GOVT 2301
Spring 2003
Richard Higginbotham 50141
Make-Up Exam #1
ESSAY QUESTION. Answer the following question in a thorough essay. Organize your essay
around a thesis statement. Include an introduction, separate paragraphs developing your
supporting arguments, and a conclusion. A complete answer is one that addresses all parts of
the question. Write complete sentences and pay attention to spelling, grammar, and word
choice. Do NOT assume that “the instructor will know what you mean.” 40 points.
1. Using a straight-line continuum, indicate and discuss the role of government in the
American economy. Why is the American economy considered a “mixed economy”?
Discuss two broad types of economic functions performed by government, providing
examples of each. Specifically, discuss government’s role in promoting the ideal of
competition in the economy, in redistributing wealth, in providing public goods and
services, in countering externalities, and in stabilizing the economy. Illustrate your points
with examples.
SHORT ANSWER QUESTIONS. Answer the following questions in a paragraph (a separate
paragraph for each question). Do NOT answer specific parts as separate items. Integrate
your responses into a well-organized, well-constructed paragraph. A complete answer is one
that addresses all parts of the question. Write complete sentences and pay attention to
spelling, grammar, and word choice. Do NOT assume that “the instructor will know what you
mean.” 15 points each/30 points total.
1. Discuss the five stages of the policy-making process (the production line model). Outline
the activities and actors that may be involved in each stage.
2. Distinguish between positive and negative externalities. Provide examples of each. What
actions might government take to counter each?
IDENTIFICATION ITEMS. Define and identify the importance of the terms in ten (10) of the
pairs below. These items can generally be answered in two or three sentences. Students
should go beyond simple definitions of the terms or concepts to say why each is important.
Your answer should be written to demonstrate your familiarity with and understanding of both
terms or concepts in each pair. You should explain why the two are juxtaposed. 3 points
each/30 points total.
[example] Article I, sec. 8:18 v 10th Amendment – Article I, sec 8:18 implies that the national
government has powers beyond those that are expressly delegated in the Constitution while the 10 th
Amendment reserves for the states any powers not delegated by the Constitution to the national
government. These provisions reflect the competing political philosophies of the Federalists and the
Anti-Federalists respectively; consequently, the question of the balance of constitutional powers
between the two levels of government must be resolved by judicial interpretation.
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politics vs. government
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policy statements vs. implementing actions 
input structures vs. conversion structures 
public agenda vs. official agenda
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aggregate demand vs. productive capacity 
fiscal policy vs. monetary policy
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monopoly vs. ”natural” monopoly
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price ceiling vs. price floor
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progressive tax vs. regressive tax
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market capitalism vs. market socialism
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public good vs. private good
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policy outputs vs. policy outcomes
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policy outcomes
pure capitalism
laissez-faire capitalism
centrally-planned economy
market capitalism
market socialism
command socialism
command capitalism
mixed economy
asymmetrical information
monopoly
”natural” monopoly
transfer programs
price ceiling
price floor
progressive tax
regressive tax
free-rider problem