Question 1

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 2

Which of the following is true?

Accepted Answer

A)  To remain in office, a politician must try to enact policies that gain him votes for his reelection and increase the support coming from contributors. 
B)  A politician always attempts to pursue policies that are good for society even if they are strongly opposed by many of her constituents or contributors. 
C)  Politicians generally place more weight on how their decisions affect future costs and benefits than on how they affect present costs and benefits. 
D)  The value of being in office is so low that most political candidates spend very little on campaigns to try to win (or keep) elected office. 
A)  To remain in office, a politician must try to enact policies that gain him votes for his reelection and increase the support coming from contributors. 
B)  A politician always attempts to pursue policies that are good for society even if they are strongly opposed by many of her constituents or contributors. 
C)  Politicians generally place more weight on how their decisions affect future costs and benefits than on how they affect present costs and benefits. 
D)  The value of being in office is so low that most political candidates spend very little on campaigns to try to win (or keep) elected office.

Question 3

Public choice analysis suggests that the primary motivating factor for politicians will be finding the policies that are most likely to

Accepted Answer

A)  get them reelected. 
B)  improve economic efficiency. 
C)  improve the welfare of society as a whole. 
D)  anger the interest groups that provide substantial contributions to their campaigns. 
A)  get them reelected. 
B)  improve economic efficiency. 
C)  improve the welfare of society as a whole. 
D)  anger the interest groups that provide substantial contributions to their campaigns.

Question 4

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 5

Which of the following is true?

Accepted Answer

A)  The incentives to engage in rent-seeking activities increase with the ease with which the political process can provide personal gain at the expense of others. 
B)  The amount of resources devoted toward rent seeking generally has no impact on the economic prosperity of a nation. 
C)  Income transfers directed toward the poor constitute about half of all income transfers in the United States. 
D)  All of the above are correct. 
A)  The incentives to engage in rent-seeking activities increase with the ease with which the political process can provide personal gain at the expense of others. 
B)  The amount of resources devoted toward rent seeking generally has no impact on the economic prosperity of a nation. 
C)  Income transfers directed toward the poor constitute about half of all income transfers in the United States. 
D)  All of the above are correct.

Question 6

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

Accepted Answer

A)  constitutional rules 
B)  the shortsightedness effect 
C)  the special-interest effect 
D)  public goods 
A)  constitutional rules 
B)  the shortsightedness effect 
C)  the special-interest effect 
D)  public goods

Question 7

Which of the following is true?

Accepted Answer

A)  Competitive behavior is present in the market sector but not in the public sector. 
B)  Because candidates for public office represent a bundle of views, there is more ability for individuals to make their preferences count on specific issues than in the market sector. 
C)  When decisions are made democratically, the economic and political power of all individuals will be equal unlike in the market sector. 
D)  The reality of the aggregate consumption-aggregate payment link imposed by scarcity is present in both the market and public sectors. 
A)  Competitive behavior is present in the market sector but not in the public sector. 
B)  Because candidates for public office represent a bundle of views, there is more ability for individuals to make their preferences count on specific issues than in the market sector. 
C)  When decisions are made democratically, the economic and political power of all individuals will be equal unlike in the market sector. 
D)  The reality of the aggregate consumption-aggregate payment link imposed by scarcity is present in both the market and public sectors.

Question 8

Despite many differences, the market and public sectors are similar in which one of the following respects?

Accepted Answer

A)  In both sectors, income (or power) is distributed on the basis of the same criterion. 
B)  Consumers in the market sector and voters in the public sector are equally well informed. 
C)  Voluntary exchange, rather than compulsion, is characteristic of both sectors. 
D)  It will be costly to use scarce goods, whether through the private or the public sector. 
A)  In both sectors, income (or power) is distributed on the basis of the same criterion. 
B)  Consumers in the market sector and voters in the public sector are equally well informed. 
C)  Voluntary exchange, rather than compulsion, is characteristic of both sectors. 
D)  It will be costly to use scarce goods, whether through the private or the public sector.

Question 9

Economic theory indicates that the behavior of

Accepted Answer

A)  government employees differs from the behavior of employees in the private sector because government employees generally disregard their own personal self-interest when making decisions. 
B)  elected public officials differs from the behavior of all other individuals in society because they are not influenced by private interests. 
C)  individuals when they make decisions about who to vote for is very different from the behavior of these same individuals when they make other types of choices. 
D)  voters, government employees, and public officials is best understood by applying the same basic principle we use to predict the behavior of people in the private sector--that incentives matter. 
A)  government employees differs from the behavior of employees in the private sector because government employees generally disregard their own personal self-interest when making decisions. 
B)  elected public officials differs from the behavior of all other individuals in society because they are not influenced by private interests. 
C)  individuals when they make decisions about who to vote for is very different from the behavior of these same individuals when they make other types of choices. 
D)  voters, government employees, and public officials is best understood by applying the same basic principle we use to predict the behavior of people in the private sector--that incentives matter.

Question 10

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 11

According to the shortsightedness effect, politicians tend to favor projects with

Accepted Answer

A)  short-run benefits and short-run costs. 
B)  short-run benefits and long-run costs. 
C)  long-run benefits and short-run costs. 
D)  long-run benefits and long-run costs. 
A)  short-run benefits and short-run costs. 
B)  short-run benefits and long-run costs. 
C)  long-run benefits and short-run costs. 
D)  long-run benefits and long-run costs.

