivation.
C) preference about other people's behavior, even when it does not affect you.
D) preference about how the government should reform tax law.

Question 66

In New York City, there was a debate whether to (1) retrofit the city's buses for wheelchair access, or (2) pay the taxicab fares of the disabled. Proponents for making the buses handicapped accessible were motivated by concerns of:

A) efficiency; it is much more expensive to pay taxicab fares than retrofit buses.
B) fair and equal treatment.
C) the deadweight losses from higher taxes associated with paying taxicab fares.
D) the higher carbon emissions of taxicabs, which is a form of externality.

Question 67

Which statement is TRUE?

A) New York City buses do not accommodate the disabled.
B) Taxpayers would have lost money if New York City had paid disabled people to use taxis rather than retrofitting city buses for wheelchair ramps.
C) New York City buses are capable of accepting passengers in wheelchairs.
D) New York City would have saved money if buses were used to transport the disabled rather than taxicabs.

Question 68

Which of the following hold to a meddlesome preference?

A) people who are against interracial dating
B) people who are against sodomy
C) people who are against certain religious practices
D) All of the answers are correct.

Question 69

It is often difficult to resolve meddlesome preferences with other values that are considered important such as:

A) liberty.
B) rights.
C) religious freedom.
D) All of the answers are correct.

Question 70

In which case does meddlesome preferences interfere with standard economic reasoning?

A) In a poor economy, the diet is very low in protein, and plenty of stray dogs abound. Sellers realize that dog meat would be profitable and deliver the protein needs of the people, but don't sell it because the animal rights society issued a ban against eating dogs.
B) Thousands of people are on the wait list for kidneys. However, the government does not allow the sale of kidneys even though people can survive very well with one kidney.
C) In poor countries, workers between the ages of 13 to 16 bring much-needed income to households. However, due to child labor laws in the richer countries, export industries in poor countries cannot hire these workers, leading to the poor getting poorer.
D) Each of these cases provides an example of meddlesome preferences.

Question 71

Which assertion about the principle of fair and equal treatment is correct?

A) Fair and equal treatment does not apply in New York City.
B) Mass transit is really about not making people feel different or disadvantaged.
C) Handicapped should have easier and more luxurious transport options.
D) Equipping buses to accept handicapped passengers increases the value of efficiency.

Question 72

Which statement is TRUE?

A) The French government mandates that 40 percent of the movies shown on TV must be French-language movies.
B) The French government encourages rock-and-roll music from French bands instead of American and British rock bands.
C) In general, the French government tries to support French culture.
D) Each of these statements is correct.

Question 73

Meddlesome preferences are ________ with ________.

A) consistent; liberty, rights, and religious freedom
B) inconsistent; liberty, rights, and religious freedom
C) consistent; more fundamental rights like the pursuit of life, liberty, and happiness
D) harmless; dictatorships

Question 74

Preferences over what other people do, even when their actions do not interfere in any direct way with the rest of society, are called:

A) interfering preferences.
B) intervening preferences.
C) meddlesome preferences.
D) officious preferences.

Question 75

The French government tries to support French culture by:

A) placing a sales tax on French-made music.
B) specifying a minimum number of French-language movies that must be shown on TV.
C) encouraging cross-cultural exchanges with other European countries.
D) encouraging foreign-film producers to shoot in France.

Question 76

Economists typically view government-supported programs such as arts and movies as:

A) efficient; these are public goods that would be underproduced in the market.
B) inefficient; if people valued these things they should be willing to pay for them.
C) efficient; the cost to the government to produce these goods is less than the private sector because of economies of scale.
D) inefficient; government provision of these goods is not fair nor equal.

Question 77

Why does economic efficiency not always result in fair and equal treatment?

A) Efficiency demands cost-minimization, which may cause the nonproduction of expensive items or adjustments designed to ensure that disadvantaged members of society are catered for.
B) Market efficiency requires that only profitable goods be produced in order to maximize the return from using scarce resources, and some goods for the disadvantaged may not always yield profits.
C) Market efficiency does not always allow firms to hire disadvantaged members of society so labor and governments sometimes have to step in to demand hiring of some of these individuals.
D) All of these explanations are correct.

Question 78

A city-owned hospital sends morbidly obese patients to the zoo to get an MRI. The city, however, could purchase a newer model MRI machine (at a cost of $2.5 million) that is capable of accommodating morbidly obese patients. This example highlights the problem of:

A) exploitation.
B) meddlesome preferences.
C) fair and equal treatment.
D) the distribution of wealth.

Question 79

A city-owned hospital sends morbidly obese patients to the zoo to get an MRI. The city, however, could purchase a newer model MRI machine (at a cost of $2.5 million) that is capable of accommodating morbidly obese patients. This type of problem:

A) can usually be solved by economists.
B) can always be solved by economists.
C) cannot be solved by economists.
D) can be solved by economists who are trained in econometrics.

Question 80

The notion of fair and equal treatment can:

A) match the value of trade and efficiency.
B) be irrelevant to the value of trade and efficiency.
C) enhance the value of trade and efficiency.
D) run up against the value of trade and efficiency.