Question 1

Majority voting produces efficient outcomes because it takes into account the strength of the preferences of individual voters.

Accepted Answer

A) True 
 B)False

Question 2

In assessing the efficiency of government policy, economic analysis would focus on

Accepted Answer

A) the size of government: big versus small. 
B) marginal benefits versus costs of government policy and action. 
C) presence or absence of the invisible hand. 
D) revenues and profitability of the government agencies. 
A) the size of government: big versus small. 
B) marginal benefits versus costs of government policy and action. 
C) presence or absence of the invisible hand. 
D) revenues and profitability of the government agencies.

Question 3

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

Accepted Answer

A) the outcome would depend on which item was listed first on the ballot. 
B) a majority of voters would favor public safety. 
C) no voter decision is possible. 
D) a majority of voters would favor parks. 
A) the outcome would depend on which item was listed first on the ballot. 
B) a majority of voters would favor public safety. 
C) no voter decision is possible. 
D) a majority of voters would favor parks.

Question 4

Fiscal policy is more susceptible to politicization than monetary policy.

Accepted Answer

A) True 
 B)False

Question 5

The field of economics that analyzes government decision making, politics, and elections is called

Accepted Answer

A) public finance. 
B) public choice theory. 
C) collective economics. 
D) political economy. 
A) public finance. 
B) public choice theory. 
C) collective economics. 
D) political economy.

Question 6

The median-voter model indicates that political parties will

Accepted Answer

A) target only those voters who can be influenced by rent seeking. 
B) direct their work to voters who can be influenced by special interests. 
C) campaign at one end of the distribution of voter sentiments. 
D) try to appeal to the sentiments of the voter holding the middle position. 
A) target only those voters who can be influenced by rent seeking. 
B) direct their work to voters who can be influenced by special interests. 
C) campaign at one end of the distribution of voter sentiments. 
D) try to appeal to the sentiments of the voter holding the middle position.

Question 7

The collective action problem makes it hard for voters to counter the influence of special-interest groups.

Accepted Answer

A) True 
 B)False

Question 8

Which one of the following topics would be of the most interest to a public choice economist?

Accepted Answer

A) the theory of comparative advantage 
B) the law of increasing opportunity cost 
C) inflation and unemployment 
D) rent-seeking behavior 
A) the theory of comparative advantage 
B) the law of increasing opportunity cost 
C) inflation and unemployment 
D) rent-seeking behavior

Question 9

Many governments end up with chronic budget deficits because

Accepted Answer

A) many government programs are popular with voters, but hardly any voter likes paying taxes. 
B) the nation simply cannot produce everything that it consumes, so it has to rely on other nations. 
C) some resources are not available from within, so they have to be bought from other nations. 
D) businesses do not want to have "big government" around too much. 
A) many government programs are popular with voters, but hardly any voter likes paying taxes. 
B) the nation simply cannot produce everything that it consumes, so it has to rely on other nations. 
C) some resources are not available from within, so they have to be bought from other nations. 
D) businesses do not want to have "big government" around too much.

Question 10

In thinking about the "principal-agent problem" in a democratic government, we assign the role of "principal" to the government.

Accepted Answer

A) True 
 B)False

Question 11

When the government provides loan guarantees and in effect "socializes losses and privatizes gains" of a project or firm, it can lead to a

Accepted Answer

A) moral hazard problem among investors. 
B) regulatory capture problem. 
C) principal-agent problem within the firm. 
D) limited and bundled choice problem. 
A) moral hazard problem among investors. 
B) regulatory capture problem. 
C) principal-agent problem within the firm. 
D) limited and bundled choice problem.

Question 12

"Informal payments" or "under-the table fees" are a common form of corruption.

Accepted Answer

A) True 
 B)False

Question 13

The "principal-agent problem" often arises in public choice when politicians pursue the best interests of their constituents.

