Question 1

"Good economics" is about marginal costs and marginal benefits of specific projects; "good politics" is more about clear benefits and hidden costs.

Accepted Answer

A) True 
 B)False

Question 2

The trading of votes to secure favorable outcomes on decisions that would otherwise be defeated is called

Accepted Answer

A) median-voter trading. 
B) the special-interest effect. 
C) political logrolling. 
D) the paradox of voting. 
A) median-voter trading. 
B) the special-interest effect. 
C) political logrolling. 
D) the paradox of voting.

Question 3

The Securities and Exchange Commission's supervision of Wall Street financial firms is a possible example of regulatory capture.

Accepted Answer

A) True 
 B)False

Question 4

Senator A agrees to vote for Senator K's state project in exchange for Senator K voting for Senator A's state project.This is an example of

Accepted Answer

A) logrolling. 
B) the paradox of voting. 
C) the principal-agent problem. 
D) the median voter model. 
A) logrolling. 
B) the paradox of voting. 
C) the principal-agent problem. 
D) the median voter model.

Question 5

Which of the following would be the best example of regulatory capture?

Accepted Answer

A) Starbucks buys up all the available supplies of coffee beans. 
B) Nike executives influence the rules for track and field events. 
C) Federal law makers write and pass legislation that protects domestic companies from foreign competition. 
D) Executives from the Ford, General Motors, and Chrysler companies write the rules regulating automobile safety and fuel requirements. 
A) Starbucks buys up all the available supplies of coffee beans. 
B) Nike executives influence the rules for track and field events. 
C) Federal law makers write and pass legislation that protects domestic companies from foreign competition. 
D) Executives from the Ford, General Motors, and Chrysler companies write the rules regulating automobile safety and fuel requirements.

Question 6

Making blackmail, extortion, and other forms of private coercion illegal is one way that government

Accepted Answer

A) reduces private-sector economic risk. 
B) increases private-sector economic risk. 
C) reduces the market's economic efficiency. 
D) increases the economy's deadweight losses. 
A) reduces private-sector economic risk. 
B) increases private-sector economic risk. 
C) reduces the market's economic efficiency. 
D) increases the economy's deadweight losses.

Question 7

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference.In a paired-choice vote between a stadium and a park,

Accepted Answer

A) a majority of the voters would favor the park, 2-to-1. 
B) a majority of the voters would favor the stadium, 2-to-1. 
C) a majority of the voters would favor the park, 3-to-0. 
D) a majority of the voters would favor the stadium, 3-to-0. 
A) a majority of the voters would favor the park, 2-to-1. 
B) a majority of the voters would favor the stadium, 2-to-1. 
C) a majority of the voters would favor the park, 3-to-0. 
D) a majority of the voters would favor the stadium, 3-to-0.

Question 8

The special-interest effect in government decision making is significant because

Accepted Answer

A) it corrects instances of spillover costs and benefits. 
B) it can lead to programs with concentrated benefits and diffuse costs. 
C) capitalistic economies are based upon the pursuit of self-interest. 
D) it allows us to avoid the collective-action problem. 
A) it corrects instances of spillover costs and benefits. 
B) it can lead to programs with concentrated benefits and diffuse costs. 
C) capitalistic economies are based upon the pursuit of self-interest. 
D) it allows us to avoid the collective-action problem.

Question 9

The problem of limited and bundled choices explains why many voters cannot fully express their political preferences.

Accepted Answer

A) True 
 B)False

Question 10

Special-interest groups result from people with strong preferences on a particular issue banding together to let policymakers know their preferences and could thereby lead to efficient outcomes.

Accepted Answer

A) True 
 B)False

Question 11

Regulatory capture occurs when government exerts excessive control over an industry.

Accepted Answer

A) True 
 B)False

Question 12

Deregulation can solve the problem of regulatory capture and increase economic efficiency

Accepted Answer

A) if the deregulated industry quickly evolves into a monopoly. 
B) if the deregulated industry becomes more competitive. 
C) when the regulations covering the industry are tightened. 
D) when the industry ends up generating substantial external costs. 
A) if the deregulated industry quickly evolves into a monopoly. 
B) if the deregulated industry becomes more competitive. 
C) when the regulations covering the industry are tightened. 
D) when the industry ends up generating substantial external costs.

Question 13

Deregulation of an industry will always lead to an improvement in economic efficiency.

Accepted Answer

A) True 
 B)False

Question 14

As long as government officials have to be elected, they are always held accountable for their policy decisions and choices.

Accepted Answer

A) True 
 B)False

Question 15

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference.In a paired-choice vote between a jail and a stadium,

Accepted Answer

A) a majority of the voters would favor the jail, 2 to 1. 
B) a majority of the voters would favor the stadium, 2 to 1. 
C) a majority of the voters would favor the jail, 3 to 0. 
D) a majority of the voters would favor the stadium, 3 to 0. 
A) a majority of the voters would favor the jail, 2 to 1. 
B) a majority of the voters would favor the stadium, 2 to 1. 
C) a majority of the voters would favor the jail, 3 to 0. 
D) a majority of the voters would favor the stadium, 3 to 0.

Question 16

One consequence of the paradox of voting is that whoever sets the agenda of a vote could practically predetermine the results of the vote.

Accepted Answer

A) True 
 B)False

Question 17

"Voter failure" is one cause of government failure.

Accepted Answer

A) True 
 B)False

Question 18

The "pork" in pork-barrel politics refers to government projects that politicians try to secure in favor of the common good for the whole nation.

Accepted Answer

A) True 
 B)False

Question 19

The principle that under some circumstances majority voting fails to make consistent choices reflecting the community's underlying preference is best demonstrated by the

Accepted Answer

A) paradox of voting. 
B) concept of logrolling. 
C) median-voter model. 
D) Coase theorem. 
A) paradox of voting. 
B) concept of logrolling. 
C) median-voter model. 
D) Coase theorem.

Question 20

Even if individual voters have clear preferences, and they stay consistent in their preferences, we could still end up with the paradox of voting.

Accepted Answer

A) True 
 B)False

Exam 5: Governments Role and Government Failure

"Good economics" is about marginal costs and marginal benefits of specific projects; "good politics" is more about clear benefits and hidden costs.

The trading of votes to secure favorable outcomes on decisions that would otherwise be defeated is called

The Securities and Exchange Commission's supervision of Wall Street financial firms is a possible example of regulatory capture.

Senator A agrees to vote for Senator K's state project in exchange for Senator K voting for Senator A's state project.This is an example of

Which of the following would be the best example of regulatory capture?

Making blackmail, extortion, and other forms of private coercion illegal is one way that government

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference.In a paired-choice vote between a stadium and a park,

The special-interest effect in government decision making is significant because

The problem of limited and bundled choices explains why many voters cannot fully express their political preferences.

Special-interest groups result from people with strong preferences on a particular issue banding together to let policymakers know their preferences and could thereby lead to efficient outcomes.

Regulatory capture occurs when government exerts excessive control over an industry.

Deregulation can solve the problem of regulatory capture and increase economic efficiency

Deregulation of an industry will always lead to an improvement in economic efficiency.

As long as government officials have to be elected, they are always held accountable for their policy decisions and choices.

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference.In a paired-choice vote between a jail and a stadium,

One consequence of the paradox of voting is that whoever sets the agenda of a vote could practically predetermine the results of the vote.

"Voter failure" is one cause of government failure.

The "pork" in pork-barrel politics refers to government projects that politicians try to secure in favor of the common good for the whole nation.

The principle that under some circumstances majority voting fails to make consistent choices reflecting the community's underlying preference is best demonstrated by the

Even if individual voters have clear preferences, and they stay consistent in their preferences, we could still end up with the paradox of voting.

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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