American Heritage Final Exam NEWEST 2025-2026 COMPLETE
QUESTIONS AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS)|ALREADY GRADED A+||BRAND NEW VERSION!!
What are the implications questioning as a result of deep change in our nation? -
CORRECT ANSWER- How do these changes affect our understanding of the
Constitution? Specifically, what role, if any, should government play in the
economy?
List all the market weaknesses - CORRECT ANSWER- ✤ Imperfect Information
✤ Monopoly
✤ Public Goods
✤ Externalities
✤ Economic Instability or Recession
✤ Economic Injustice
What are the three questions we need to ask when analyzing market
weaknesses? - CORRECT ANSWER- 1. Problem: What is the source of the market
breakdown?
2. Intervention: What could government do to correct the problem?
3. Evaluation: How successful is government intervention likely to be?
,Unintended consequences?
Describe imperfect information - CORRECT ANSWER- ✤ Because they do not have
complete or correct information, parties make exchanges that might be harmful.
✤ The value/cost of the good is not accurate.
✤ Both parties are not better off
what are possible government responses to imperfect information? - CORRECT
ANSWER- ✤ Use the courts to recover damages
✤ Require information labels and warnings
✤ Control production and marketing of goods
What are the challenges of government intervention in relieving imperfect
information? - CORRECT ANSWER- they can prevent good exchanges from happening
- like the example of FDA, maybe lives could be lost
Describe monopoly and the problems? - CORRECT ANSWER- ✤ A monopoly can
exercise significant *control over prices *because
it has exclusive control over production.
*Inequality*: Monopolist receives greater benefit from exchange
and can amass great wealth.
✤ *Inefficiency*: exchanges are restricted because of price
List all the founding principles - CORRECT ANSWER- The Good Society
,Freedom/Virtue/Welfare
Rule of Law
Market Economics
The Declaration of Independence
What are the differences between our nation at the time of the founding and
today? - CORRECT ANSWER- Agricultural and Rural --> Urban
Large Families --> Small Families
Little Formal Education --> Education Crucial
Low Life Expectancy --> High Life Expectancy
Largely Christian Believers with Common Moral View --> Diverse Religious Views
with Growing Minority of Non- Believers
Low Levels of Ethnic and Racial Diversity (+ Slavery) --> High Levels of Ethnic and
Racial Diversity
Concentrated on Eastern Seaboard --> Stretch from Coast to Coast
What are possible government responses to monopolies? - CORRECT ANSWER- ✤
Government may regulate economically powerful firms, forcing them to
price their products and behave like competitive firms.
✤ Example: Local utility company.
✤ Government may take action to foster competition in order to eliminate
the economic power of firms.
, ✤ Example: FCC decisions on exclusive cable TV deals for apartment
complexes.
What are the challenges of government intervention in relieving monopolies? -
CORRECT ANSWER- ✤ Differences in interests
✤ Businesses have powerful incentives to lobby regulatory
agencies. Individual consumers have relatively small stakes
(and thus a collective action problem).
✤ Antitrust laws
✤ Court cases can be expensive, time-consuming
What is a recession? - CORRECT ANSWER- ✤ Definition: "a significant decline in
economic activity spread across the
country, lasting more than a few months ..."
✤ National Bureau of Economic Research Business Cycle Dating
Committee
✤ Great Depression lasted 43 months
✤ Previous post-WWII recessions have lasted from 6 to 16 months
(average: 10 months)
QUESTIONS AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS)|ALREADY GRADED A+||BRAND NEW VERSION!!
What are the implications questioning as a result of deep change in our nation? -
CORRECT ANSWER- How do these changes affect our understanding of the
Constitution? Specifically, what role, if any, should government play in the
economy?
List all the market weaknesses - CORRECT ANSWER- ✤ Imperfect Information
✤ Monopoly
✤ Public Goods
✤ Externalities
✤ Economic Instability or Recession
✤ Economic Injustice
What are the three questions we need to ask when analyzing market
weaknesses? - CORRECT ANSWER- 1. Problem: What is the source of the market
breakdown?
2. Intervention: What could government do to correct the problem?
3. Evaluation: How successful is government intervention likely to be?
,Unintended consequences?
Describe imperfect information - CORRECT ANSWER- ✤ Because they do not have
complete or correct information, parties make exchanges that might be harmful.
✤ The value/cost of the good is not accurate.
✤ Both parties are not better off
what are possible government responses to imperfect information? - CORRECT
ANSWER- ✤ Use the courts to recover damages
✤ Require information labels and warnings
✤ Control production and marketing of goods
What are the challenges of government intervention in relieving imperfect
information? - CORRECT ANSWER- they can prevent good exchanges from happening
- like the example of FDA, maybe lives could be lost
Describe monopoly and the problems? - CORRECT ANSWER- ✤ A monopoly can
exercise significant *control over prices *because
it has exclusive control over production.
*Inequality*: Monopolist receives greater benefit from exchange
and can amass great wealth.
✤ *Inefficiency*: exchanges are restricted because of price
List all the founding principles - CORRECT ANSWER- The Good Society
,Freedom/Virtue/Welfare
Rule of Law
Market Economics
The Declaration of Independence
What are the differences between our nation at the time of the founding and
today? - CORRECT ANSWER- Agricultural and Rural --> Urban
Large Families --> Small Families
Little Formal Education --> Education Crucial
Low Life Expectancy --> High Life Expectancy
Largely Christian Believers with Common Moral View --> Diverse Religious Views
with Growing Minority of Non- Believers
Low Levels of Ethnic and Racial Diversity (+ Slavery) --> High Levels of Ethnic and
Racial Diversity
Concentrated on Eastern Seaboard --> Stretch from Coast to Coast
What are possible government responses to monopolies? - CORRECT ANSWER- ✤
Government may regulate economically powerful firms, forcing them to
price their products and behave like competitive firms.
✤ Example: Local utility company.
✤ Government may take action to foster competition in order to eliminate
the economic power of firms.
, ✤ Example: FCC decisions on exclusive cable TV deals for apartment
complexes.
What are the challenges of government intervention in relieving monopolies? -
CORRECT ANSWER- ✤ Differences in interests
✤ Businesses have powerful incentives to lobby regulatory
agencies. Individual consumers have relatively small stakes
(and thus a collective action problem).
✤ Antitrust laws
✤ Court cases can be expensive, time-consuming
What is a recession? - CORRECT ANSWER- ✤ Definition: "a significant decline in
economic activity spread across the
country, lasting more than a few months ..."
✤ National Bureau of Economic Research Business Cycle Dating
Committee
✤ Great Depression lasted 43 months
✤ Previous post-WWII recessions have lasted from 6 to 16 months
(average: 10 months)
