Question 1

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 2

Which of the following is most likely to result in government failure?

Accepted Answer

A)  Highly competitive markets. 
B)  Monopoly. 
C)  A constitutional reform mandating that the federal government maintain a balanced budget. 
D)  Widespread government actions that favor some business firms and sectors of the economy relative to others. 
A)  Highly competitive markets. 
B)  Monopoly. 
C)  A constitutional reform mandating that the federal government maintain a balanced budget. 
D)  Widespread government actions that favor some business firms and sectors of the economy relative to others.

Question 3

Which of the following is true?

Accepted Answer

A)  When the government undertakes an activity, we can be assured that all voters will gain. 
B)  If a government activity is favored by most citizens, it must be productive. 
C)  If most voters oppose a government activity, it must be counterproductive. 
D)  When voters pay in proportion to benefits received, all voters will gain if the government activity is productive. 
A)  When the government undertakes an activity, we can be assured that all voters will gain. 
B)  If a government activity is favored by most citizens, it must be productive. 
C)  If most voters oppose a government activity, it must be counterproductive. 
D)  When voters pay in proportion to benefits received, all voters will gain if the government activity is productive.

Question 4

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 5

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 6

As more politically directed spending leads to more rent-seeking activity,

Accepted Answer

A)  the spending will increase GDP, but only if it is directed toward productive activity. 
B)  the spending will decrease GDP, but only if it is directed toward unproductive activity. 
C)  resources will be channeled toward unproductive activity and away from productive activity. 
D)  resources will be channeled toward productive activity and away from unproductive activity. 
A)  the spending will increase GDP, but only if it is directed toward productive activity. 
B)  the spending will decrease GDP, but only if it is directed toward unproductive activity. 
C)  resources will be channeled toward unproductive activity and away from productive activity. 
D)  resources will be channeled toward productive activity and away from unproductive activity.

Question 7

Public choice theory suggests that politicians will be most likely to favor redistribution of income from

Accepted Answer

A)  the rich to the poor. 
B)  unorganized taxpayers to well-organized interest groups. 
C)  well-organized business groups to consumers. 
D)  none of the above. 
A)  the rich to the poor. 
B)  unorganized taxpayers to well-organized interest groups. 
C)  well-organized business groups to consumers. 
D)  none of the above.

Question 8

Which of the following is an example of political action that reflects the shortsightedness effect?

Accepted Answer

A)  budget surpluses 
B)  the promise of future benefits without providing for their funding 
C)  spending on roads and highways 
D)  spending on programs that transfer income from the rich to the poor 
A)  budget surpluses 
B)  the promise of future benefits without providing for their funding 
C)  spending on roads and highways 
D)  spending on programs that transfer income from the rich to the poor

Question 9

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 10

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 11

The rational-ignorance effect is a result of

Accepted Answer

A)  externalities that lead to an excess supply of information. 
B)  the limited incentive of the news media to cover political campaigns. 
C)  the expectation of individual voters that their vote will not be decisive. 
D)  the lack of a college education on the part of most voters in the United States. 
A)  externalities that lead to an excess supply of information. 
B)  the limited incentive of the news media to cover political campaigns. 
C)  the expectation of individual voters that their vote will not be decisive. 
D)  the lack of a college education on the part of most voters in the United States.

Question 12

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 13

Public choice theory indicates that representative government yields outcomes more consistent with economic efficiency when a close relationship exists between the benefits received and the costs borne by each voter. Which of the following methods of financing a government program will most likely result in a close relationship between voter benefits and costs?

Accepted Answer

A)  progressive income tax 
B)  retail sales tax 
C)  property tax 
D)  user charges 
A)  progressive income tax 
B)  retail sales tax 
C)  property tax 
D)  user charges

Question 14

Despite being a college graduate, Ethan cannot name any of his representatives in Congress and he has no idea which issues are being debated and voted on this week in Congress. According to public choice analysis, Ethan is

Accepted Answer

A)  irrational. 
B)  considering only the welfare of society and not his own personal interests. 
C)  not intelligent enough to understand the issues. 
D)  making a rational personal choice because knowing these things gives him little personal benefit. 
A)  irrational. 
B)  considering only the welfare of society and not his own personal interests. 
C)  not intelligent enough to understand the issues. 
D)  making a rational personal choice because knowing these things gives him little personal benefit.

Question 15

If a federal agency requested funds to build a dam on an Idaho river to irrigate nearby farmland used for growing potatoes, the most active support for the project probably would come from

Accepted Answer

A)  potato farmers who own land that wouldn't be irrigated by the project. 
B)  taxpayers who would pay for the project. 
C)  consumers of potatoes who might benefit from an expansion in supply and slightly lower potato prices. 
D)  potato farmers who own the land to be irrigated. 
A)  potato farmers who own land that wouldn't be irrigated by the project. 
B)  taxpayers who would pay for the project. 
C)  consumers of potatoes who might benefit from an expansion in supply and slightly lower potato prices. 
D)  potato farmers who own the land to be irrigated.

Question 16

Other things constant, if both the benefits and costs of a public-sector activity are widespread among voters, the political process will generally result in the

Accepted Answer

A)  rejection of productive activities and acceptance of unproductive activities. 
B)  acceptance of both productive and unproductive activities. 
C)  rejection of both productive and unproductive activities. 
D)  acceptance of productive activities and rejection of unproductive activities. 
A)  rejection of productive activities and acceptance of unproductive activities. 
B)  acceptance of both productive and unproductive activities. 
C)  rejection of both productive and unproductive activities. 
D)  acceptance of productive activities and rejection of unproductive activities.

Question 17

Is calling a voter rationally ignorant the same as calling her irrational? Explain.

Accepted Answer

These are clearly not the same. To be ir

Question 18

Government decisions tend to be biased toward actions that have

Accepted Answer

A)  current benefits that are easily observable and future costs that are difficult to identify. 
B)  current benefits and future costs that are both difficult to identify. 
C)  future costs that are easily observable. 
D)  clear benefits to the poor at no costs to the wealthy. 
A)  current benefits that are easily observable and future costs that are difficult to identify. 
B)  current benefits and future costs that are both difficult to identify. 
C)  future costs that are easily observable. 
D)  clear benefits to the poor at no costs to the wealthy.

Question 19

Restrictions that limit sugar imports, subsidies for the construction of sports stadiums, and federal spending on programs like the construction of an indoor rain forest in Iowa all provide examples of government programs

Accepted Answer

A)  based on careful analysis of benefits relative to cost. 
B)  designed to redistribute income from the rich to the poor. 
C)  that reflect the political attractiveness of special-interest issues. 
D)  that promote the general welfare. 
A)  based on careful analysis of benefits relative to cost. 
B)  designed to redistribute income from the rich to the poor. 
C)  that reflect the political attractiveness of special-interest issues. 
D)  that promote the general welfare.

Question 20

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. When the structure of production and consumption for a good places it in quadrant B,

Accepted Answer

A)  consumers have little incentive to search out and patronize low-cost suppliers. 
B)  private producers of such goods will have little incentive to operate efficiently and to keep prices low. 
C)  goods and services will only be supplied if consumers are willing to pay an amount sufficient to cover their production costs. 
D)  both a and b, but not c, will be true. 
A)  consumers have little incentive to search out and patronize low-cost suppliers. 
B)  private producers of such goods will have little incentive to operate efficiently and to keep prices low. 
C)  goods and services will only be supplied if consumers are willing to pay an amount sufficient to cover their production costs. 
D)  both a and b, but not c, will be true.

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

Which of the following is most likely to result in government failure?

Which of the following is true?

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

The major categories of federal government spending are

As more politically directed spending leads to more rent-seeking activity,

Public choice theory suggests that politicians will be most likely to favor redistribution of income from

Which of the following is an example of political action that reflects the shortsightedness effect?

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

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

The rational-ignorance effect is a result of

Special-interest legislation is characterized by

Despite being a college graduate, Ethan cannot name any of his representatives in Congress and he has no idea which issues are being debated and voted on this week in Congress. According to public choice analysis, Ethan is

If a federal agency requested funds to build a dam on an Idaho river to irrigate nearby farmland used for growing potatoes, the most active support for the project probably would come from

Other things constant, if both the benefits and costs of a public-sector activity are widespread among voters, the political process will generally result in the

Is calling a voter rationally ignorant the same as calling her irrational? Explain.

Government decisions tend to be biased toward actions that have

Restrictions that limit sugar imports, subsidies for the construction of sports stadiums, and federal spending on programs like the construction of an indoor rain forest in Iowa all provide examples of government programs

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. When the structure of production and consumption for a good places it in quadrant B,

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

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters

Exam 6: The Economics of Political Action

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

Which of the following is most likely to result in government failure?

Which of the following is true?

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

The major categories of federal government spending are

As more politically directed spending leads to more rent-seeking activity,

Public choice theory suggests that politicians will be most likely to favor redistribution of income from

Which of the following is an example of political action that reflects the shortsightedness effect?

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

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

The rational-ignorance effect is a result of

Special-interest legislation is characterized by

Despite being a college graduate, Ethan cannot name any of his representatives in Congress and he has no idea which issues are being debated and voted on this week in Congress. According to public choice analysis, Ethan is

If a federal agency requested funds to build a dam on an Idaho river to irrigate nearby farmland used for growing potatoes, the most active support for the project probably would come from

Other things constant, if both the benefits and costs of a public-sector activity are widespread among voters, the political process will generally result in the

Is calling a voter rationally ignorant the same as calling her irrational? Explain.

Government decisions tend to be biased toward actions that have

Restrictions that limit sugar imports, subsidies for the construction of sports stadiums, and federal spending on programs like the construction of an indoor rain forest in Iowa all provide examples of government programs

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. When the structure of production and consumption for a good places it in quadrant B,

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

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters