Question 1

Because majority voting fails to incorporate the strength of the preferences of individual voters, it:

Accepted Answer

A) creates negative externalities. 
B) under some circumstances produces economically inefficient outcomes. 
C) leads to market failure. 
D) leads to politics dominated by special interest groups. 
A) creates negative externalities. 
B) under some circumstances produces economically inefficient outcomes. 
C) leads to market failure. 
D) leads to politics dominated by special interest groups. B

Question 2

When congressional representatives vote on an appropriations bill, they must vote yea or nay, taking the bad with the good.This statement best reflects the:

Accepted Answer

A) paradox of voting. 
B) regulatory capture effect. 
C) benefits-received principle. 
D) concept of limited and bundled choices. 
A) paradox of voting. 
B) regulatory capture effect. 
C) benefits-received principle. 
D) concept of limited and bundled choices. D

Question 3

Proponents of deregulation point to all of the following industries as examples of successful deregulation except for:

Accepted Answer

A) airlines. 
B) pharmaceuticals. 
C) railroads. 
D) interstate trucking. 
A) airlines. 
B) pharmaceuticals. 
C) railroads. 
D) interstate trucking. B

Question 4

Suppose that friends Jennifer, Stephanie, and Megan cannot agree on how much to spend for a bouquet of flowers to send to a person that allowed them to use their beach house for the weekend.Jennifer wants to buy a moderately priced bouquet, Stephanie wants to buy an expensive bouquet, and Megan wants to buy a very expensive bouquet.Assuming no paradox of voting, majority voting will result in the decision to buy:

Accepted Answer

A) an inexpensive bouquet. 
B) a very expensive bouquet. 
C) a moderately priced bouquet. 
D) an expensive bouquet. 
A) an inexpensive bouquet. 
B) a very expensive bouquet. 
C) a moderately priced bouquet. 
D) an expensive bouquet.

Question 5

Factors that impede the attainment of economic efficiency in the public sector are called:

Accepted Answer

A) market failures. 
B) externalities. 
C) government failures. 
D) voting irregularities. 
A) market failures. 
B) externalities. 
C) government failures. 
D) voting irregularities.

Question 6

Chronic budget deficits can be attributed to:

Accepted Answer

A) unfunded liabilities. 
B) voters wanting government programs but not wanting to pay taxes. 
C) inappropriate monetary policy. 
D) state budget laws. 
A) unfunded liabilities. 
B) voters wanting government programs but not wanting to pay taxes. 
C) inappropriate monetary policy. 
D) state budget laws.

Question 7

The principal-agent problem is a problem for the private sector but does not apply to political decision making.

Accepted Answer

A) True 
 B)False

Question 8

The problem of limited and bundled choices explains why many voters cannot fully express their political preferences.

Accepted Answer

A) True 
 B)False

Question 9

Economists call the pursuit of a transfer of wealth through government at someone else's expense:

Accepted Answer

A) the paradox of voting. 
B) adverse selection. 
C) rent-seeking behavior. 
D) the benefits-received principle. 
A) the paradox of voting. 
B) adverse selection. 
C) rent-seeking behavior. 
D) the benefits-received principle.

Question 10

Which of the following is a source of government failure?

Accepted Answer

A) The invisible hand. 
B) The lack of bureaucracy in government. 
C) The enormous size and scope of government. 
D) Excessive flexibility. 
A) The invisible hand. 
B) The lack of bureaucracy in government. 
C) The enormous size and scope of government. 
D) Excessive flexibility.

Question 11

(Consider This) Voter failure describes the situation where:

Accepted Answer

A) an insufficient number of voters turn out to express their preferences. 
B) voter preferences cannot be adequately captured because of a voting paradox. 
C) voters support policies that would reduce productive and allocative efficiency. 
D) government officials make poor decisions that contradict voter preferences. 
A) an insufficient number of voters turn out to express their preferences. 
B) voter preferences cannot be adequately captured because of a voting paradox. 
C) voters support policies that would reduce productive and allocative efficiency. 
D) government officials make poor decisions that contradict voter preferences.

