Question 1

Most voters will likely be concerned with

Accepted Answer

A)  most issues since most issues have some impact, however slight, on each citizen. 
B)  only a few special issues (those that exert the most impact on the voters' personal welfare). 
C)  most issues since information on most issues can be obtained at a low cost. 
D)  the views of a particular political candidate on all issues. 
A)  most issues since most issues have some impact, however slight, on each citizen. 
B)  only a few special issues (those that exert the most impact on the voters' personal welfare). 
C)  most issues since information on most issues can be obtained at a low cost. 
D)  the views of a particular political candidate on all issues.

Question 2

A local government operates a city recreation center with a pool and tennis courts. The center is financed through $50 annual membership fees (required for members to use it). This type of financing is an example of a

Accepted Answer

A)  head tax. 
B)  excise fee. 
C)  user charge. 
D)  progressive tax. 
A)  head tax. 
B)  excise fee. 
C)  user charge. 
D)  progressive tax.

Question 3

The National Industrial Recovery Act, passed in 1933,

Accepted Answer

A)  broke up monopolies and cartels, and introduce competition into several different industries. 
B)  fixed prices, wages, and quotas for several industries in an effort to keep prices high. 
C)  lowered corporate taxes and removed collusive behavior in an effort to keep U.S. firms competitive with foreign manufacturers. 
D)  created a stable economic environment that encouraged investment and expansion in the industrial sector of the economy. 
A)  broke up monopolies and cartels, and introduce competition into several different industries. 
B)  fixed prices, wages, and quotas for several industries in an effort to keep prices high. 
C)  lowered corporate taxes and removed collusive behavior in an effort to keep U.S. firms competitive with foreign manufacturers. 
D)  created a stable economic environment that encouraged investment and expansion in the industrial sector of the economy.

Question 4

Special-interest programs are highly attractive to vote-seeking politicians because

Accepted Answer

A)  these programs are highly efficient, and therefore, they tend to enhance the general welfare of the populace. 
B)  members of special interest groups favoring these programs are less likely to vote than the taxpayers who pay for them. 
C)  low-income recipients are the primary beneficiaries of special-interest programs. 
D)  members of special interest groups favoring these programs feel strongly about them while most other voters are rationally uninformed about them. 
A)  these programs are highly efficient, and therefore, they tend to enhance the general welfare of the populace. 
B)  members of special interest groups favoring these programs are less likely to vote than the taxpayers who pay for them. 
C)  low-income recipients are the primary beneficiaries of special-interest programs. 
D)  members of special interest groups favoring these programs feel strongly about them while most other voters are rationally uninformed about them.

Question 5

Which of the following was a result of the many programs introduced as part of the New Deal?

Accepted Answer

A)  A business environment of uncertainty that reduced output and investment. 
B)  A speeding up of the economic recovery process once these programs were enacted. 
C)  An increase in trade, investment, and output within the business sector. 
D)  A steady decline in the unemployment rate. 
A)  A business environment of uncertainty that reduced output and investment. 
B)  A speeding up of the economic recovery process once these programs were enacted. 
C)  An increase in trade, investment, and output within the business sector. 
D)  A steady decline in the unemployment rate.

Question 6

Which one of the following was a secondary effect of the stock market crash of 1929?

Accepted Answer

A)  An increase in the money supply in the early 1930s. 
B)  A decline in consumption expenditures because of the reduction in the wealth of stockholders. 
C)  An increase in the supply of loanable funds as people transferred funds from the stock market into savings accounts. 
D)  An increase in tax revenues as the sellers of stocks paid the capital gains tax on stocks that had appreciated during the 1920s. 
A)  An increase in the money supply in the early 1930s. 
B)  A decline in consumption expenditures because of the reduction in the wealth of stockholders. 
C)  An increase in the supply of loanable funds as people transferred funds from the stock market into savings accounts. 
D)  An increase in tax revenues as the sellers of stocks paid the capital gains tax on stocks that had appreciated during the 1920s.

Question 7

The shortsightedness effect suggests that

Accepted Answer

A)  politicians have a strong incentive to support projects that yield immediate and easily recognized benefits, especially when the costs of the projects are difficult to identify and are observable only in the distant future. 
B)  politicians have a strong incentive to support projects that yield benefits in the distant future, especially when the costs of the project must be paid for in the current period. 
C)  voters will tend to weigh future costs and benefits more heavily than current costs and benefits. 
D)  legislators will be unwilling to trade votes on issues, especially when those issues benefit only special interest groups. 
A)  politicians have a strong incentive to support projects that yield immediate and easily recognized benefits, especially when the costs of the projects are difficult to identify and are observable only in the distant future. 
B)  politicians have a strong incentive to support projects that yield benefits in the distant future, especially when the costs of the project must be paid for in the current period. 
C)  voters will tend to weigh future costs and benefits more heavily than current costs and benefits. 
D)  legislators will be unwilling to trade votes on issues, especially when those issues benefit only special interest groups.

Question 8

Which of the following perspectives exerted the most impact on fiscal policy during the Great Depression?

