AP ECONOMICS CHAPTER 5 QUIZ

1. The functional distribution of income refers to the:
A. division of income between personal taxes, consumption expenditures, and saving.
B. division of income on the basis of industry sources, for example, agriculture, transportation, mining, etc.
C. distribution of income to basic resource classes, that is, wages, rents, interest, and profits.
D. way income is distributed among specific households or spending units.

2. Listed in descending order of relative size, households divide their total incomes among:
A. consumption expenditures, saving, and taxes.
B. saving, consumption expenditures, and taxes.
C. consumption expenditures, taxes, and saving.
D. taxes, consumption expenditures, and saving.

3. Listed in descending order of relative size, total consumption spending is comprised of:
A. nondurable goods, durable goods, and services.
B. services, nondurable goods, and durable goods.
C. services, durable goods, and nondurable goods.
D. durable goods, nondurable goods, and services

4. Ebenezer likes to decorate the exterior of his house for the Christmas holidays. If his neighbors enjoy the display then it has created:
A. a negative externality, and government should respond by subsidizing holiday displays.
B. a negative externality, and government should respond by taxing holiday displays.
C. a positive externality, and government should respond by subsidizing holiday displays.
D. a positive externality and government should respond by taxing holiday displays.

5. Unlike a private good, a public good:
A. produces no external benefits or external costs.
B. has no opportunity costs.
C. has benefits that are available to all, regardless of payment.
D. is characterized by rivalry and excludability.

6. A quasi-public good is:
A. a public good that is produced profitably by private firms,