Question 12

Use the figure below to answer the following question(s).
Figure 6-2
 
Figure 6-2 illustrates the four possibilities of the structure of production and consumption for a good or service. In which case is the incentive of producers and consumers to economize the strongest?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 13

The branch of economics that attempts to understand the outcomes observed in the public sector by examining the incentives faced by the individual actors involved (such as voters, politicians, and bureaucrats) is known as

Accepted Answer

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

Question 14

Ginny is the owner of a small business, and she is 35 years old. She doesn't smoke cigarettes, and she often spends her weekends with her family camping at the local Greentree state park. According to public choice theory, which of the following four politicians for a public office would Ginny be most likely to vote for in the upcoming election?

Accepted Answer

A)  Politician A proposes increasing the tax on small businesses and using the money to provide additional benefits for the elderly. 
B)  Politician B proposes increasing the tax on small businesses and using the money to improve the camping facilities at Greentree state park. 
C)  Politician C proposes increasing the excise tax on cigarettes and using the money to improve the camping facilities at Greentree state park. 
D)  Politician D proposes increasing the excise tax on cigarettes and using the money to provide additional benefits for the elderly. 
A)  Politician A proposes increasing the tax on small businesses and using the money to provide additional benefits for the elderly. 
B)  Politician B proposes increasing the tax on small businesses and using the money to improve the camping facilities at Greentree state park. 
C)  Politician C proposes increasing the excise tax on cigarettes and using the money to improve the camping facilities at Greentree state park. 
D)  Politician D proposes increasing the excise tax on cigarettes and using the money to provide additional benefits for the elderly.

Question 15

Which of the following is most likely to result in an increase in crony capitalism?

Accepted Answer

A)  a reduction in entry barriers and an increase in the competitiveness of markets. 
B)  an increase in government spending and growth of government regulation 
C)  a reduction in the size of government 
D)  an increase in the share of the population voting in elections 
A)  a reduction in entry barriers and an increase in the competitiveness of markets. 
B)  an increase in government spending and growth of government regulation 
C)  a reduction in the size of government 
D)  an increase in the share of the population voting in elections

Question 16

The major categories of federal government spending are

Accepted Answer

A)  health care, national defense, Social Security, and other income transfers. 
B)  law enforcement, environmental protection, and national defense. 
C)  public education, garbage collection, and public parks. 
D)  health care, public education, and highways. 
A)  health care, national defense, Social Security, and other income transfers. 
B)  law enforcement, environmental protection, and national defense. 
C)  public education, garbage collection, and public parks. 
D)  health care, public education, and highways.

Question 17

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 18

Senator Dogood is pushing for the construction of a new military base in his state even though, from the standpoint of national security, it is clear that there are better places to locate the new military base. Economic theory would suggest that Senator Dogood is

Accepted Answer

A)  acting irrationally; he must not know that the base would be better located in a different state. 
B)  acting rationally; he realizes that constructing the base in his state will increase his chances of getting reelected. 
C)  acting rationally if the country is currently at war but is acting irrationally if the country is not at war. 
D)  trying to do what is best for the country. 
A)  acting irrationally; he must not know that the base would be better located in a different state. 
B)  acting rationally; he realizes that constructing the base in his state will increase his chances of getting reelected. 
C)  acting rationally if the country is currently at war but is acting irrationally if the country is not at war. 
D)  trying to do what is best for the country.

Question 19

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

Question 20

A local government operates a city water system and finances it through fees that it charges to water consumers. This type of financing is an example of a

Accepted Answer

A)  head tax. 
B)  excise fee. 
C)  progressive tax. 
D)  user charge. 
A)  head tax. 
B)  excise fee. 
C)  progressive tax. 
D)  user charge.

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

Which of the following is true?

Public choice analysis suggests that the primary motivating factor for politicians will be finding the policies that are most likely to

Public choice analysis indicates

Which of the following is true?

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

Which of the following is true?

Despite many differences, the market and public sectors are similar in which one of the following respects?

Economic theory indicates that the behavior of

The term logrolling describes

According to the shortsightedness effect, politicians tend to favor projects with

Use the figure below to answer the following question(s). Figure 6-2 Figure 6-2 illustrates the four possibilities of the structure of production and consumption for a good or service. In which case is the incentive of producers and consumers to economize the strongest?

The branch of economics that attempts to understand the outcomes observed in the public sector by examining the incentives faced by the individual actors involved (such as voters, politicians, and bureaucrats) is known as

Which of the following is most likely to result in an increase in crony capitalism?

The major categories of federal government spending are

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

Senator Dogood is pushing for the construction of a new military base in his state even though, from the standpoint of national security, it is clear that there are better places to locate the new military base. Economic theory would suggest that Senator Dogood is

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

A local government operates a city water system and finances it through fees that it charges to water consumers. This type of financing is an example of a

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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Exam 6: The Economics of Political Action

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

Which of the following is true?

Public choice analysis suggests that the primary motivating factor for politicians will be finding the policies that are most likely to

Public choice analysis indicates

Which of the following is true?

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

Which of the following is true?

Despite many differences, the market and public sectors are similar in which one of the following respects?

Economic theory indicates that the behavior of

The term logrolling describes

According to the shortsightedness effect, politicians tend to favor projects with

Use the figure below to answer the following question(s). Figure 6-2 Figure 6-2 illustrates the four possibilities of the structure of production and consumption for a good or service. In which case is the incentive of producers and consumers to economize the strongest?

The branch of economics that attempts to understand the outcomes observed in the public sector by examining the incentives faced by the individual actors involved (such as voters, politicians, and bureaucrats) is known as

Which of the following is most likely to result in an increase in crony capitalism?

The major categories of federal government spending are

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

Senator Dogood is pushing for the construction of a new military base in his state even though, from the standpoint of national security, it is clear that there are better places to locate the new military base. Economic theory would suggest that Senator Dogood is

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

A local government operates a city water system and finances it through fees that it charges to water consumers. This type of financing is an example of a

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