Suppose Country W has a partly-planned economy with a large public sector. A neoliberal recommends privatizing all state-run enterprises. A modern liberal would be most likely to _____.
a. modify this recommendation by exempting infant industries from the list of enterprises to be sold off
b. oppose this recommendation because the resulting inflation would unfairly erode the spending power of people living on a fixed income
c. critique this recommendation by pointing out that certain services are too important to social well-being to be left to the whims of the market
d. support this recommendation by arguing that the loss in government revenue would be offset by a higher tax based produced by economic growth
Q. 2A program of public-private partnerships is aimed most strongly at securing _____.
a. economic justice
b. individual liberty
c. long-term stability
d. productive efficiency
Q. 3A neoliberal is most likely to argue that government intervention in the economy is immoral because it _____.
a. crowds out faith-based initiatives
b. works against a fair taxation system
c. weakens self-reliance and increases dependency
d. makes domestic industries vulnerable to foreign competition
Q. 4Modern liberals disagree with conservatives about _____.
a. the importance of property rights
b. the value of individual liberty
c. the central goal of government action
d. the most effective policies for promoting economic growth
Q. 5In the aftermath of the Great Recession, most governments in wealthy countries tried some form of Keynesian _____.
a. austerity
b. autarky
c. stimulus
d. shock therapy
Q. 6Which statement best explains why the Lehman Brothers bankruptcy rattled financial markets so badly?
a. Lehman Brothers had received a massive taxpayer bailout.
b. Lehman Brothers had insured the deposits of most institutional investors.
c. Government regulators began examining the accounts of every major bank.
d. Economists feared that other large financial institutions were on the verge of collapse.
Q. 7A critic of deficit spending is most likely to point out that government borrowing _____.
a. creates high unemployment
b. contributes to increased income inequality
c. results in a stagnation of private-sector wages
d. reduces the amount of money available for private-sector investment
Q. 8A conservative in the United States would most likely argue that the Great Recession resulted from _____.
a. unwise deregulation of the financial industry
b. problems with the bonus structure of major banks
c. a failure to modernize the American infrastructure
d. too much government meddling in the housing market
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