American Heritage BYU Final Exam 2025/26
Questions and Answers ( 100% Verified Answers )
A+ Rated , Guaranteed Pass
List all the founding principles - ...answerThe 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? -
...answerAgricultural 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 the implications questioning as a result of deep change in our nation? - ...answerHow
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 - ...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? - ...answer1.
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 - ...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? - ...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? -
...answerthey can prevent good exchanges from happening - like the example of FDA, maybe
lives could be lost
Describe monopoly and the problems? - ...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
What are possible government responses to monopolies? - ...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? - ...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? - ...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)
Why do recessions occur? - ...answer✤ *A negative "shock" hits the economy*
✤ Example: stock market correction, oil price increase, bank panic, etc.
✤ If wages and prices adjust downward quickly, full employment is preserved and output
stabilizes
✤* But contracts, inertia, and other forces (government policies?) prevent quick adjustment of
wages and prices*
✤ Output falls and resources are unemployed, including labor
✤ Recovery takes place as wages and prices adjust
Why are recessions so bad? Can they ever be good? - ...answer✤ Recessions are costly
-Lost employment of resources/income
-Lost output
✤ Recessions may also have some benefits
-Allow for readjustments which can lead to increased standard of living in the
future (purge bad businesses)
-Like going to the dentist -- painful now, helpful later
What can government do in the case of a recession? - ...answer✤ Nothing
Questions and Answers ( 100% Verified Answers )
A+ Rated , Guaranteed Pass
List all the founding principles - ...answerThe 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? -
...answerAgricultural 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 the implications questioning as a result of deep change in our nation? - ...answerHow
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 - ...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? - ...answer1.
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 - ...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? - ...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? -
...answerthey can prevent good exchanges from happening - like the example of FDA, maybe
lives could be lost
Describe monopoly and the problems? - ...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
What are possible government responses to monopolies? - ...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? - ...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? - ...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)
Why do recessions occur? - ...answer✤ *A negative "shock" hits the economy*
✤ Example: stock market correction, oil price increase, bank panic, etc.
✤ If wages and prices adjust downward quickly, full employment is preserved and output
stabilizes
✤* But contracts, inertia, and other forces (government policies?) prevent quick adjustment of
wages and prices*
✤ Output falls and resources are unemployed, including labor
✤ Recovery takes place as wages and prices adjust
Why are recessions so bad? Can they ever be good? - ...answer✤ Recessions are costly
-Lost employment of resources/income
-Lost output
✤ Recessions may also have some benefits
-Allow for readjustments which can lead to increased standard of living in the
future (purge bad businesses)
-Like going to the dentist -- painful now, helpful later
What can government do in the case of a recession? - ...answer✤ Nothing
