Exam 6: The Economics of Political Action

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)?

Which of the following is an important lesson that can be drawn from the experience of the Great Depression?

People who spend more time and effort investigating the advantages and disadvantages of different automobile models when they go to purchase one than they do investigating the strengths and weaknesses of presidential candidates are saying, in effect, that

Under democratic representative government, spending on a government program will likely be larger than the amount consistent with economic efficiency when

Which one of the following economists has played a central role in the development of the "economics of collective decision making," better known as public choice analysis?

Public choice theory assumes each voter will tend to support the political candidate who offers

The National Industrial Recovery Act essentially legalized

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 types of projects would government action most likely work well, undertaking only efficient projects and rejecting inefficient ones?

Which of the following is a predictable side effect of increased government activity (for example, taxes and subsidies) designed to redistribute income among citizens?

Fiscal policy analysis indicates that large tax increases during a severe recession will result in

The branch of economics that applies the principles and methodology of economics to the operation of the political process is known as

When voters pay taxes in proportion to the benefits they receive from government projects,

Use the figure below to answer the following question(s). Figure 6-2 -Figure 6-2 illustrates the four possibilities of the structure of production and consumption for a good or service. In which case is the incentive of producers to be efficient and the incentive for consumers to economize the weakest?

A special-interest issue is one that

Public choice theory indicates that representative government yields outcomes more consistent with economic efficiency when a close relationship exists between the benefits received and the costs borne by each voter. Which of the following methods of financing a government program will most likely result in a close relationship between voter benefits and costs?

Government action will often result in the counterproductive use of resources because

According to public choice theory, which of the following groups will likely benefit the most from government income transfers under a system of representative democracy?

Madison is a third-grade public school teacher who doesn't own a car and uses public transportation. According to public choice theory, which of the following four politicians for a public office would Madison be most likely to vote for in the upcoming election?

When decisions are made by majority rule, elected officials have a strong incentive to

Current tax rates are insufficient to finance the benefits promised by both the Social Security and Medicare programs. Are these unfunded promises surprising according to economic theory?