Question 1

Railroads continue to increase their share of freight traffic.

Accepted Answer

A)   Conservatives see this as a triumph of greater competition within the transportation sector.
B)   Liberals claim this is due to lower energy costs.
C)   Radicals see this as a result of monopoly pricing.
D)   Conservatives, Liberals, and Radicals agree that this is the result of ending the experiment with deregulation.E) A) and C)
F) A) and B)

Question 2

According to both Liberals and Radicals, regulation worked out but deregulation has failed.

Accepted Answer

A) True 
 B)False

Question 3

Railroads are what economists call a "natural monopoly."

Accepted Answer

A) True 
 B)False

Question 4

Comparing the United States with European nations

Accepted Answer

A)   Americans tend to support a broader degree of regulation of business.
B)   Europeans have historically favored public ownership over regulation in many industrial sectors.
C)   the United States has been slow to deregulate.
D)   None of the above.E) A) and B)
F) A) and C)

Question 5

A local electric utility company is a good example of a firm possessing "natural monopoly" characteristics.

Accepted Answer

A) True 
 B)False

Question 6

"Universal service" arguments contend that all publicly sought services should be provided free of charge to all potential users.

Accepted Answer

A) True 
 B)False

Question 7

Which is not an alleged benefit of deregulation offered by its supporters?

Accepted Answer

A)   Falling prices paid by the consumer.
B)   The clear articulation of specific public interest objectives.
C)   The breakdown of monopoly powers.
D)   An encouragement of greater efficiency of formerly regulated firms.
E)   An end to "cross-subsidization" and price discrimination.F) D) and E)
G) A) and C)

Question 8

The bailout of Conrail with federal funds could be characterized by "socialism for the rich" because

Accepted Answer

A)   only wealthy people can afford intercity rail travel.
B)   Congress sought to nationalize passenger railroads and use the revenues to pay down the deficit.
C)   American railroads typically had above-average profitability.
D)   Conrail had significantly undervalued assets, which only shareholders stood to realize.E) B) and C)
F) A) and D)

Question 9

According to the Liberal view, certain industries should be required by law and regulation to meet basic public interest standards.

Accepted Answer

A) True 
 B)False

Question 10

Radicals believe that deregulation will, in the long run, have little effect in reducing the monopolistic power of most previously regulated industries.

Accepted Answer

A) True 
 B)False  True

Question 11

Liberals hold that

Accepted Answer

A)   government regulations are always harmful to consumers.
B)   regulation should balance investor and managerial interests.
C)   regulation has, on balance, been beneficial to consumers.
D)   market freedom is always commensurate with personal freedom.E) A) and B)
F) None of the above

Question 12

There is strong evidence to support the fact that business itself has in the past, and to some extent even presently, supported government regulation.

Accepted Answer

A) True 
 B)False

Question 13

The Sarbanes-Oxley Act of 2002 represented

Accepted Answer

A)   deregulation of the financial services industry.
B)   increased oversight over corporate financial reporting.
C)   telecommunications deregulation.
D)   a proposed national ban on cellular phone use while operating a motor vehicle.E) A) and C)
F) None of the above B

Question 14

Deregulation as a movement

Accepted Answer

A)   began in the 1890s.
B)   is mostly supported by Liberal economists.
C)   has largely been associated with Republican presidents.
D)   has had few successes.E) A) and C)
F) A) and B)

Question 15

When AT&T was broken up, it became possible to introduce the Liberal supported "cross subsidizing" phone rates.

Accepted Answer

A) True 
 B)False

Question 16

Conservatives find no justification--under any conditions--for government regulation of any private enterprise.

Accepted Answer

A) True 
 B)False

Question 17

The Interstate Commerce Commission was the nation's first serious effort at establishing a federal regulatory commission to oversee an entire industry.

Accepted Answer

A) True 
 B)False  True

Question 18

From a Conservative perspective, government regulation

Accepted Answer

A)   tends to create monopoly power where it might otherwise not exist.
B)   is acceptable to railroads and banks because there are considerable public interest effects.
C)   should replace the current deregulation movement.
D)   All of the above.
E)   None of the above.F) A) and C)
G) A) and D)

Question 19

Radicals would agree with Conservatives that transportation regulation has not benefited ordinary consumers.

Accepted Answer

A) True 
 B)False

Question 20

Since the late 1970s, Conservatives claim that the

Accepted Answer

A)   number of operating railroads has increased.
B)   nation's public transportation system has been weakened.
C)   United States has moved even further from free market ideals.
D)   number of operating railroads has declined, but price competition and service have improved.E) C) and D)
F) None of the above

Exam 5: Economic Regulation Which Path: Deregulation or Reregulation

Railroads continue to increase their share of freight traffic.

Correct AnswerverifiedShow Answer

According to both Liberals and Radicals, regulation worked out but deregulation has failed.

Correct AnswerverifiedShow Answer

Railroads are what economists call a "natural monopoly."

Correct AnswerverifiedShow Answer

Comparing the United States with European nations

Correct AnswerverifiedShow Answer

A local electric utility company is a good example of a firm possessing "natural monopoly" characteristics.

Correct AnswerverifiedShow Answer

"Universal service" arguments contend that all publicly sought services should be provided free of charge to all potential users.

Correct AnswerverifiedShow Answer

Which is not an alleged benefit of deregulation offered by its supporters?

Correct AnswerverifiedShow Answer

The bailout of Conrail with federal funds could be characterized by "socialism for the rich" because

Correct AnswerverifiedShow Answer

According to the Liberal view, certain industries should be required by law and regulation to meet basic public interest standards.

Correct AnswerverifiedShow Answer

Radicals believe that deregulation will, in the long run, have little effect in reducing the monopolistic power of most previously regulated industries.

Correct AnswerverifiedTrue

Liberals hold that

Correct AnswerverifiedShow Answer

There is strong evidence to support the fact that business itself has in the past, and to some extent even presently, supported government regulation.

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act of 2002 represented

Correct AnswerverifiedB

Deregulation as a movement

Correct AnswerverifiedShow Answer

When AT&T was broken up, it became possible to introduce the Liberal supported "cross subsidizing" phone rates.

Correct AnswerverifiedShow Answer

Conservatives find no justification--under any conditions--for government regulation of any private enterprise.

Correct AnswerverifiedShow Answer

The Interstate Commerce Commission was the nation's first serious effort at establishing a federal regulatory commission to oversee an entire industry.

Correct AnswerverifiedTrue

From a Conservative perspective, government regulation

Correct AnswerverifiedShow Answer

Radicals would agree with Conservatives that transportation regulation has not benefited ordinary consumers.

Correct AnswerverifiedShow Answer

Since the late 1970s, Conservatives claim that the

Correct AnswerverifiedShow Answer

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True

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B

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True

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