Question 1

The so-called collective-action problem refers to the fact that

Accepted Answer

A) it is always difficult to collect fees from users of a service. 
B) larger groups are more difficult to organize and motivate than smaller ones. 
C) larger groups often have more power than smaller groups. 
D) collection agencies often abuse their power over individual consumers. 
A) it is always difficult to collect fees from users of a service. 
B) larger groups are more difficult to organize and motivate than smaller ones. 
C) larger groups often have more power than smaller groups. 
D) collection agencies often abuse their power over individual consumers. B

Question 2

Monetary policy refers to the government's attempt at smoothing business cycles through the use of changes in

Accepted Answer

A) tax rates. 
B) interest rates. 
C) wage rates. 
D) government spending. 
A) tax rates. 
B) interest rates. 
C) wage rates. 
D) government spending. B

Question 3

The study of public choice theory involves the economic analysis of the following, except

Accepted Answer

A) government decision making. 
B) actions by elected officials. 
C) the impact of budget deficits on the public debt. 
D) voting and elections. 
A) government decision making. 
B) actions by elected officials. 
C) the impact of budget deficits on the public debt. 
D) voting and elections. C

Question 4

Based on our study of market failure and government failure, the main conclusion that one should arrive at is that

Accepted Answer

A) the market system is highly vulnerable to imperfections, and therefore the socialist system is a much better system to adopt. 
B) the government has much imperfection and creates a lot of inefficiencies; therefore, it is best to adopt a pure market system. 
C) it is best to always compare perfect markets against an idealized benevolent government that efficiently responds to the wants of society. 
D) we must carefully compare the benefits of government intervention in our markets against the costs of such intervention. 
A) the market system is highly vulnerable to imperfections, and therefore the socialist system is a much better system to adopt. 
B) the government has much imperfection and creates a lot of inefficiencies; therefore, it is best to adopt a pure market system. 
C) it is best to always compare perfect markets against an idealized benevolent government that efficiently responds to the wants of society. 
D) we must carefully compare the benefits of government intervention in our markets against the costs of such intervention.

Question 5

In which of the following cases has political corruption definitely occurred?

Accepted Answer

A) Political candidates accept campaign contributions from people. 
B) Government agencies impose fines for such things as traffic violations. 
C) A bureaucrat allows someone to look at confidential documents for an informal fee. 
D) A government agency receives donations for distribution to charity. 
A) Political candidates accept campaign contributions from people. 
B) Government agencies impose fines for such things as traffic violations. 
C) A bureaucrat allows someone to look at confidential documents for an informal fee. 
D) A government agency receives donations for distribution to charity.

Question 6

In presidential elections, voters often find that they do not agree with any single candidate on all the issues that matter to them (the voters).This is known as the

Accepted Answer

A) principal-agent problem. 
B) limited and bundled choice problem. 
C) rent-seeking behavior problem. 
D) lack of accountability problem. 
A) principal-agent problem. 
B) limited and bundled choice problem. 
C) rent-seeking behavior problem. 
D) lack of accountability problem.

Question 7

Public choice theory focuses on the economics of

Accepted Answer

A) fiscal and monetary policy. 
B) the behavior of business firms. 
C) antitrust and regulatory policy. 
D) government decision making, politics, and elections. 
A) fiscal and monetary policy. 
B) the behavior of business firms. 
C) antitrust and regulatory policy. 
D) government decision making, politics, and elections.

Question 8

To reduce politicization of policy making, many countries have given control of to politically independent central banks.

Accepted Answer

A) fiscal policy 
B) monetary policy 
C) unfunded liabilities 
D) budget deficits 
A) fiscal policy 
B) monetary policy 
C) unfunded liabilities 
D) budget deficits

Question 9

(Consider This) The collective action problem refers to

Accepted Answer

A) logrolling behavior that results in inefficient policies. 
B) the tendency for legislatures to enact policies that are economically harmful. 
C) the lack of political power of small groups of people. 
D) difficulty in organizing and motivating large groups to achieve desired outcomes. 
A) logrolling behavior that results in inefficient policies. 
B) the tendency for legislatures to enact policies that are economically harmful. 
C) the lack of political power of small groups of people. 
D) difficulty in organizing and motivating large groups to achieve desired outcomes.

Question 10

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 11

Suppose that friends Jennifer, Stephanie, and Megan cannot agree on how much to spend for a bouquet of flowers to send to a person who allowed them to use her beach house for the weekend.Jennifer wants to buy a moderately priced bouquet, Stephanie wants to buy an expensive bouquet, and Megan wants to buy a very expensive bouquet.Assuming no paradox of voting, majority voting will result in the decision to buy

Accepted Answer

A) an inexpensive bouquet. 
B) a very expensive bouquet. 
C) a moderately priced bouquet. 
D) an expensive bouquet. 
A) an inexpensive bouquet. 
B) a very expensive bouquet. 
C) a moderately priced bouquet. 
D) an expensive bouquet.

Question 12

Some people argue that the three main television networks all have similar programming.If true, this observation might best be explained by the

Accepted Answer

A) paradox of voting. 
B) median-voter model. 
C) law of diminishing marginal utility. 
D) ability-to-pay principle. 
A) paradox of voting. 
B) median-voter model. 
C) law of diminishing marginal utility. 
D) ability-to-pay principle.

Question 13

Chronic budget deficits can be attributed to

Accepted Answer

A) unfunded liabilities. 
B) voters wanting government programs but not wanting to pay taxes. 
C) inappropriate monetary policy. 
D) state budget laws. 
A) unfunded liabilities. 
B) voters wanting government programs but not wanting to pay taxes. 
C) inappropriate monetary policy. 
D) state budget laws.

Question 14

When politicians support policies such as imposing punitive tariffs on imports, which are popular among voters but which also reduce economic efficiency, we refer to this as

Accepted Answer

A) regulatory capture. 
B) voter failure. 
C) limited and bundled choice. 
D) paradox of voting. 
A) regulatory capture. 
B) voter failure. 
C) limited and bundled choice. 
D) paradox of voting.

Question 15

Government in a market system can increase economic efficiency by collecting taxes in order to subsidize the production of

Accepted Answer

A) goods with negative externalities. 
B) goods with positive externalities. 
C) private sector goods. 
D) complementary goods. 
A) goods with negative externalities. 
B) goods with positive externalities. 
C) private sector goods. 
D) complementary goods.

Question 16

Government can raise economic efficiency through all of the following policies, except

Accepted Answer

A) outlawing various forms of commercial deception. 
B) imposing pollution taxes on polluting firms. 
C) using tax money to subsidize goods with external benefits. 
D) fixing the prices of various resources and products. 
A) outlawing various forms of commercial deception. 
B) imposing pollution taxes on polluting firms. 
C) using tax money to subsidize goods with external benefits. 
D) fixing the prices of various resources and products.

Question 17

The so-called collective action problem helps explain why

Accepted Answer

A) minorities always bear the costs of programs voted for by the majority. 
B) businesses often find it difficult when they have to deal with a labor union. 
C) it is hard for the government to discern the true preferences of everyone in society. 
D) special-interest groups could have the costs of their narrowly focused programs be paid for by the general taxpayers. 
A) minorities always bear the costs of programs voted for by the majority. 
B) businesses often find it difficult when they have to deal with a labor union. 
C) it is hard for the government to discern the true preferences of everyone in society. 
D) special-interest groups could have the costs of their narrowly focused programs be paid for by the general taxpayers.

Question 18

To curb the problem of voters wanting immediate benefits and deferred costs, many state governments in the United States have

Accepted Answer

A) made unfunded liabilities illegal. 
B) resorted to greater use of monetary policy. 
C) passed laws requiring balanced budgets. 
D) stopped using fiscal policy. 
A) made unfunded liabilities illegal. 
B) resorted to greater use of monetary policy. 
C) passed laws requiring balanced budgets. 
D) stopped using fiscal policy.

Question 19

(Consider This) According to a 2015 study, health and safety violations are more prevalent in public companies because

Accepted Answer

A) private companies have greater technical expertise than public companies. 
B) public companies are less likely to be fined for violating health and safety laws than private companies. 
C) laws for public companies are more stringent, making it more difficult for public companies to comply. 
D) public companies are more closely monitored, making it easier to detect violations. 
A) private companies have greater technical expertise than public companies. 
B) public companies are less likely to be fined for violating health and safety laws than private companies. 
C) laws for public companies are more stringent, making it more difficult for public companies to comply. 
D) public companies are more closely monitored, making it easier to detect violations.

Question 20

Which of the following is related to the special-interest effect?

Accepted Answer

A) pork-barrel politics 
B) earmarks 
C) logrolling 
D) all of these 
A) pork-barrel politics 
B) earmarks 
C) logrolling 
D) all of these

Exam 5: Governments Role and Government Failure

The so-called collective-action problem refers to the fact that

Monetary policy refers to the government's attempt at smoothing business cycles through the use of changes in

The study of public choice theory involves the economic analysis of the following, except

Based on our study of market failure and government failure, the main conclusion that one should arrive at is that

In which of the following cases has political corruption definitely occurred?

In presidential elections, voters often find that they do not agree with any single candidate on all the issues that matter to them (the voters).This is known as the

Public choice theory focuses on the economics of

To reduce politicization of policy making, many countries have given control of to politically independent central banks.

(Consider This) The collective action problem refers to

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

Some people argue that the three main television networks all have similar programming.If true, this observation might best be explained by the

Chronic budget deficits can be attributed to

When politicians support policies such as imposing punitive tariffs on imports, which are popular among voters but which also reduce economic efficiency, we refer to this as

Government in a market system can increase economic efficiency by collecting taxes in order to subsidize the production of

Government can raise economic efficiency through all of the following policies, except

The so-called collective action problem helps explain why

To curb the problem of voters wanting immediate benefits and deferred costs, many state governments in the United States have

(Consider This) According to a 2015 study, health and safety violations are more prevalent in public companies because

Which of the following is related to the special-interest effect?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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