Accepted Answer

A) True 
 B)False

Question 14

Assume that Matt, Joe, and Teresa are the only citizens in a community.A proposed public good has a total cost of $1,000.All three citizens will share an equal portion of this cost in taxes.The benefit of the public good is $500 for Matt, $280 for Joe, and $260 for Teresa.In a majority vote, this proposal will most likely be

Accepted Answer

A) accepted, two in favor and one against. 
B) defeated, two against and one in favor. 
C) accepted, three in favor and none against. 
D) defeated, none in favor and three against. 
A) accepted, two in favor and one against. 
B) defeated, two against and one in favor. 
C) accepted, three in favor and none against. 
D) defeated, none in favor and three against.

Question 15

Which of the following countries had the least corruption, as reported in the Global Corruption Barometer survey in 2013?

Accepted Answer

A) Mexico 
B) Italy 
C) India 
D) South Africa 
A) Mexico 
B) Italy 
C) India 
D) South Africa

Question 16

"Vote for my special local project and I will vote for yours." This political technique

Accepted Answer

A) illustrates the paradox of voting. 
B) is called "logrolling." 
C) illustrates the median voter model. 
D) undermines the benefits-received principle. 
A) illustrates the paradox of voting. 
B) is called "logrolling." 
C) illustrates the median voter model. 
D) undermines the benefits-received principle.

Question 17

If the government runs a smaller budget deficit, then the public debt will decrease.

Accepted Answer

A) True 
 B)False

Question 18

Assume that Matt, Joe, and Teresa are the only citizens in a community.A proposed public good has a total cost of $1,000.All three citizens will share an equal portion of this cost in taxes.The benefit of the public good is $500 for Matt, $280 for Joe, and $260 for Teresa.In a majority vote, this proposal will most likely be

Accepted Answer

A) accepted; the public good is produced, even though it is economically inefficient. 
B) defeated; the public good is not produced, even though it would have been efficient to do so. 
C) accepted; the public good is produced, which is economically efficient. 
D) defeated; the public good is not produced, which is the proper outcome. 
A) accepted; the public good is produced, even though it is economically inefficient. 
B) defeated; the public good is not produced, even though it would have been efficient to do so. 
C) accepted; the public good is produced, which is economically efficient. 
D) defeated; the public good is not produced, which is the proper outcome.

Question 19

Government's ability to enforce laws and contracts increases private-sector economic risks.

Accepted Answer

A) True 
 B)False

Question 20

Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community.A proposed public good has a total cost of $1,000.All five citizens will share an equal portion of this cost in taxes.The benefit of the public good is $220 to Abby, $210 to Ben, $210 to Clara, $180 to Joe, and $120 to Matt.In a majority vote, this proposal will most likely be

Accepted Answer

A) accepted, four in favor and one against. 
B) defeated, one in favor and four against. 
C) accepted, three in favor and two against. 
D) defeated, two in favor and three against. 
A) accepted, four in favor and one against. 
B) defeated, one in favor and four against. 
C) accepted, three in favor and two against. 
D) defeated, two in favor and three against.

Exam 5: Governments Role and Government Failure

Majority voting produces efficient outcomes because it takes into account the strength of the preferences of individual voters.

In assessing the efficiency of government policy, economic analysis would focus on

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

Fiscal policy is more susceptible to politicization than monetary policy.

The field of economics that analyzes government decision making, politics, and elections is called

The median-voter model indicates that political parties will

The collective action problem makes it hard for voters to counter the influence of special-interest groups.

Which one of the following topics would be of the most interest to a public choice economist?

Many governments end up with chronic budget deficits because

In thinking about the "principal-agent problem" in a democratic government, we assign the role of "principal" to the government.

When the government provides loan guarantees and in effect "socializes losses and privatizes gains" of a project or firm, it can lead to a

"Informal payments" or "under-the table fees" are a common form of corruption.

The "principal-agent problem" often arises in public choice when politicians pursue the best interests of their constituents.

Which of the following countries had the least corruption, as reported in the Global Corruption Barometer survey in 2013?

"Vote for my special local project and I will vote for yours." This political technique

If the government runs a smaller budget deficit, then the public debt will decrease.

Government's ability to enforce laws and contracts increases private-sector economic risks.

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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