Question 1

The term logrolling describes

Accepted Answer

A)  government spending programs financed with user charges. 
B)  the exchange between legislators of their votes on issues. 
C)  the actions of legislators who are willing to trade their political votes for campaign contributions from special interest groups. 
D)  government spending programs that primarily benefit loggers and other forest workers. 
A)  government spending programs financed with user charges. 
B)  the exchange between legislators of their votes on issues. 
C)  the actions of legislators who are willing to trade their political votes for campaign contributions from special interest groups. 
D)  government spending programs that primarily benefit loggers and other forest workers.

Question 2

Producers tend to be better represented in lobbying efforts and other elements of the political process than consumers because

Accepted Answer

A)  producers are generally more intelligent and, therefore, better informed. 
B)  producers are generally better organized than consumers. 
C)  producers are better educated than consumers. 
D)  the number of producers affected by the outcome of a particular political issue is usually greater than the number of consumers affected. 
A)  producers are generally more intelligent and, therefore, better informed. 
B)  producers are generally better organized than consumers. 
C)  producers are better educated than consumers. 
D)  the number of producers affected by the outcome of a particular political issue is usually greater than the number of consumers affected.

Question 3

Which one of the following economists has played a central role in the development of the "economics of collective decision making," better known as public choice analysis?

Accepted Answer

A)  Alfred Marshall 
B)  John Maynard Keynes 
C)  James Buchanan 
D)  Milton Friedman 
A)  Alfred Marshall 
B)  John Maynard Keynes 
C)  James Buchanan 
D)  Milton Friedman

Question 4

When voters pay in proportion to the benefits received from an economic action of the government, if the government activity is productive,

Accepted Answer

A)  all voters will gain. 
B)  only a smaller proportion of voters will gain. 
C)  less than a simple majority of voters will gain. 
D)  approximately 50 percent of the voters will gain. 
A)  all voters will gain. 
B)  only a smaller proportion of voters will gain. 
C)  less than a simple majority of voters will gain. 
D)  approximately 50 percent of the voters will gain.

Question 5

In the case of a private good, which of the following forms of economic organization will result in the strongest incentive for consumers and producers to economize?

Accepted Answer

A)  The good is produced privately and taxes are used to provide it to consumers free of charge. 
B)  The good is produced privately and consumers purchase it with their own money. 
C)  The good is produced by government enterprises and the cost of its production is covered by taxes. 
D)  The good is produced by government enterprises and consumers purchase it with their own money. 
A)  The good is produced privately and taxes are used to provide it to consumers free of charge. 
B)  The good is produced privately and consumers purchase it with their own money. 
C)  The good is produced by government enterprises and the cost of its production is covered by taxes. 
D)  The good is produced by government enterprises and consumers purchase it with their own money.

Question 6

Which of the following represents why private production tends to be more efficient then government production?

Accepted Answer

A)  Politicians have a strong incentive to support projects that have immediate and easily recognized benefits and distant and unidentifiable costs, even if the total costs outweigh the total benefits. 
B)  Politicians have a strong incentive to support programs where the benefits are highly concentrated on special interest groups and the costs are widely dispersed among voters, even if the total costs outweigh the benefits. 
C)  Private companies face a profit motive that keeps them operating efficiently, government bureaucracies use taxpayer money and, therefore, do not face this profit motive. 
D)  All of the above are reasons why private production tends to be more efficient then government production. 
A)  Politicians have a strong incentive to support projects that have immediate and easily recognized benefits and distant and unidentifiable costs, even if the total costs outweigh the total benefits. 
B)  Politicians have a strong incentive to support programs where the benefits are highly concentrated on special interest groups and the costs are widely dispersed among voters, even if the total costs outweigh the benefits. 
C)  Private companies face a profit motive that keeps them operating efficiently, government bureaucracies use taxpayer money and, therefore, do not face this profit motive. 
D)  All of the above are reasons why private production tends to be more efficient then government production.

