Question 1

Which of the following refers to when legislators trade votes on legislation?

Accepted Answer

A) the shortsightedness effect 
B) the special-interest effect 
C) rational-ignorance effect 
D) logrolling 
A) the shortsightedness effect 
B) the special-interest effect 
C) rational-ignorance effect 
D) logrolling

Question 2

In economics, actions by individuals and interest groups designed to influence public policy in a manner that will either directly or indirectly redistribute more income to themselves are known as

Accepted Answer

A) logrolling. 
B) rent seeking. 
C) influence peddling. 
D) redistribution searching. 
A) logrolling. 
B) rent seeking. 
C) influence peddling. 
D) redistribution searching.

Question 3

Elizabeth is the owner of a small business, and she is 35 years old. She doesn't smoke cigarettes, and she often spends her weekends with her family camping at the local state park. According to public choice theory, which of the following four politicians for a public office would Elizabeth be most likely to vote for in the upcoming election?

Accepted Answer

A) Politician A proposes increasing the tax on small businesses and using the money to provide additional benefits for the elderly. 
B) Politician B proposes increasing the tax on small businesses and using the money to improve the camping facilities at the state park. 
C) Politician C proposes increasing the excise tax on cigarettes and using the money to improve the camping facilities at the state park. 
D) Politician D proposes increasing the excise tax on cigarettes and using the money to provide additional benefits for the elderly. 
A) Politician A proposes increasing the tax on small businesses and using the money to provide additional benefits for the elderly. 
B) Politician B proposes increasing the tax on small businesses and using the money to improve the camping facilities at the state park. 
C) Politician C proposes increasing the excise tax on cigarettes and using the money to improve the camping facilities at the state park. 
D) Politician D proposes increasing the excise tax on cigarettes and using the money to provide additional benefits for the elderly.

Question 4

Public choice theory indicates competitive forces provide a politician with a strong incentive to offer voters a bundle of political goods that she believes

Accepted Answer

A) is best for the economic and political situations the country faces. 
B) will most likely clear the legislative process. 
C) will increase the welfare of society. 
D) will increase her chances of winning elections. 
A) is best for the economic and political situations the country faces. 
B) will most likely clear the legislative process. 
C) will increase the welfare of society. 
D) will increase her chances of winning elections.

Question 5

Use the figure below to answer the following question(s).
Figure 6-1  
-Figure 6-1 illustrates the four possibilities of the distribution of costs and benefits among voters for a government project. For which type would the government most likely fail to undertake many projects that would be considered efficient or productive (in other words, do too few of them relative to economic efficiency)?

Accepted Answer

A) type A 
B) type B 
C) type C 
D) type D 
A) type A 
B) type B 
C) type C 
D) type D

Question 6

Subsidizing coal mining and orange growing have both been found to be economically inefficient in that the costs outweigh the benefits. However, a subsidy on coal mining would help the coal producers in West Virginia and a subsidy on orange growing would help the orange farmers in Florida. So the senator from West Virginia approaches the senator from Florida and says that he will vote for the orange subsidy if the Florida senator votes for the coal-mining subsidy. The Florida senator agrees. Which term best describes what just happened?

Accepted Answer

A) the shortsightedness effect 
B) logrolling 
C) the use of user charges 
D) the political voter theory 
A) the shortsightedness effect 
B) logrolling 
C) the use of user charges 
D) the political voter theory

Question 7

Use the figure below to answer the following question(s).
Figure 6-1  
-Figure 6-1 illustrates the four possibilities of the distribution of costs and benefits among voters for a government project. For which type would the government most likely undertake many projects that would be considered inefficient or counterproductive (in other words, do too many of them relative to economic efficiency)?

Accepted Answer

A) type A 
B) type B 
C) type C 
D) type D 
A) type A 
B) type B 
C) type C 
D) type D

Question 8

Special-interest legislation is characterized by

Accepted Answer

A) concentrated costs and concentrated benefits 
B) concentrated benefits and widespread costs 
C) widespread benefits and widespread costs 
D) widespread benefits and concentrated costs 
E) zero costs 
A) concentrated costs and concentrated benefits 
B) concentrated benefits and widespread costs 
C) widespread benefits and widespread costs 
D) widespread benefits and concentrated costs 
E) zero costs

Question 9

In 2006, the American Association of Retired Persons (AARP) spent over $70 million on lobbying-related expenses in an attempt to get policies enacted that would benefit retirees. In economics, the term used to describe such activity is

Accepted Answer

A) logrolling. 
B) rent seeking. 
C) influence peddling. 
D) redistribution searching. 
A) logrolling. 
B) rent seeking. 
C) influence peddling. 
D) redistribution searching.

Question 10

In the case of a private good, which of the following forms of economic organization will result in the strongest incentive for consumers and producers to economize?

