Chapter 1: Public Sector in a Mix Economy

Question 1

What is the study of economic policies

Answer 1

Public Economics

Question 2

. This involves the study of government policy through the lens of economic efficiency and equity. As Myles (2001)

Answer 2

Public Economics

Question 3

government modifies the behavior of the private sector through a wide array of mechanisms such as ____

Answer 3

regulations, taxes, and subsidies

Question 4

converting government enterprises into private firms or even
forging partnerships of both private and public sector to provide social services

Answer 4

privatization

Question 5

French economists advocated ________, which encouraged the
government to actively participate in trade and industry.

Answer 5

mercantilism

Question 6

Who pushed for
the limited role of the government, arguing that competition and profit motive of individuals would eventually
lead to serving the public interest, as if led by an invisible hand.

Answer 6

Adam Smith

Question 7

Adam Smith pushed for
the limited role of the government, arguing that competition and profit motive of individuals would eventually
lead to serving the public interest, as if led by an ______

Answer 7

invisible hand.

Question 8

economists ______and _______formulated the principle
known as laissez faire

Answer 8

John Stuart Mill , Nassau Senior

Question 9

economists John Stuart Mill and Nassau Senior formulated the principle
known as _______

Answer 9

laissez faire

Question 10

elaborating that the government should leave the private sector alone because
unregulated competition would serve the best interest of the society.

Answer 10

laissez faire

Question 11

Who advocated a
greater role for the government in controlling production

Answer 11

Karl Marx

Question 12

argued that the government should not only but also could do something about economic declines

Answer 12

John Maynard Keynes

Question 13

four major reasons why the government fails

Answer 13

(1) Limited Information:
(2) Limited control over private market responses:
(3) Limited control over bureaucracy:
(4) Limitations imposed by political processes: (5) Limited control over

Question 14

Public actions are complicated and difficult to foresee. Therefore government
does not have the information required to do what it would like to do.

Answer 14

Limited Information:

Question 15

The government has only limited control over the
consequences of its action.

Answer 15

Limited control over private market responses:

Question 16

Congress, State and local legislatives design legislation but
delegates implementation to government agencies.

Answer 16

Limited control over bureaucracy:

Question 17

Even if government were perfectly informed about the
consequences of all possible actions the political through which decisions about actions are made
would raise additional difficulties.

Answer 17

Limitations imposed by political processes:

Question 18

two initiatives to
rethink the role of the government.

Answer 18

1. Deregulation
   2- privatization

Question 19

reducing the role of the government especially on the
pricing mechanisms imposed on several goods and services.

Answer 19

Deregulation

Question 20

turning over the previously
undertaken activities by the government to the private sector.

Answer 20

privatization

Question 21

two important differences that distinguishes government

Answer 21

1. the individuals running the public institutions are elected or appointed by someone
   who is elected and not merely chosen by bodies of organizational structure just like in private enterprises.
2. the government has an inherent power or rights of compulsion. The government has the right to force
   you to pay taxes and confiscate such property or imprison you if you fail to do so.

Question 22

What are the 4 major economic questions?

Answer 22

(1) What is to be produced?
(2) How should it be produced?
(3) For whom is it to be produced?
(4) How are choices made?

Question 23

This pertains on how the government will allocate its resources in the
production of public goods vis-à-vis the production of private goods.

Answer 23

What is to be produced?

Question 24

Does the good be produced publicly or privately using less labor and
more capital. This question also encompasses the effects of government policies in the production of firms for
such products.

Answer 24

How should it be produced?

Question 25

the question of distribution. Deciding what public goods to produce comes with the decision making process of choosing what groups will be benefitted by such production.

Answer 25

For whom is it to be produced? :

Question 26

Collective choices are the choices made collectively by the society by means of collective decision-making process. Social choices are anchored towards the benefit and importance of public interest.

Answer 26

How are choices made?

Question 27

four general stages of analysis to address economic questions

Answer 27

1. Describing what the government does 2. Analyzing the consequences of government action. 3. Evaluating alternative policies. 4. Interpreting the political process.

Question 28

are utilized to make predictions about what the consequences of a particular policy by separating out essential features to those insignificant ones.

Answer 28

models or economic models.

Question 29

Economists also differ their points of analysis in terms of these two approaches.

Answer 29

1. Positive Economics 2. Normative Economics

Question 30

looks at the scope of government activities and the consequences of the various government policies, to put simply, it is concerned with “what is”.

Answer 30

Positive economics

Question 31

attempts to evaluate alternative policies that might be pursued or “what should be” done.

Answer 31

normative economics

Question 32

DISAGREEMENTS AMONG ECONOMISTS

Answer 32

Differences in Views on How the Economy Behaves Disagreement over Values

Question 33

The disagreement boils down to the best model depicting the behaviour of the economy.

Answer 33

Differences in Views on How the Economy Behaves

Question 34

This disagreement concerns positive analysis.

Answer 34

Differences in Views on How the Economy Behaves

Question 35

This disagreement falls under the normative analysis.

Answer 35

Disagreement over Values

Question 36

What economy does the USA and Philippines are in?

Answer 36

Mixed Economy

Question 37

where many eco nomic activities are undertaken by private fi rms, while others are under taken by the government.

Answer 37

mixed economy

Question 38

Examples of countries that operates in command economy

Answer 38

North Korea and Cuba

Question 39

Who wrote The Wealth of Nations (1776), in which he argued for a limited role for gov ernment.

Answer 39

Adam Smith

Question 40

which traces the various amounts of two goods that can be produced effi ciently with a given technology and resources.

Answer 40

production possibilities schedule,

Question 41

MUSGRAVE’S THREE BRANCHES

Answer 41

stabilization allocation distribution

Question 42

its responsibility was to ensure that the economy remained at full employment with stable prices.

Answer 42

stabilization branch;

Question 43

Here, the govern ment intervened in how the economy allocated its resources.

Answer 43

allocation branch.

Question 44

, was concerned with how the goods that were produced by society were dis tributed among its members.

Answer 44

distribution branch