Question 1

The unlawful misdirection of governmental resources for personal gain is known as:

Accepted Answer

A) political corruption. 
B) logrolling. 
C) adverse selection. 
D) the special-interest effect. 
A) political corruption. 
B) logrolling. 
C) adverse selection. 
D) the special-interest effect.

Question 2

Public choice economists:

Accepted Answer

A) analyze the incidence of taxes. 
B) are also known as Keynesian economists. 
C) use the tools of economics to analyze decision making, politics, and elections in the public sector. 
D) are, by definition, economists employed by federal, state, and local governments. 
A) analyze the incidence of taxes. 
B) are also known as Keynesian economists. 
C) use the tools of economics to analyze decision making, politics, and elections in the public sector. 
D) are, by definition, economists employed by federal, state, and local governments.

Question 3

Regulatory capture occurs when government exerts excessive control over an industry.

Accepted Answer

A) True 
 B)False

Question 4

Suppose three roommates cannot agree on the size of a pizza to order.Domino argues for a medium pizza, Godfather contends a large pizza will be needed, and Little Caesar wants a super-large pizza.Assuming no paradox of voting, majority voting will result in a decision to order:

Accepted Answer

A) a medium pizza. 
B) a large pizza. 
C) a super-large pizza. 
D) two medium pizzas. 
A) a medium pizza. 
B) a large pizza. 
C) a super-large pizza. 
D) two medium pizzas.

Question 5

Which of the following is an activity of government that is not an activity of private firms?

Accepted Answer

A) Enforcing involuntary transactions. 
B) Paying equitable wages. 
C) Creating positive externalities. 
D) Pursuing economic efficiency. 
A) Enforcing involuntary transactions. 
B) Paying equitable wages. 
C) Creating positive externalities. 
D) Pursuing economic efficiency.

Question 6

The trading of votes by elected officials to secure favorable outcomes is called:

Accepted Answer

A) splitting the difference. 
B) social engineering. 
C) logrolling. 
D) grandstanding. 
A) splitting the difference. 
B) social engineering. 
C) logrolling. 
D) grandstanding.

Question 7

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

Accepted Answer

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

Question 8

(Consider This) Which of the following is an example of voter failure?

Accepted Answer

A) Voters support adding stop lights that would increase congestion and travel costs without increasing safety or convenience. 
B) Government officials ignore voter calls for regulations that would reduce negative externalities and enhance efficiency. 
C) Voters wanting greater highway safety are unable to express their preferences on how to achieve it because the voting system doesn't allow it. 
D) Voters wanting more government services are divided on what services they most prefer, leaving government officials to determine what is best. 
A) Voters support adding stop lights that would increase congestion and travel costs without increasing safety or convenience. 
B) Government officials ignore voter calls for regulations that would reduce negative externalities and enhance efficiency. 
C) Voters wanting greater highway safety are unable to express their preferences on how to achieve it because the voting system doesn't allow it. 
D) Voters wanting more government services are divided on what services they most prefer, leaving government officials to determine what is best.

Question 9

Which of the following is a key difference between the economic activities of government and those of private firms?

Accepted Answer

A) Private firms face the constraint of scarcity; government does not. 
B) Government focuses primarily on equity; private firms focus only on efficiency. 
C) Private economic activities create externalities; government activities do not. 
D) Government has the legal right to force people to do things; private firms do not. 
A) Private firms face the constraint of scarcity; government does not. 
B) Government focuses primarily on equity; private firms focus only on efficiency. 
C) Private economic activities create externalities; government activities do not. 
D) Government has the legal right to force people to do things; private firms do not.

Question 10

Government failure is a prominent topic in:

Accepted Answer

A) public choice theory. 
B) Keynesian economics. 
C) socialist theory. 
D) behavioral economics. 
A) public choice theory. 
B) Keynesian economics. 
C) socialist theory. 
D) behavioral economics.

Question 11

In corporations, owners are __________________ and managers are ________________.

Accepted Answer

A) agents; principals 
B) stockholders; bondholders 
C) agents; employees 
D) principals; agents 
A) agents; principals 
B) stockholders; bondholders 
C) agents; employees 
D) principals; agents

Question 12

As it relates to corporations, the principal-agent problem is that:

Accepted Answer

A) the goals of the corporate managers (the principals) may not match the goals of the corporate owners (the agents). 
B) the goals of the corporate managers (the agents) may not match the goals of the corporate owners (the principals). 
C) the federal government (the agent) taxes both corporate profits and the dividends paid to stockholders (the principals). 
D) it is costly for the corporate owners (the principals) to obtain a corporate charter from government (the agent). 
A) the goals of the corporate managers (the principals) may not match the goals of the corporate owners (the agents). 
B) the goals of the corporate managers (the agents) may not match the goals of the corporate owners (the principals). 
C) the federal government (the agent) taxes both corporate profits and the dividends paid to stockholders (the principals). 
D) it is costly for the corporate owners (the principals) to obtain a corporate charter from government (the agent).

Question 13

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

Accepted Answer

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

Question 14

Deregulation is seen as a solution to regulatory capture because it eliminates the regulatory agency that can or has been captured.

Accepted Answer

A) True 
 B)False

Question 15

The size and scope of government inhibit the flow of information to decision makers, leading to inefficient outcomes.

Accepted Answer

A) True 
 B)False

Question 16

Because of the force of law and bureaucratic structure, government accountability is less of a problem than in the private sector.

Accepted Answer

A) True 
 B)False

Question 17

The many layers of the federal government in Canada:

Accepted Answer

A) lead to economic inefficiencies because of difficulty aggregating and conveying information. 
B) enhance government's ability make effective decisions quickly. 
C) better allow the invisible hand to direct government resources to their best uses. 
D) improve accountability of government officials, thus leading to more efficient policies. 
A) lead to economic inefficiencies because of difficulty aggregating and conveying information. 
B) enhance government's ability make effective decisions quickly. 
C) better allow the invisible hand to direct government resources to their best uses. 
D) improve accountability of government officials, thus leading to more efficient policies.

Question 18

Regulatory capture often occurs because of which of the following?

Accepted Answer

A) Government officials want stronger control over industry regulation. 
B) Nearly everyone with expertise works in the regulated industry. 
C) Patent law allows firms to gain monopoly power easily and therefore control a market. 
D) Consumer groups are effective at lobbying the government for industry regulation. 
A) Government officials want stronger control over industry regulation. 
B) Nearly everyone with expertise works in the regulated industry. 
C) Patent law allows firms to gain monopoly power easily and therefore control a market. 
D) Consumer groups are effective at lobbying the government for industry regulation.

Question 19

Changes in tax rates are a form of monetary policy.

Accepted Answer

A) True 
 B)False

Question 20

Monetary stimulus is only helpful to an economy:

Accepted Answer

A) that is experiencing high inflation. 
B) that is in recession. 
C) experiencing significant negative externalities. 
D) with few public goods. 
A) that is experiencing high inflation. 
B) that is in recession. 
C) experiencing significant negative externalities. 
D) with few public goods.

Exam 5: B: Governments Role and Government Failure

The unlawful misdirection of governmental resources for personal gain is known as:

Public choice economists:

Regulatory capture occurs when government exerts excessive control over an industry.

Suppose three roommates cannot agree on the size of a pizza to order.Domino argues for a medium pizza, Godfather contends a large pizza will be needed, and Little Caesar wants a super-large pizza.Assuming no paradox of voting, majority voting will result in a decision to order:

Which of the following is an activity of government that is not an activity of private firms?

The trading of votes by elected officials to secure favorable outcomes is called:

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

(Consider This) Which of the following is an example of voter failure?

Which of the following is a key difference between the economic activities of government and those of private firms?

Government failure is a prominent topic in:

In corporations, owners are __________________ and managers are ________________.

As it relates to corporations, the principal-agent problem is that:

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

Deregulation is seen as a solution to regulatory capture because it eliminates the regulatory agency that can or has been captured.

The size and scope of government inhibit the flow of information to decision makers, leading to inefficient outcomes.

Because of the force of law and bureaucratic structure, government accountability is less of a problem than in the private sector.

The many layers of the federal government in Canada:

Regulatory capture often occurs because of which of the following?

Changes in tax rates are a form of monetary policy.

Monetary stimulus is only helpful to an economy:

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

Filters

In corporations, owners are __ and managers are .