Question 12

Majority voting assures that government will provide a public good if it yields total benefits in excess of total costs.

Accepted Answer

A) True 
 B)False

Question 13

As it relates to owners and managers, the principal-agent problem results from the:

Accepted Answer

A) separation of corporate ownership and control. 
B) double taxation of corporate profit. 
C) limited liability of corporate owners. 
D) differing interests of corporate stockholders and bondholders. 
A) separation of corporate ownership and control. 
B) double taxation of corporate profit. 
C) limited liability of corporate owners. 
D) differing interests of corporate stockholders and bondholders.

Question 14

The field of economics that analyzes government decision making, politics, and elections is called:

Accepted Answer

A) public finance. 
B) public choice theory. 
C) collective economics. 
D) political economy. 
A) public finance. 
B) public choice theory. 
C) collective economics. 
D) political economy.

Question 15

The pursuit through government of a "transfer of wealth" at someone else's expense refers to:

Accepted Answer

A) logrolling. 
B) rent-seeking behavior. 
C) the paradox of voting. 
D) the median-voter model. 
A) logrolling. 
B) rent-seeking behavior. 
C) the paradox of voting. 
D) the median-voter model.

Question 16

Refer to the table.In a choice between education and public safety:

Accepted Answer

A) a majority of voters would favor education. 
B) no voter decision is possible. 
C) a majority of voters would favor public safety. 
D) the outcome would depend on which item was listed first on the ballot. 
A) a majority of voters would favor education. 
B) no voter decision is possible. 
C) a majority of voters would favor public safety. 
D) the outcome would depend on which item was listed first on the ballot.

Question 17

Logrolling can either increase or diminish economic efficiency.

Accepted Answer

A) True 
 B)False

Question 18

A debt crisis refers to how much government spending exceeds tax revenues in a given year.

Accepted Answer

A) True 
 B)False

Question 19

A government using fiscal policy in an attempt to stimulate the economy would do which of the following?

Accepted Answer

A) Raise taxes. 
B) Raise interest rates. 
C) Lower interest rates. 
D) Raise government spending. 
A) Raise taxes. 
B) Raise interest rates. 
C) Lower interest rates. 
D) Raise government spending.

Question 20

According to some economists, the private sector is more efficient than the public sector mainly because:

Accepted Answer

A) the private sector has a clear test of performance: profit and loss. 
B) wages, salaries, and fringe benefits are higher in the private sector. 
C) worker turnover is higher in the public sector. 
D) of extensive negative externalities in the public sector. 
A) the private sector has a clear test of performance: profit and loss. 
B) wages, salaries, and fringe benefits are higher in the private sector. 
C) worker turnover is higher in the public sector. 
D) of extensive negative externalities in the public sector.

Exam 5: B: Governments Role and Government Failure

Because majority voting fails to incorporate the strength of the preferences of individual voters, it:

When congressional representatives vote on an appropriations bill, they must vote yea or nay, taking the bad with the good.This statement best reflects the:

Proponents of deregulation point to all of the following industries as examples of successful deregulation except for:

Factors that impede the attainment of economic efficiency in the public sector are called:

Chronic budget deficits can be attributed to:

The principal-agent problem is a problem for the private sector but does not apply to political decision making.

The problem of limited and bundled choices explains why many voters cannot fully express their political preferences.

Economists call the pursuit of a transfer of wealth through government at someone else's expense:

Which of the following is a source of government failure?

(Consider This) Voter failure describes the situation where:

Majority voting assures that government will provide a public good if it yields total benefits in excess of total costs.

As it relates to owners and managers, the principal-agent problem results from the:

The field of economics that analyzes government decision making, politics, and elections is called:

The pursuit through government of a "transfer of wealth" at someone else's expense refers to:

Refer to the table.In a choice between education and public safety:

Logrolling can either increase or diminish economic efficiency.

A debt crisis refers to how much government spending exceeds tax revenues in a given year.

A government using fiscal policy in an attempt to stimulate the economy would do which of the following?

According to some economists, the private sector is more efficient than the public sector mainly because:

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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