Question 1

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 2

According to the special-interest effect, which of the following groups is least likely to have a significant influence on the political process?

Accepted Answer

A)  the American Federation of Labor 
B)  the National Association of Manufacturers 
C)  nonunion employees 
D)  the American Medical Association 
A)  the American Federation of Labor 
B)  the National Association of Manufacturers 
C)  nonunion employees 
D)  the American Medical Association

Question 3

Between 1930 and 1980, government expenditures as a percent of GDP in the United States

Accepted Answer

A)  more than tripled. 
B)  remained constant at 10 percent. 
C)  declined from 30 percent to 20 percent. 
D)  increased from 30 percent to 40 percent. 
A)  more than tripled. 
B)  remained constant at 10 percent. 
C)  declined from 30 percent to 20 percent. 
D)  increased from 30 percent to 40 percent.

Question 4

Which of the following factors weakens the case for private-sector provision of goods and services as opposed to public-sector provision?

Accepted Answer

A)  weak incentives for operational efficiency 
B)  rent-seeking 
C)  the shortsightedness effect 
D)  externalities 
A)  weak incentives for operational efficiency 
B)  rent-seeking 
C)  the shortsightedness effect 
D)  externalities

Question 5

Suppose we coupled the pay of Congress with the federal budget, so that for every billion dollars of deficit spending, a lawmaker's pay would be reduced $1,000. How would this affect fiscal policy?

Accepted Answer

If personal income matters to a majority

Question 6

The rational-ignorance effect refers to the

Accepted Answer

A)  lack of incentive voters have to become well-informed about candidates and issues because their vote is unlikely to affect the outcome of an election. 
B)  fact that most people choose to become just as well-informed when making choices as consumers as they do when making choices as voters. 
C)  lack of rational analysis on the part of voters when they choose not to become informed about candidates and issues even though this knowledge would produce great personal benefit to them. 
D)  problem of not enough information being supplied to voters because politicians are not spending enough on campaign adds to inform voters of their positions on issues. 
A)  lack of incentive voters have to become well-informed about candidates and issues because their vote is unlikely to affect the outcome of an election. 
B)  fact that most people choose to become just as well-informed when making choices as consumers as they do when making choices as voters. 
C)  lack of rational analysis on the part of voters when they choose not to become informed about candidates and issues even though this knowledge would produce great personal benefit to them. 
D)  problem of not enough information being supplied to voters because politicians are not spending enough on campaign adds to inform voters of their positions on issues.

Question 7

In which case is the political process most likely to result in the acceptance of efficient projects and rejection of inefficient projects?

Accepted Answer

A)  The benefits are highly concentrated, and costs are widespread among voters. 
B)  The costs are highly concentrated, and the benefits are widespread among voters. 
C)  Both the benefits and costs are widespread among voters. 
D)  The benefits accrue primarily in the future, while the costs are more visible during the current period. 
A)  The benefits are highly concentrated, and costs are widespread among voters. 
B)  The costs are highly concentrated, and the benefits are widespread among voters. 
C)  Both the benefits and costs are widespread among voters. 
D)  The benefits accrue primarily in the future, while the costs are more visible during the current period.

Question 8

In which one of the following situations is the political process most likely to result in both the acceptance of efficient (productive) programs and the rejection of inefficient (counterproductive) political activities?

Accepted Answer

A)  The people who benefit from a government program pay the costs of the program roughly in proportion to the benefits that each receives. 
B)  The benefits are highly concentrated, and the costs are widespread among voters. 
C)  The costs are highly concentrated, and the benefits are widespread among voters. 
D)  The benefits accrue primarily in the future, while the costs are more visible during the current period. 
A)  The people who benefit from a government program pay the costs of the program roughly in proportion to the benefits that each receives. 
B)  The benefits are highly concentrated, and the costs are widespread among voters. 
C)  The costs are highly concentrated, and the benefits are widespread among voters. 
D)  The benefits accrue primarily in the future, while the costs are more visible during the current period.

Question 9

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 10

The park in Hammerhead, Florida, built to honor the city's founding father, General Hammerhead, is starting to deteriorate. It would take about $5,000 to restore the General's statue, repair the benches, and repair the fountain, but the city budget is tight. Also, the deterioration is not that noticeable. Mayor Grouper suggests delaying the repair until after the election, three years away. City Councilwoman Halibut notes that by then the park will be dilapidated, and repairs will cost $25,000. From a public choice perspective, what is the likely outcome of this debate?

Accepted Answer

The shortsightedness effect would sugges

Question 11

Public choice theory assumes voters, politicians, and other individuals in the public sector are largely motivated by

Accepted Answer

A)  a desire to promote the general welfare. 
B)  a desire to meet the conditions of economic efficiency for the economy as a whole. 
C)  altruism or the good of the public as a whole. 
D)  personal self-interest. 
A)  a desire to promote the general welfare. 
B)  a desire to meet the conditions of economic efficiency for the economy as a whole. 
C)  altruism or the good of the public as a whole. 
D)  personal self-interest.

Question 12

The fact that voters perceive their votes as unlikely to actually change the outcome of an election causes

Accepted Answer

A)  voters to have little incentive to become informed about candidates and political issues. 
B)  voters to spend a great deal of effort becoming informed about candidates and political issues. 
C)  the percent of people who actually turn out to cast a vote on election day to be very high. 
D)  people to be extremely reluctant to "waste" their votes on a third-party candidate. 
A)  voters to have little incentive to become informed about candidates and political issues. 
B)  voters to spend a great deal of effort becoming informed about candidates and political issues. 
C)  the percent of people who actually turn out to cast a vote on election day to be very high. 
D)  people to be extremely reluctant to "waste" their votes on a third-party candidate.

Question 13

Combined federal, state, and local government expenditures in the United States were approximately 9 percent of the gross domestic product (GDP) in 1930. How large were government expenditures as a share of GDP in 2010?

Accepted Answer

A)  approximately 10 percent 
B)  approximately 20 percent 
C)  approximately 30 percent 
D)  approximately 40 percent 
A)  approximately 10 percent 
B)  approximately 20 percent 
C)  approximately 30 percent 
D)  approximately 40 percent

Question 14

Which of the following explains why managers of government agencies have little incentive to achieve operational efficiency?

Accepted Answer

A)  Public-sector managers need not fear bankruptcy when operational efficiency is not achieved. 
B)  Public-sector managers seldom receive personal benefits if they find ways to improve the efficiency of their operations. 
C)  Public-sector agencies typically do not face competition. 
D)  All of the above explain why government agencies have little incentive to be efficient. 
A)  Public-sector managers need not fear bankruptcy when operational efficiency is not achieved. 
B)  Public-sector managers seldom receive personal benefits if they find ways to improve the efficiency of their operations. 
C)  Public-sector agencies typically do not face competition. 
D)  All of the above explain why government agencies have little incentive to be efficient.

Question 15

The branch of economics that applies the principles and methodology of economics to the operation of the political process is known as

Accepted Answer

A)  private choice analysis. 
B)  public choice analysis. 
C)  government operations analysis. 
D)  policy preference analysis. 
A)  private choice analysis. 
B)  public choice analysis. 
C)  government operations analysis. 
D)  policy preference analysis.

Question 16

In 2008, the combined expenditures of federal, state, and local governments in the United States were approximately

Accepted Answer

A)  14 percent of GDP. 
B)  24 percent of GDP. 
C)  35 percent of GDP. 
D)  44 percent of GDP. 
A)  14 percent of GDP. 
B)  24 percent of GDP. 
C)  35 percent of GDP. 
D)  44 percent of GDP.

Question 17

At the most basic level, the distinguishing characteristic of government that makes it different from private firms is

Accepted Answer

A)  the difference in incentive structure motivating economic activity. 
B)  its ability to direct resources in a manner that is more economically efficient. 
C)  its ability to produce goods and services that people value. 
D)  its ability to use coercive force against people to modify their behavior or force them to pay for a good or service whether they benefit from it or not. 
A)  the difference in incentive structure motivating economic activity. 
B)  its ability to direct resources in a manner that is more economically efficient. 
C)  its ability to produce goods and services that people value. 
D)  its ability to use coercive force against people to modify their behavior or force them to pay for a good or service whether they benefit from it or not.

Question 18

Current tax rates are insufficient to finance the benefits promised by both the Social Security and Medicare programs. Are these unfunded promises surprising according to economic theory?

Accepted Answer

A)  Yes, political representatives have a strong incentive to levy taxes that are sufficient to cover the cost of all programs they favor. 
B)  No, the unfunded promises reflect the shortsighted nature of the political process. 
C)  Yes, political representatives generally favor balancing the government budget because this is best for the economy. 
D)  No, even though debt financing often makes sense, politicians are reluctant to use it because it will damage their chances of being reelected. 
A)  Yes, political representatives have a strong incentive to levy taxes that are sufficient to cover the cost of all programs they favor. 
B)  No, the unfunded promises reflect the shortsighted nature of the political process. 
C)  Yes, political representatives generally favor balancing the government budget because this is best for the economy. 
D)  No, even though debt financing often makes sense, politicians are reluctant to use it because it will damage their chances of being reelected.

Question 19

Which of the following is a predictable side effect of increased government activity (for example, taxes and subsidies) designed to redistribute income among citizens?

Accepted Answer

A)  improvement in the operational efficiency of government agencies 
B)  budget surpluses 
C)  reduction in the poverty rate 
D)  an increase in rent-seeking activity 
A)  improvement in the operational efficiency of government agencies 
B)  budget surpluses 
C)  reduction in the poverty rate 
D)  an increase in rent-seeking activity

Question 20

Which of the following is legally permitted to use coercive force to modify the actions of adults against their will?

Accepted Answer

A)  banks 
B)  corporations 
C)  governments 
D)  all of the above 
A)  banks 
B)  corporations 
C)  governments 
D)  all of the above

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

According to the special-interest effect, which of the following groups is least likely to have a significant influence on the political process?

Between 1930 and 1980, government expenditures as a percent of GDP in the United States

Which of the following factors weakens the case for private-sector provision of goods and services as opposed to public-sector provision?

Suppose we coupled the pay of Congress with the federal budget, so that for every billion dollars of deficit spending, a lawmaker's pay would be reduced $1,000. How would this affect fiscal policy?

The rational-ignorance effect refers to the

In which case is the political process most likely to result in the acceptance of efficient projects and rejection of inefficient projects?

In which one of the following situations is the political process most likely to result in both the acceptance of efficient (productive) programs and the rejection of inefficient (counterproductive) political activities?

Public choice theory assumes voters, politicians, and other individuals in the public sector are largely motivated by

The fact that voters perceive their votes as unlikely to actually change the outcome of an election causes

Combined federal, state, and local government expenditures in the United States were approximately 9 percent of the gross domestic product (GDP) in 1930. How large were government expenditures as a share of GDP in 2010?

Which of the following explains why managers of government agencies have little incentive to achieve operational efficiency?

The branch of economics that applies the principles and methodology of economics to the operation of the political process is known as

In 2008, the combined expenditures of federal, state, and local governments in the United States were approximately

At the most basic level, the distinguishing characteristic of government that makes it different from private firms is

Current tax rates are insufficient to finance the benefits promised by both the Social Security and Medicare programs. Are these unfunded promises surprising according to economic theory?

Which of the following is a predictable side effect of increased government activity (for example, taxes and subsidies) designed to redistribute income among citizens?

Which of the following is legally permitted to use coercive force to modify the actions of adults against their 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 someone who spends more time evaluating which tennis racket to buy than deciding which U.S. Senate candidate to support

According to the special-interest effect, which of the following groups is least likely to have a significant influence on the political process?

Between 1930 and 1980, government expenditures as a percent of GDP in the United States

Which of the following factors weakens the case for private-sector provision of goods and services as opposed to public-sector provision?

Suppose we coupled the pay of Congress with the federal budget, so that for every billion dollars of deficit spending, a lawmaker's pay would be reduced $1,000. How would this affect fiscal policy?

The rational-ignorance effect refers to the

In which case is the political process most likely to result in the acceptance of efficient projects and rejection of inefficient projects?

In which one of the following situations is the political process most likely to result in both the acceptance of efficient (productive) programs and the rejection of inefficient (counterproductive) political activities?

Public choice theory assumes voters, politicians, and other individuals in the public sector are largely motivated by

The fact that voters perceive their votes as unlikely to actually change the outcome of an election causes

Combined federal, state, and local government expenditures in the United States were approximately 9 percent of the gross domestic product (GDP) in 1930. How large were government expenditures as a share of GDP in 2010?

Which of the following explains why managers of government agencies have little incentive to achieve operational efficiency?

The branch of economics that applies the principles and methodology of economics to the operation of the political process is known as

In 2008, the combined expenditures of federal, state, and local governments in the United States were approximately

At the most basic level, the distinguishing characteristic of government that makes it different from private firms is

Current tax rates are insufficient to finance the benefits promised by both the Social Security and Medicare programs. Are these unfunded promises surprising according to economic theory?

Which of the following is a predictable side effect of increased government activity (for example, taxes and subsidies) designed to redistribute income among citizens?

Which of the following is legally permitted to use coercive force to modify the actions of adults against their 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