Economics 202: Study Questions Unit # 4, G. and S. chapters 5-6 and special topics 12 and 14.

1)     Describe the following potential problems within a market economic system that might lead to a role for government:

a)     A lack of competition in the production of goods and services.

b)    External benefits and external costs.

c)     Pure public goods.

d)    The information problem.

e)     The economic security problem.

f)      The macroeconomic instability problem.

2)     Describe government's response to the above that might take the form of:

a)     Economic assistance.

b)    The providing of goods and services.

c)     Economic regulation.

d)    Planning and Stabilization activities.

3)     What guiding economic principle is involved in economic efficiency as it relates to the role of government. 

4)     Describe the major sources of government revenue and spending in the United States. (see exhibit 2, page 114)

5)     Describe the major similarities and differences between market and collective (government action)

6)     Describe the opportunity costs of government actions.

7) Describe the following problems that can arise from government activity   

    in the economy:

          a) The shortsightedness problem.

          b) The rational-ignorance--special interest problem

          c) The non-selectivity criticism

          d) The bureaucratic waste problem

8) Special Topic 12: How does Government Regulation affect your life:

a)     What is the difference between "traditional regulation" and "health and safety regulations"?

b)    Who bears the cost of regulation? How do regulatory costs compare to their benefits?

7) Special topic 14: Economics and the environment:

a)     What is the relationship between economic growth and the environment?

b)    Is there a link between property rights and the environment?