Accepted Answer

A)  The Keynesian view. 
B)  The supply-side view. 
C)  The view that the federal government should maintain a balanced budget. 
D)  The new classical view that fiscal policy exerts little impact on demand and output. 
A)  The Keynesian view. 
B)  The supply-side view. 
C)  The view that the federal government should maintain a balanced budget. 
D)  The new classical view that fiscal policy exerts little impact on demand and output.

Question 9

According to the shortsightedness effect, politicians tend to favor projects with

Accepted Answer

A)  short-run benefits and short-run costs. 
B)  short-run benefits and long-run costs. 
C)  long-run benefits and short-run costs. 
D)  long-run benefits and long-run costs. 
A)  short-run benefits and short-run costs. 
B)  short-run benefits and long-run costs. 
C)  long-run benefits and short-run costs. 
D)  long-run benefits and long-run costs.

Question 10

During the Great Depression of 1929-1933,

Accepted Answer

A)  the Fed allowed the money supply to contract substantially. 
B)  the Fed increased the money supply sharply. 
C)  Congress cut tax rates sharply. 
D)  Congress cut tariffs substantially. 
A)  the Fed allowed the money supply to contract substantially. 
B)  the Fed increased the money supply sharply. 
C)  Congress cut tax rates sharply. 
D)  Congress cut tariffs substantially.

Question 11

Public choice theory suggests that politicians will be most likely to favor redistribution of income from

Accepted Answer

A)  the rich to the poor. 
B)  unorganized taxpayers to well-organized interest groups. 
C)  well-organized business groups to consumers. 
D)  none of the above. 
A)  the rich to the poor. 
B)  unorganized taxpayers to well-organized interest groups. 
C)  well-organized business groups to consumers. 
D)  none of the above.

Question 12

Which of the following statements is false?

Accepted Answer

A)  Political activities consistent with economic efficiency tend to emerge naturally from the unconstrained democratic political process. 
B)  Constitutional rules establishing procedures and limiting the ability of the political process to engage in redistributive activities can improve the economic efficiency of government. 
C)  Rent-seeking activity tends to retard the economic prosperity of a nation because it takes resources away from productive private sector activities. 
D)  Unconstrained democratic governments often enact special-interest programs that waste resources and impair the standard of living of a country. 
A)  Political activities consistent with economic efficiency tend to emerge naturally from the unconstrained democratic political process. 
B)  Constitutional rules establishing procedures and limiting the ability of the political process to engage in redistributive activities can improve the economic efficiency of government. 
C)  Rent-seeking activity tends to retard the economic prosperity of a nation because it takes resources away from productive private sector activities. 
D)  Unconstrained democratic governments often enact special-interest programs that waste resources and impair the standard of living of a country.

Question 13

Government decisions tend to be biased toward actions that have

Accepted Answer

A)  current benefits that are easily observable and future costs that are difficult to identify. 
B)  current benefits and future costs that are both difficult to identify. 
C)  future costs that are easily observable. 
D)  clear benefits to the poor at no costs to the wealthy. 
A)  current benefits that are easily observable and future costs that are difficult to identify. 
B)  current benefits and future costs that are both difficult to identify. 
C)  future costs that are easily observable. 
D)  clear benefits to the poor at no costs to the wealthy.

Question 14

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 15

"The Great Depression was caused by the 1929 stock market crash." Which of the following is an indication that this statement is false?

Accepted Answer

A)  The stock market had regained most of its losses from the October 1929 crash by April 1930. 
B)  The recessionary conditions actually began in the mid-1920s before the stock market crash. 
C)  The Great Depression was a result of government failure to intervene in market activity. 
D)  Economic theory indicates that a reduction in stock prices would reduce the consumer price index and thereby stimulate output and employment. 
A)  The stock market had regained most of its losses from the October 1929 crash by April 1930. 
B)  The recessionary conditions actually began in the mid-1920s before the stock market crash. 
C)  The Great Depression was a result of government failure to intervene in market activity. 
D)  Economic theory indicates that a reduction in stock prices would reduce the consumer price index and thereby stimulate output and employment.

Question 16

The methodology of public choice analysis

Accepted Answer

A)  develops a logically consistent theory based on how individual actors (such as voters, politicians, and bureaucrats) respond to incentives. 
B)  assumes that all decisions made by individual actors in the public sector are done with the public interest in mind, rather than their private interests. 
C)  assumes that individuals generally react to the incentives they face when making choices in the private sector but not in the public sector. 
D)  focuses on the development of a single theory of government as a whole rather than on analyzing the choices made by individual agents in the public sector. 
A)  develops a logically consistent theory based on how individual actors (such as voters, politicians, and bureaucrats) respond to incentives. 
B)  assumes that all decisions made by individual actors in the public sector are done with the public interest in mind, rather than their private interests. 
C)  assumes that individuals generally react to the incentives they face when making choices in the private sector but not in the public sector. 
D)  focuses on the development of a single theory of government as a whole rather than on analyzing the choices made by individual agents in the public sector.

Question 17

Which of the following is an example of a good that is produced by the public sector but consumers purchase it in proportion to the benefit received?

Accepted Answer

A)  milk 
B)  public education 
C)  first-class mail delivery from the U.S. Post Office 
D)  national defense 
A)  milk 
B)  public education 
C)  first-class mail delivery from the U.S. Post Office 
D)  national defense

Question 18

According to the data, was the stock-market crash of 1929 the primary cause of the Great Depression?

Accepted Answer

A)  No, the Great Depression actually began two years before the stock market crash of 1929. 
B)  Yes, after the stock market crash of October 1929 the market never recovered until the depression came to an end a decade later. 
C)  Yes, sharp reductions in stock prices like that of 1929 always result in prolonged depressions. 
D)  No, the stock market actually recovered to the level of October 1929 during the five months following the crash. 
A)  No, the Great Depression actually began two years before the stock market crash of 1929. 
B)  Yes, after the stock market crash of October 1929 the market never recovered until the depression came to an end a decade later. 
C)  Yes, sharp reductions in stock prices like that of 1929 always result in prolonged depressions. 
D)  No, the stock market actually recovered to the level of October 1929 during the five months following the crash.

Question 19

Which of the following is the most likely explanation for the imposition of a price floor in the market for corn?

Accepted Answer

A)  Policymakers have studied the effects of the price floor carefully and they recognize that the price floor will improve the efficiency of resource use. 
B)  Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into enacting the price floor. 
C)  Buyers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor. 
D)  Sellers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor. 
A)  Policymakers have studied the effects of the price floor carefully and they recognize that the price floor will improve the efficiency of resource use. 
B)  Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into enacting the price floor. 
C)  Buyers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor. 
D)  Sellers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor.

Question 20

Which one of the following factors contributed to the decline in real output during the Great Depression?

Accepted Answer

A)  Deflation, which changed the terms of long-term contracts and discouraged long-term exchange. 
B)  Inflation, which reduced the value of the dollar and eroded the savings of the elderly. 
C)  Stable monetary policy, which caused business decision makers to lose confidence in the Fed's ability to fine-tune the economy. 
D)  Establishment of the Federal Deposit Insurance Corporation. 
A)  Deflation, which changed the terms of long-term contracts and discouraged long-term exchange. 
B)  Inflation, which reduced the value of the dollar and eroded the savings of the elderly. 
C)  Stable monetary policy, which caused business decision makers to lose confidence in the Fed's ability to fine-tune the economy. 
D)  Establishment of the Federal Deposit Insurance Corporation.

Most voters will likely be concerned with

A local government operates a city recreation center with a pool and tennis courts. The center is financed through $50 annual membership fees (required for members to use it). This type of financing is an example of a

The National Industrial Recovery Act, passed in 1933,

Special-interest programs are highly attractive to vote-seeking politicians because

Which of the following was a result of the many programs introduced as part of the New Deal?

Which one of the following was a secondary effect of the stock market crash of 1929?

The shortsightedness effect suggests that

Which of the following perspectives exerted the most impact on fiscal policy during the Great Depression?

According to the shortsightedness effect, politicians tend to favor projects with

During the Great Depression of 1929-1933,

Public choice theory suggests that politicians will be most likely to favor redistribution of income from

Which of the following statements is false?

Government decisions tend to be biased toward actions that have

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

"The Great Depression was caused by the 1929 stock market crash." Which of the following is an indication that this statement is false?

The methodology of public choice analysis

Which of the following is an example of a good that is produced by the public sector but consumers purchase it in proportion to the benefit received?

According to the data, was the stock-market crash of 1929 the primary cause of the Great Depression?

Which of the following is the most likely explanation for the imposition of a price floor in the market for corn?

Which one of the following factors contributed to the decline in real output during the Great Depression?

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

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 6: The Economics of Political Action

Most voters will likely be concerned with

A local government operates a city recreation center with a pool and tennis courts. The center is financed through $50 annual membership fees (required for members to use it). This type of financing is an example of a

The National Industrial Recovery Act, passed in 1933,

Special-interest programs are highly attractive to vote-seeking politicians because

Which of the following was a result of the many programs introduced as part of the New Deal?

Which one of the following was a secondary effect of the stock market crash of 1929?

The shortsightedness effect suggests that

Which of the following perspectives exerted the most impact on fiscal policy during the Great Depression?

According to the shortsightedness effect, politicians tend to favor projects with

During the Great Depression of 1929-1933,

Public choice theory suggests that politicians will be most likely to favor redistribution of income from

Which of the following statements is false?

Government decisions tend to be biased toward actions that have

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

"The Great Depression was caused by the 1929 stock market crash." Which of the following is an indication that this statement is false?

The methodology of public choice analysis

Which of the following is an example of a good that is produced by the public sector but consumers purchase it in proportion to the benefit received?

According to the data, was the stock-market crash of 1929 the primary cause of the Great Depression?

Which of the following is the most likely explanation for the imposition of a price floor in the market for corn?

Which one of the following factors contributed to the decline in real output during the Great Depression?

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

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters