Question 1

Public choice theory indicates that the behavior of people in government

Accepted Answer

A)  differs from the behavior of people in the private sector because they are motivated by the public interest rather than their own personal self-interest. 
B)  differs from the behavior of people in the private sector because public sector decision roles do not allow people to pursue their own self-interests. 
C)  is the same as people in the private sector only if decisions are made by majority vote. 
D)  is best understood by applying the same principles we use to predict the behavior of people in the private sector. 
A)  differs from the behavior of people in the private sector because they are motivated by the public interest rather than their own personal self-interest. 
B)  differs from the behavior of people in the private sector because public sector decision roles do not allow people to pursue their own self-interests. 
C)  is the same as people in the private sector only if decisions are made by majority vote. 
D)  is best understood by applying the same principles we use to predict the behavior of people in the private sector.

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

Which of the following explains why elected representatives will find borrowing to be an attractive method of financing current government programs?

Accepted Answer

A)  the shortsightedness effect 
B)  pork-barrel politics 
C)  the invisible hand principle 
D)  the public goods argument for government spending programs 
A)  the shortsightedness effect 
B)  pork-barrel politics 
C)  the invisible hand principle 
D)  the public goods argument for government spending programs

Question 4

Economic studies have concluded that a new bill lowering the trade restrictions on the importation of sugar would be good for the economy. President Sweet Tooth highlights the results of this study in his state of the union address and sends the "Sweet Tooth" bill to Congress. Another economic study declares that subsidizing coal mining and orange growing have both been found to be economically inefficient in that the costs outweigh the benefits. However, a subsidy on coal mining would help the coal producers in West Virginia and a subsidy on orange growing would help the orange farmers in Florida. So when the "Sweet Tooth" bill makes its way through congress the senators from West Virginia and Florida will only vote for it if they have their coal-mining and orange-growing subsidies attached to it. The bill gets to President Sweet Tooth with these and other economically inefficient subsidies attached to it, and he passes the bill in its entirety. Which term best describes what just happened?

Accepted Answer

A)  pork-barrel legislation 
B)  public good provision 
C)  rational-ignorance effect 
D)  the political voter theory 
A)  pork-barrel legislation 
B)  public good provision 
C)  rational-ignorance effect 
D)  the political voter theory

Question 5

In 2010, government income transfers redistributed what percentage of national income?

Accepted Answer

A)  1.5 percent 
B)  9.5 percent 
C)  19.5 percent 
D)  25.5 percent 
A)  1.5 percent 
B)  9.5 percent 
C)  19.5 percent 
D)  25.5 percent

Question 6

Logrolling refers to

Accepted Answer

A)  vote trading among legislators. 
B)  the tendency of voters to free-ride on the payment for public goods. 
C)  the power of well-organized interest groups. 
D)  the tendency of legislators to favor the interests of the timber (logging) industry. 
A)  vote trading among legislators. 
B)  the tendency of voters to free-ride on the payment for public goods. 
C)  the power of well-organized interest groups. 
D)  the tendency of legislators to favor the interests of the timber (logging) industry.

Question 7

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 8

Joella is a third-grade public school teacher who doesn't own a car and uses public transportation. According to public choice theory, which of the following four politicians for a public office would Joella be most likely to vote for in the upcoming election?

Accepted Answer

A)  Politician A proposes increasing the property tax on personal automobiles and using the money to increase teacher salaries by 10 percent. 
B)  Politician B proposes an across-the-board increase in state income tax rates and using the money to increase the benefits paid to unemployed workers. 
C)  Politician C proposes increasing the property tax on personal automobiles and using the money to increase the benefits paid to unemployed workers. 
D)  Politician D proposes an across-the-board increase in state income tax rates and using the money to improve the highway system. 
A)  Politician A proposes increasing the property tax on personal automobiles and using the money to increase teacher salaries by 10 percent. 
B)  Politician B proposes an across-the-board increase in state income tax rates and using the money to increase the benefits paid to unemployed workers. 
C)  Politician C proposes increasing the property tax on personal automobiles and using the money to increase the benefits paid to unemployed workers. 
D)  Politician D proposes an across-the-board increase in state income tax rates and using the money to improve the highway system.

Question 9

Special-interest legislation is characterized by

Accepted Answer

A)  concentrated costs and concentrated benefits 
B)  concentrated benefits and widespread costs 
C)  widespread benefits and widespread costs 
D)  widespread benefits and concentrated costs 
E)  zero costs 
A)  concentrated costs and concentrated benefits 
B)  concentrated benefits and widespread costs 
C)  widespread benefits and widespread costs 
D)  widespread benefits and concentrated costs 
E)  zero costs

Question 10

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 11

An issue that generates substantial benefits to a small group of individuals while imposing a small cost on many others is called a

Accepted Answer

A)  special-interest issue. 
B)  minority application. 
C)  commons policy. 
D)  national service. 
A)  special-interest issue. 
B)  minority application. 
C)  commons policy. 
D)  national service.

Question 12

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 13

Use the figure below to answer the following question(s).
Figure 6-1
 
Figure 6-1 illustrates the four possibilities of the distribution of costs and benefits among voters for a government project. For which types of projects would government action most likely work well, undertaking only efficient projects and rejecting inefficient ones?

Accepted Answer

A)  types A and B 
B)  types B and D 
C)  types B and C 
D)  types A and D 
A)  types A and B 
B)  types B and D 
C)  types B and C 
D)  types A and D

Question 14

Which one of the following is a major difference between market and collective action through government?

Accepted Answer

A)  Individuals are motivated by personal interests when making market choices, but they will be motivated primarily by the public interest when making collective choices. 
B)  Competitive behavior is present when decisions are made in the marketplace, but competition is absent when choices are made collectively. 
C)  Scarcity constrains output when decisions are made in the market sector, but scarcity is absent when goods are provided by the government. 
D)  In the market sector, there is generally a one-to-one link between payment and consumption; this link is often absent in the government sector. 
A)  Individuals are motivated by personal interests when making market choices, but they will be motivated primarily by the public interest when making collective choices. 
B)  Competitive behavior is present when decisions are made in the marketplace, but competition is absent when choices are made collectively. 
C)  Scarcity constrains output when decisions are made in the market sector, but scarcity is absent when goods are provided by the government. 
D)  In the market sector, there is generally a one-to-one link between payment and consumption; this link is often absent in the government sector.

Question 15

Senator Blacklung represents a state that grows a significant amount of tobacco. Not only do many of his constituents work for businesses in this industry, but the tobacco firms also make generous contributions to his reelection campaign. According to public choice theory, which of the following bills would Senator Blacklung be most likely to support?

Accepted Answer

A)  a bill proposing an increase in the tax on cigarettes to fund urban renewal programs across the nation 
B)  a bill that would provide substantial subsidies for tobacco growers 
C)  a bill proposing increased funding for a national antismoking awareness campaign financed by an increase in the tax on cigarettes 
D)  a bill that would prohibit senators from accepting campaign contributions from firms who are involved in the production or sale of tobacco products 
A)  a bill proposing an increase in the tax on cigarettes to fund urban renewal programs across the nation 
B)  a bill that would provide substantial subsidies for tobacco growers 
C)  a bill proposing increased funding for a national antismoking awareness campaign financed by an increase in the tax on cigarettes 
D)  a bill that would prohibit senators from accepting campaign contributions from firms who are involved in the production or sale of tobacco products

Question 16

In 2010, the combined expenditures of federal, state, and local governments in the United States were approximately 40 percent of gross domestic product (GDP). Approximately what percentage of GDP were government expenditures in 1930?

Accepted Answer

A)  9 percent 
B)  19 percent 
C)  29 percent 
D)  39 percent 
A)  9 percent 
B)  19 percent 
C)  29 percent 
D)  39 percent

Question 17

Public choice analysis indicates

Accepted Answer

A)  most income transfers will be directed toward the poor. 
B)  rent-seeking activities will improve the efficiency of resource allocation and promote economic growth. 
C)  rent seeking will be less attractive if the nation's legal (or constitutional) structure makes it difficult to use the political process to take the property or income of others. 
D)  politicians will consistently oppose programs favored by rent seekers if those programs reduce the welfare of society. 
A)  most income transfers will be directed toward the poor. 
B)  rent-seeking activities will improve the efficiency of resource allocation and promote economic growth. 
C)  rent seeking will be less attractive if the nation's legal (or constitutional) structure makes it difficult to use the political process to take the property or income of others. 
D)  politicians will consistently oppose programs favored by rent seekers if those programs reduce the welfare of society.

Question 18

Measured as a share of national income, government expenditures on income transfers during the last 70 years have

Accepted Answer

A)  grown rapidly. 
B)  declined substantially. 
C)  been virtually unchanged. 
D)  increased throughout much of that period, but they have declined substantially since 1980. 
A)  grown rapidly. 
B)  declined substantially. 
C)  been virtually unchanged. 
D)  increased throughout much of that period, but they have declined substantially since 1980.

Question 19

Legislators often gain by bundling a number of projects benefiting local districts at the expense of general taxpayers. Such legislation is called

Accepted Answer

A)  market failure legislation. 
B)  the rational ignorance effect. 
C)  public goods legislation. 
D)  pork-barrel legislation. 
A)  market failure legislation. 
B)  the rational ignorance effect. 
C)  public goods legislation. 
D)  pork-barrel legislation.

Question 20

When analyzing public sector decision making, economic theory assumes voters, politicians, and government officials will

Accepted Answer

A)  respond to changes in personal benefits and costs when making public sector choices. 
B)  always pursue the public interest even when it conflicts with their private interests. 
C)  generally ignore the personal costs and benefits associated with their choices. 
D)  make decisions that seek to maximize the amount of benefits created for society as a whole. 
A)  respond to changes in personal benefits and costs when making public sector choices. 
B)  always pursue the public interest even when it conflicts with their private interests. 
C)  generally ignore the personal costs and benefits associated with their choices. 
D)  make decisions that seek to maximize the amount of benefits created for society as a whole.

Public choice theory indicates that the behavior of people in government

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?

Which of the following explains why elected representatives will find borrowing to be an attractive method of financing current government programs?

In 2010, government income transfers redistributed what percentage of national income?

Logrolling refers to

Crony capitalism is present when

Joella is a third-grade public school teacher who doesn't own a car and uses public transportation. According to public choice theory, which of the following four politicians for a public office would Joella be most likely to vote for in the upcoming election?

Special-interest legislation is characterized by

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

An issue that generates substantial benefits to a small group of individuals while imposing a small cost on many others is called a

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

Which one of the following is a major difference between market and collective action through government?

In 2010, the combined expenditures of federal, state, and local governments in the United States were approximately 40 percent of gross domestic product (GDP). Approximately what percentage of GDP were government expenditures in 1930?

Public choice analysis indicates

Measured as a share of national income, government expenditures on income transfers during the last 70 years have

Legislators often gain by bundling a number of projects benefiting local districts at the expense of general taxpayers. Such legislation is called

When analyzing public sector decision making, economic theory assumes voters, politicians, and government officials will

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

Applying the Basics: Special Topics in Economics

Filters

Exam 6: The Economics of Political Action

Public choice theory indicates that the behavior of people in government

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?

Which of the following explains why elected representatives will find borrowing to be an attractive method of financing current government programs?

In 2010, government income transfers redistributed what percentage of national income?

Logrolling refers to

Crony capitalism is present when

Joella is a third-grade public school teacher who doesn't own a car and uses public transportation. According to public choice theory, which of the following four politicians for a public office would Joella be most likely to vote for in the upcoming election?

Special-interest legislation is characterized by

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

An issue that generates substantial benefits to a small group of individuals while imposing a small cost on many others is called a

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

Which one of the following is a major difference between market and collective action through government?

In 2010, the combined expenditures of federal, state, and local governments in the United States were approximately 40 percent of gross domestic product (GDP). Approximately what percentage of GDP were government expenditures in 1930?

Public choice analysis indicates

Measured as a share of national income, government expenditures on income transfers during the last 70 years have

Legislators often gain by bundling a number of projects benefiting local districts at the expense of general taxpayers. Such legislation is called

When analyzing public sector decision making, economic theory assumes voters, politicians, and government officials will

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

Applying the Basics: Special Topics in Economics

Filters