Accepted Answer

A) The good is produced privately and taxes are used to provide it to consumers free of charge. 
B) The good is produced privately and consumers purchase it with their own money. 
C) The good is produced by government enterprises and the cost of its production is covered by taxes. 
D) The good is produced by government enterprises and consumers purchase it with their own money. 
A) The good is produced privately and taxes are used to provide it to consumers free of charge. 
B) The good is produced privately and consumers purchase it with their own money. 
C) The good is produced by government enterprises and the cost of its production is covered by taxes. 
D) The good is produced by government enterprises and consumers purchase it with their own money.

Question 11

Economists refer to the lack of incentive that voters have to search for and obtain information to help make better political choices as the

Accepted Answer

A) shortsightedness effect. 
B) public-interest effect. 
C) free rider problem. 
D) rational-ignorance effect. 
A) shortsightedness effect. 
B) public-interest effect. 
C) free rider problem. 
D) rational-ignorance effect.

Question 12

Legislators often gain by bundling a number of projects benefiting local districts at the expense of general taxpayers together on a single bill. Such legislation is called

Accepted Answer

A) market failure legislation. 
B) the rational-ignorance effect. 
C) public-goods legislation. 
D) pork-barrel legislation. 
A) market failure legislation. 
B) the rational-ignorance effect. 
C) public-goods legislation. 
D) pork-barrel legislation.

Question 13

At the most basic level, the distinguishing characteristic of government that makes it different from private firms is its ability to

Accepted Answer

A) use coercive force against adults to modify their behavior or force them to pay for a good or service. 
B) direct resources in a manner that serves the public interest rather than the private interest of individuals. 
C) produce goods and services that people value. 
D) escape the constraints imposed by scarcity. 
A) use coercive force against adults to modify their behavior or force them to pay for a good or service. 
B) direct resources in a manner that serves the public interest rather than the private interest of individuals. 
C) produce goods and services that people value. 
D) escape the constraints imposed by scarcity.

Question 14

An issue that generates substantial benefits to a small group of individuals while imposing a small cost on many others is called a

Accepted Answer

A) special-interest issue. 
B) minority application. 
C) commons policy. 
D) national service. 
A) special-interest issue. 
B) minority application. 
C) commons policy. 
D) national service.

Question 15

Which of the following is true of government activities under a system of representative democracy?

Accepted Answer

A) When voters pay in proportion to benefits received, all voters will gain if the government activity is productive. 
B) If a majority opposes an activity, it must be counterproductive. 
C) When voters must pay in proportion to benefits received for an activity undertaken by the government, the activity will most likely be rejected by the majority of voters. 
D) Government activities must be productive in order to be eligible for vote. 
A) When voters pay in proportion to benefits received, all voters will gain if the government activity is productive. 
B) If a majority opposes an activity, it must be counterproductive. 
C) When voters must pay in proportion to benefits received for an activity undertaken by the government, the activity will most likely be rejected by the majority of voters. 
D) Government activities must be productive in order to be eligible for vote.

Question 16

Senator Dogood is pushing for the construction of a new military base in his state even though, from the standpoint of national security, it is clear that there are better places to locate the new military base. Economic theory would suggest that Senator Dogood is

Accepted Answer

A) acting irrationally; he must not know that the base would be better located in a different state. 
B) acting rationally; he realizes that constructing the base in his state will increase his chances of getting reelected. 
C) acting rationally if the country is currently at war but is acting irrationally if the country is not at war. 
D) trying to do what is best for the country. 
A) acting irrationally; he must not know that the base would be better located in a different state. 
B) acting rationally; he realizes that constructing the base in his state will increase his chances of getting reelected. 
C) acting rationally if the country is currently at war but is acting irrationally if the country is not at war. 
D) trying to do what is best for the country.

Question 17

Which of the following provides the best summary of the basic idea of public choice analysis?

Accepted Answer

A) Public choice analysis applies the principles of economics to political science topics. 
B) Public choice analysis takes the principles of political science and applies them to the traditional topics of economics. 
C) Public choice analysis uses the principle of majority rule to determine the efficiency of an action. 
D) Public choice analysis indicates there is a sharp distinction between economic and political topics. 
A) Public choice analysis applies the principles of economics to political science topics. 
B) Public choice analysis takes the principles of political science and applies them to the traditional topics of economics. 
C) Public choice analysis uses the principle of majority rule to determine the efficiency of an action. 
D) Public choice analysis indicates there is a sharp distinction between economic and political topics.

Question 18

Assume that you are a member of the U.S. House of Representatives from your home state and district. Which of the following best explains why you have a strong incentive to get the federal government to finance pork-barrel projects in your district?

Accepted Answer

A) Most of the benefits of pork-barrel projects within your district will accrue to your constituents, while most of the costs will be imposed on voters from other districts. 
B) Most of the costs of pork-barrel projects within your district will be imposed on your constituents, while most of the benefits will accrue to voters from other districts. 
C) Pork producers are a powerful political lobby that will influence the actions of legislators in all districts. 
D) This is a trick question; in a representative democracy, there is little incentive for legislators to support pork-barrel projects. 
A) Most of the benefits of pork-barrel projects within your district will accrue to your constituents, while most of the costs will be imposed on voters from other districts. 
B) Most of the costs of pork-barrel projects within your district will be imposed on your constituents, while most of the benefits will accrue to voters from other districts. 
C) Pork producers are a powerful political lobby that will influence the actions of legislators in all districts. 
D) This is a trick question; in a representative democracy, there is little incentive for legislators to support pork-barrel projects.

Question 19

Which of the following is true?

Accepted Answer

A) The incentives to engage in rent-seeking activities increase with the ease with which the political process can provide personal gain at the expense of others. 
B) The amount of resources devoted toward rent seeking generally has no impact on the economic prosperity of a nation. 
C) Income transfers directed toward the poor constitute about half of all income transfers in the United States. 
D) All of the above are correct. 
A) The incentives to engage in rent-seeking activities increase with the ease with which the political process can provide personal gain at the expense of others. 
B) The amount of resources devoted toward rent seeking generally has no impact on the economic prosperity of a nation. 
C) Income transfers directed toward the poor constitute about half of all income transfers in the United States. 
D) All of the above are correct.

Question 20

Measured as a share of national income, government expenditures on income transfers during the last 70 years have

Accepted Answer

A) grown rapidly. 
B) declined substantially. 
C) been virtually unchanged. 
D) increased throughout much of that period, but they have declined substantially since 1980. 
A) grown rapidly. 
B) declined substantially. 
C) been virtually unchanged. 
D) increased throughout much of that period, but they have declined substantially since 1980.

Which of the following refers to when legislators trade votes on legislation?

In economics, actions by individuals and interest groups designed to influence public policy in a manner that will either directly or indirectly redistribute more income to themselves are known as

Public choice theory indicates competitive forces provide a politician with a strong incentive to offer voters a bundle of political goods that she believes

Special-interest legislation is characterized by

In 2006, the American Association of Retired Persons (AARP) spent over $70 million on lobbying-related expenses in an attempt to get policies enacted that would benefit retirees. In economics, the term used to describe such activity is

In the case of a private good, which of the following forms of economic organization will result in the strongest incentive for consumers and producers to economize?

Economists refer to the lack of incentive that voters have to search for and obtain information to help make better political choices as the

Legislators often gain by bundling a number of projects benefiting local districts at the expense of general taxpayers together on a single bill. Such legislation is called

At the most basic level, the distinguishing characteristic of government that makes it different from private firms is its ability to

An issue that generates substantial benefits to a small group of individuals while imposing a small cost on many others is called a

Which of the following is true of government activities under a system of representative democracy?

Senator Dogood is pushing for the construction of a new military base in his state even though, from the standpoint of national security, it is clear that there are better places to locate the new military base. Economic theory would suggest that Senator Dogood is

Which of the following provides the best summary of the basic idea of public choice analysis?

Assume that you are a member of the U.S. House of Representatives from your home state and district. Which of the following best explains why you have a strong incentive to get the federal government to finance pork-barrel projects in your district?

Which of the following is true?

Measured as a share of national income, government expenditures on income transfers during the last 70 years have

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 6: The Economics of Political Action

Which of the following refers to when legislators trade votes on legislation?

In economics, actions by individuals and interest groups designed to influence public policy in a manner that will either directly or indirectly redistribute more income to themselves are known as

Public choice theory indicates competitive forces provide a politician with a strong incentive to offer voters a bundle of political goods that she believes

Special-interest legislation is characterized by

In 2006, the American Association of Retired Persons (AARP) spent over $70 million on lobbying-related expenses in an attempt to get policies enacted that would benefit retirees. In economics, the term used to describe such activity is

In the case of a private good, which of the following forms of economic organization will result in the strongest incentive for consumers and producers to economize?

Economists refer to the lack of incentive that voters have to search for and obtain information to help make better political choices as the

Legislators often gain by bundling a number of projects benefiting local districts at the expense of general taxpayers together on a single bill. Such legislation is called

At the most basic level, the distinguishing characteristic of government that makes it different from private firms is its ability to

An issue that generates substantial benefits to a small group of individuals while imposing a small cost on many others is called a

Which of the following is true of government activities under a system of representative democracy?

Senator Dogood is pushing for the construction of a new military base in his state even though, from the standpoint of national security, it is clear that there are better places to locate the new military base. Economic theory would suggest that Senator Dogood is

Which of the following provides the best summary of the basic idea of public choice analysis?

Assume that you are a member of the U.S. House of Representatives from your home state and district. Which of the following best explains why you have a strong incentive to get the federal government to finance pork-barrel projects in your district?

Which of the following is true?

Measured as a share of national income, government expenditures on income transfers during the last 70 years have

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters