Question 1

In a representative democracy, government action results from the

Accepted Answer

A)  choices of voters. 
B)  legislative decisions by politicians. 
C)  political action of organized interest groups. 
D)  complex interaction of all of the above. 
A)  choices of voters. 
B)  legislative decisions by politicians. 
C)  political action of organized interest groups. 
D)  complex interaction of all of the above.

Question 2

Congressman Localstuff always votes for a balanced budget amendment to the U.S. Constitution. He also always votes for spending bills supported by the leadership of his political party. Is this rational?

Accepted Answer

Congressman Localstuff's constituents pr

Question 3

With a strong and active federal government, why do we need state and local governments?

Accepted Answer

Our model of government is one of fiscal

Question 4

A survey of income by county revealed that four of the five wealthiest counties were located in the suburbs surrounding Washington,
D.C. Why?

Accepted Answer

Normally, wealth is associated with prod

Question 5

Which of the following is a lesson that can be learned from monetary policy during the Great Depression?

Accepted Answer

A)  Monetary policy should be changed frequently in response to economic fluctuations. 
B)  Prolonged periods of monetary contraction will retard economic growth. 
C)  Low interest rates will direct an economy toward recovery. 
D)  Monetary policy should focus on variables such as output and employment. 
A)  Monetary policy should be changed frequently in response to economic fluctuations. 
B)  Prolonged periods of monetary contraction will retard economic growth. 
C)  Low interest rates will direct an economy toward recovery. 
D)  Monetary policy should focus on variables such as output and employment.

Question 6

When subsidies, tax credits, and government favoritism are increasingly used to allocate goods and services,

Accepted Answer

A)  lobbying activities will increase. 
B)  contributions for political campaigns will increase. 
C)  political corruption will become more widespread. 
D)  All of the above are true. 
A)  lobbying activities will increase. 
B)  contributions for political campaigns will increase. 
C)  political corruption will become more widespread. 
D)  All of the above are true.

Question 7

Prolonged periods of monetary contraction, as was the case during the Great Depression, will likely result in

Accepted Answer

A)  an increase in real output and employment. 
B)  an increase in loanable funds and upward pressure on the rate of inflation. 
C)  a decrease in output and downward pressure on prices. 
D)  a decrease in unemployment and upward pressure on prices. 
A)  an increase in real output and employment. 
B)  an increase in loanable funds and upward pressure on the rate of inflation. 
C)  a decrease in output and downward pressure on prices. 
D)  a decrease in unemployment and upward pressure on prices.

Question 8

The major categories of federal government spending are

Accepted Answer

A)  health care, national defense, Social Security, and other income transfers. 
B)  law enforcement, environmental protection, and national defense. 
C)  public education, garbage collection, and public parks. 
D)  health care, public education, and highways. 
A)  health care, national defense, Social Security, and other income transfers. 
B)  law enforcement, environmental protection, and national defense. 
C)  public education, garbage collection, and public parks. 
D)  health care, public education, and highways.

Question 9

Which of the following is true regarding government expenditures in the United States?

Accepted Answer

A)  As a share of GDP, government expenditures were higher in 1950 than 2012. 
B)  Government expenditures were more than 30 percent of GDP in 1930. 
C)  Government expenditures as a share of GDP grew rapidly between 1930 and 1980. 
D)  In 2012, government expenditures at all levels summed to approximately 10 percent of GDP. 
A)  As a share of GDP, government expenditures were higher in 1950 than 2012. 
B)  Government expenditures were more than 30 percent of GDP in 1930. 
C)  Government expenditures as a share of GDP grew rapidly between 1930 and 1980. 
D)  In 2012, government expenditures at all levels summed to approximately 10 percent of GDP.

Question 10

When resources are allocated politically, rent-seeking will

Accepted Answer

A)  channel resources toward government programs that generate large benefits relative to costs. 
B)  reduce GDP because it results in the wasteful use of resources. 
C)  lead to wasteful, rather than productive, use of resources. 
D)  improve the efficiency of resource use. 
A)  channel resources toward government programs that generate large benefits relative to costs. 
B)  reduce GDP because it results in the wasteful use of resources. 
C)  lead to wasteful, rather than productive, use of resources. 
D)  improve the efficiency of resource use.

Question 11

Producers tend to be better represented in lobbying efforts and other elements of the political process than consumers because

Accepted Answer

A)  producers are generally more intelligent and, therefore, better informed. 
B)  producers are generally better organized than consumers. 
C)  producers are better educated than consumers. 
D)  the number of producers affected by the outcome of a particular political issue is usually greater than the number of consumers affected. 
A)  producers are generally more intelligent and, therefore, better informed. 
B)  producers are generally better organized than consumers. 
C)  producers are better educated than consumers. 
D)  the number of producers affected by the outcome of a particular political issue is usually greater than the number of consumers affected.

Question 12

Restrictions that limit sugar imports, subsidies for the construction of sports stadiums, and federal spending on programs like the construction of an indoor rain forest in Iowa all provide examples of government programs

Accepted Answer

A)  based on careful analysis of benefits relative to cost. 
B)  designed to redistribute income from the rich to the poor. 
C)  that reflect the political attractiveness of special-interest issues. 
D)  that promote the general welfare. 
A)  based on careful analysis of benefits relative to cost. 
B)  designed to redistribute income from the rich to the poor. 
C)  that reflect the political attractiveness of special-interest issues. 
D)  that promote the general welfare.

Question 13

If higher tariffs, such as those enacted by the Smoot-Hawley trade bill, reduce the imports of the United States, which of the following will be most likely to occur?

Accepted Answer

A)  U.S. employment will increase. 
B)  The unemployment rate of the United States will decline. 
C)  U.S. exports will increase because foreigners will want to buy more from U.S. producers. 
D)  U.S. exports will decline because foreigners will be earning fewer of the dollars needed to purchase goods and services from Americans. 
A)  U.S. employment will increase. 
B)  The unemployment rate of the United States will decline. 
C)  U.S. exports will increase because foreigners will want to buy more from U.S. producers. 
D)  U.S. exports will decline because foreigners will be earning fewer of the dollars needed to purchase goods and services from Americans.

Question 14

A politician may be considered an entrepreneur in the sense that

Accepted Answer

A)  he is always open to bribery. 
B)  identical personal characteristics are necessary for success in politics and in business. 
C)  the successful politician discovers and offers voters political goods when voter demand is strong for him. 
D)  like the businessman, the politician selfishly attempts to gain at the expense of his customers. 
A)  he is always open to bribery. 
B)  identical personal characteristics are necessary for success in politics and in business. 
C)  the successful politician discovers and offers voters political goods when voter demand is strong for him. 
D)  like the businessman, the politician selfishly attempts to gain at the expense of his customers.

Question 15

Crony capitalism is present when

Accepted Answer

A)  businesses are either implicitly or explicitly prohibited from making donations to political candidates. 
B)  businesses either implicitly or explicitly provide political decision-makers with contributions and other forms of political support in "exchange" for government favors that will improve their profitability. 
C)  rule of law is present and government officials treat all citizens alike. 
D)  government officials spend taxpayer funds only on productive projects. 
A)  businesses are either implicitly or explicitly prohibited from making donations to political candidates. 
B)  businesses either implicitly or explicitly provide political decision-makers with contributions and other forms of political support in "exchange" for government favors that will improve their profitability. 
C)  rule of law is present and government officials treat all citizens alike. 
D)  government officials spend taxpayer funds only on productive projects.

Question 16

The Smoot-Hawley trade bill of 1930, designed to save jobs and increase revenue for the federal government, resulted in

Accepted Answer

A)  an increase in both employment and federal tax revenue. 
B)  a sharp reduction in trade and a decline in federal tax revenue. 
C)  the protection of jobs while maintaining the level of trade, but it did not increase federal tax revenue. 
D)  a decline in the volume of trade, but an increase in revenue from tariffs, which made it possible for the federal government to balance its budget. 
A)  an increase in both employment and federal tax revenue. 
B)  a sharp reduction in trade and a decline in federal tax revenue. 
C)  the protection of jobs while maintaining the level of trade, but it did not increase federal tax revenue. 
D)  a decline in the volume of trade, but an increase in revenue from tariffs, which made it possible for the federal government to balance its budget.

Question 17

Public choice analysis indicates that politicians will find

Accepted Answer

A)  budget deficits more attractive than budget surpluses. 
B)  budget surpluses more attractive than budget deficits. 
C)  budget deficits attractive during an economic boom, but surpluses attractive during a recession. 
D)  tax increases more attractive than increases in government spending. 
A)  budget deficits more attractive than budget surpluses. 
B)  budget surpluses more attractive than budget deficits. 
C)  budget deficits attractive during an economic boom, but surpluses attractive during a recession. 
D)  tax increases more attractive than increases in government spending.

Question 18

Public choice theory indicates someone who spends more time evaluating which tennis racket to buy than deciding which U.S. Senate candidate to support

Accepted Answer

A)  is behaving irrationally. 
B)  is behaving rationally, given the structure of incentives confronted. 
C)  will likely be responsible for electing the wrong senator. 
D)  is failing to maximize his own personal utility. 
A)  is behaving irrationally. 
B)  is behaving rationally, given the structure of incentives confronted. 
C)  will likely be responsible for electing the wrong senator. 
D)  is failing to maximize his own personal utility.

Question 19

Which of the following is true?

Accepted Answer

A)  To remain in office, a politician must try to enact policies that gain him votes for his reelection and increase the support coming from contributors. 
B)  A politician always attempts to pursue policies that are good for society even if they are strongly opposed by many of her constituents or contributors. 
C)  Politicians generally place more weight on how their decisions affect future costs and benefits than on how they affect present costs and benefits. 
D)  The value of being in office is so low that most political candidates spend very little on campaigns to try to win (or keep) elected office. 
A)  To remain in office, a politician must try to enact policies that gain him votes for his reelection and increase the support coming from contributors. 
B)  A politician always attempts to pursue policies that are good for society even if they are strongly opposed by many of her constituents or contributors. 
C)  Politicians generally place more weight on how their decisions affect future costs and benefits than on how they affect present costs and benefits. 
D)  The value of being in office is so low that most political candidates spend very little on campaigns to try to win (or keep) elected office.

Question 20

Other things constant, if both the benefits and costs of a public-sector activity are widespread among voters, the political process will generally result in the

Accepted Answer

A)  rejection of productive activities and acceptance of unproductive activities. 
B)  acceptance of both productive and unproductive activities. 
C)  rejection of both productive and unproductive activities. 
D)  acceptance of productive activities and rejection of unproductive activities. 
A)  rejection of productive activities and acceptance of unproductive activities. 
B)  acceptance of both productive and unproductive activities. 
C)  rejection of both productive and unproductive activities. 
D)  acceptance of productive activities and rejection of unproductive activities.

In a representative democracy, government action results from the

Congressman Localstuff always votes for a balanced budget amendment to the U.S. Constitution. He also always votes for spending bills supported by the leadership of his political party. Is this rational?

With a strong and active federal government, why do we need state and local governments?

A survey of income by county revealed that four of the five wealthiest counties were located in the suburbs surrounding Washington, D.C. Why?

Which of the following is a lesson that can be learned from monetary policy during the Great Depression?

When subsidies, tax credits, and government favoritism are increasingly used to allocate goods and services,

Prolonged periods of monetary contraction, as was the case during the Great Depression, will likely result in

The major categories of federal government spending are

Which of the following is true regarding government expenditures in the United States?

When resources are allocated politically, rent-seeking will

Producers tend to be better represented in lobbying efforts and other elements of the political process than consumers because

Restrictions that limit sugar imports, subsidies for the construction of sports stadiums, and federal spending on programs like the construction of an indoor rain forest in Iowa all provide examples of government programs

If higher tariffs, such as those enacted by the Smoot-Hawley trade bill, reduce the imports of the United States, which of the following will be most likely to occur?

A politician may be considered an entrepreneur in the sense that

Crony capitalism is present when

The Smoot-Hawley trade bill of 1930, designed to save jobs and increase revenue for the federal government, resulted in

Public choice analysis indicates that politicians will find

Public choice theory indicates someone who spends more time evaluating which tennis racket to buy than deciding which U.S. Senate candidate to support

Which of the following is true?

Other things constant, if both the benefits and costs of a public-sector activity are widespread among voters, the political process will generally result in the

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

In a representative democracy, government action results from the

Congressman Localstuff always votes for a balanced budget amendment to the U.S. Constitution. He also always votes for spending bills supported by the leadership of his political party. Is this rational?

With a strong and active federal government, why do we need state and local governments?

A survey of income by county revealed that four of the five wealthiest counties were located in the suburbs surrounding Washington, D.C. Why?

Which of the following is a lesson that can be learned from monetary policy during the Great Depression?

When subsidies, tax credits, and government favoritism are increasingly used to allocate goods and services,

Prolonged periods of monetary contraction, as was the case during the Great Depression, will likely result in

The major categories of federal government spending are

Which of the following is true regarding government expenditures in the United States?

When resources are allocated politically, rent-seeking will

Producers tend to be better represented in lobbying efforts and other elements of the political process than consumers because

Restrictions that limit sugar imports, subsidies for the construction of sports stadiums, and federal spending on programs like the construction of an indoor rain forest in Iowa all provide examples of government programs

If higher tariffs, such as those enacted by the Smoot-Hawley trade bill, reduce the imports of the United States, which of the following will be most likely to occur?

A politician may be considered an entrepreneur in the sense that

Crony capitalism is present when

The Smoot-Hawley trade bill of 1930, designed to save jobs and increase revenue for the federal government, resulted in

Public choice analysis indicates that politicians will find

Public choice theory indicates someone who spends more time evaluating which tennis racket to buy than deciding which U.S. Senate candidate to support

Which of the following is true?

Other things constant, if both the benefits and costs of a public-sector activity are widespread among voters, the political process will generally result in the

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