Question 7

How does a voting structure that relies on unanimity for an action guarantee that no one will be adversely affected? Why isn't this type of decision making used more frequently?

Accepted Answer

Since everyone must agree for a decision

Question 8

In economics, actions by individuals and interest groups designed to influence public policy in a manner that will either directly or indirectly redistribute more income to themselves are known as

Accepted Answer

A)  logrolling. 
B)  rent seeking. 
C)  influence peddling. 
D)  redistribution searching. 
A)  logrolling. 
B)  rent seeking. 
C)  influence peddling. 
D)  redistribution searching.

Question 9

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 10

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 11

Which of the following provides the best summary of the basic idea of public choice analysis?

Accepted Answer

A)  Public choice analysis applies the principles of economics to political science topics. 
B)  Public choice analysis takes the principles of political science and applies them to the traditional topics of economics. 
C)  Public choice analysis uses the principle of majority rule to determine the efficiency of an action. 
D)  Public choice analysis indicates there is a sharp distinction between economic and political topics. 
A)  Public choice analysis applies the principles of economics to political science topics. 
B)  Public choice analysis takes the principles of political science and applies them to the traditional topics of economics. 
C)  Public choice analysis uses the principle of majority rule to determine the efficiency of an action. 
D)  Public choice analysis indicates there is a sharp distinction between economic and political topics.

Question 12

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 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

When goods are produced privately, but the cost of their purchase is paid for by the taxpayer or some other third party,

Accepted Answer

A)  consumers have a strong incentive to search out those firms offering them the best deal. 
B)  private producers of such goods will have little incentive to control costs and provide them at low prices. 
C)  goods and services will only be supplied if consumers are willing to pay an amount sufficient to cover their production costs. 
D)  the invisible hand will direct consumers and producers toward an efficient level of output. 
A)  consumers have a strong incentive to search out those firms offering them the best deal. 
B)  private producers of such goods will have little incentive to control costs and provide them at low prices. 
C)  goods and services will only be supplied if consumers are willing to pay an amount sufficient to cover their production costs. 
D)  the invisible hand will direct consumers and producers toward an efficient level of output.

Question 15

When politicians support policies that benefit small interest groups, such as farmers, at the expense of unorganized, widely dispersed groups, for example, taxpayers or consumers, this is a reflection of the

Accepted Answer

A)  tragedy of interest. 
B)  special-interest effect. 
C)  unorganized interest effect. 
D)  shortsightedness effect. 
A)  tragedy of interest. 
B)  special-interest effect. 
C)  unorganized interest effect. 
D)  shortsightedness effect.

Question 16

Legislation that offers immediate and easily recognized benefits, at the expense of costs that are observable only in the distant future, is often enacted, even when economic inefficiency results. In economics this is referred to as the

Accepted Answer

A)  long-term effect. 
B)  political-fallacy effect. 
C)  shortsightedness effect. 
D)  inefficiency effect. 
A)  long-term effect. 
B)  political-fallacy effect. 
C)  shortsightedness effect. 
D)  inefficiency effect.

Question 17

According to the Bureau of Economic Analysis, government income transfer payments amounted to approximately what percent of national income?

Accepted Answer

A)  5 percent 
B)  16 percent 
C)  28 percent 
D)  50 percent 
A)  5 percent 
B)  16 percent 
C)  28 percent 
D)  50 percent

Question 18

Which of the following is an example of a transfer payment?

Accepted Answer

A)  wages paid to military personnel 
B)  benefits paid to Social Security recipients 
C)  purchase of aircraft by the Department of Defense 
D)  payments made to a contractor for construction of a highway 
A)  wages paid to military personnel 
B)  benefits paid to Social Security recipients 
C)  purchase of aircraft by the Department of Defense 
D)  payments made to a contractor for construction of a highway

Question 19

A special-interest issue is one that

Accepted Answer

A)  allocates the cost of the activity in accordance with the benefits received. 
B)  benefits a small, well-organized interest group at the expense of taxpayers or consumers. 
C)  benefits everyone and imposes a cost on everyone. 
D)  benefits a small, well-organized interest group but makes that group pay for the cost of the program. 
A)  allocates the cost of the activity in accordance with the benefits received. 
B)  benefits a small, well-organized interest group at the expense of taxpayers or consumers. 
C)  benefits everyone and imposes a cost on everyone. 
D)  benefits a small, well-organized interest group but makes that group pay for the cost of the program.

Question 20

Scenario 6-1 The quotation below relates to the following question(s).
"The ideal policy, from the viewpoint of the state, is one with identifiable beneficiaries, each of whom is helped appreciably, at the cost of many unidentifiable persons, none of whom is hurt very much." (George Stigler, A Dialogue on the Proper Economic Role of the State )
Which of the following groups does the quotation in Scenario 6-1 suggest would have the most influence on public sector action?

Accepted Answer

A)  taxpayers 
B)  nonunion workers 
C)  special interest groups 
D)  consumers 
A)  taxpayers 
B)  nonunion workers 
C)  special interest groups 
D)  consumers

The term logrolling describes

Producers tend to be better represented in lobbying efforts and other elements of the political process than consumers because

Which one of the following economists has played a central role in the development of the "economics of collective decision making," better known as public choice analysis?

When voters pay in proportion to the benefits received from an economic action of the government, if the government activity is productive,

In the case of a private good, which of the following forms of economic organization will result in the strongest incentive for consumers and producers to economize?

Which of the following represents why private production tends to be more efficient then government production?

How does a voting structure that relies on unanimity for an action guarantee that no one will be adversely affected? Why isn't this type of decision making used more frequently?

In economics, actions by individuals and interest groups designed to influence public policy in a manner that will either directly or indirectly redistribute more income to themselves are known as

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?

Logrolling refers to

Which of the following provides the best summary of the basic idea of public choice analysis?

Public choice theory indicates that the behavior of people in government

When goods are produced privately, but the cost of their purchase is paid for by the taxpayer or some other third party,

When politicians support policies that benefit small interest groups, such as farmers, at the expense of unorganized, widely dispersed groups, for example, taxpayers or consumers, this is a reflection of the

Legislation that offers immediate and easily recognized benefits, at the expense of costs that are observable only in the distant future, is often enacted, even when economic inefficiency results. In economics this is referred to as the

According to the Bureau of Economic Analysis, government income transfer payments amounted to approximately what percent of national income?

Which of the following is an example of a transfer payment?

A special-interest issue is one that

The Economic Approach

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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

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Exam 6: The Economics of Political Action

The term logrolling describes

Producers tend to be better represented in lobbying efforts and other elements of the political process than consumers because

Which one of the following economists has played a central role in the development of the "economics of collective decision making," better known as public choice analysis?

When voters pay in proportion to the benefits received from an economic action of the government, if the government activity is productive,

In the case of a private good, which of the following forms of economic organization will result in the strongest incentive for consumers and producers to economize?

Which of the following represents why private production tends to be more efficient then government production?

How does a voting structure that relies on unanimity for an action guarantee that no one will be adversely affected? Why isn't this type of decision making used more frequently?

In economics, actions by individuals and interest groups designed to influence public policy in a manner that will either directly or indirectly redistribute more income to themselves are known as

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?

Logrolling refers to

Which of the following provides the best summary of the basic idea of public choice analysis?

Public choice theory indicates that the behavior of people in government

When goods are produced privately, but the cost of their purchase is paid for by the taxpayer or some other third party,

When politicians support policies that benefit small interest groups, such as farmers, at the expense of unorganized, widely dispersed groups, for example, taxpayers or consumers, this is a reflection of the

Legislation that offers immediate and easily recognized benefits, at the expense of costs that are observable only in the distant future, is often enacted, even when economic inefficiency results. In economics this is referred to as the

According to the Bureau of Economic Analysis, government income transfer payments amounted to approximately what percent of national income?

Which of the following is an example of a transfer payment?

A special-interest issue is one that

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

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