Question 1

The shortsightedness effect suggests that

Accepted Answer

A)  politicians have a strong incentive to support projects that yield immediate and easily recognized benefits, especially when the costs of the projects are difficult to identify and are observable only in the distant future. 
B)  politicians have a strong incentive to support projects that yield benefits in the distant future, especially when the costs of the project must be paid for in the current period. 
C)  voters will tend to weigh future costs and benefits more heavily than current costs and benefits. 
D)  legislators will be unwilling to trade votes on issues, especially when those issues benefit only special interest groups. 
A)  politicians have a strong incentive to support projects that yield immediate and easily recognized benefits, especially when the costs of the projects are difficult to identify and are observable only in the distant future. 
B)  politicians have a strong incentive to support projects that yield benefits in the distant future, especially when the costs of the project must be paid for in the current period. 
C)  voters will tend to weigh future costs and benefits more heavily than current costs and benefits. 
D)  legislators will be unwilling to trade votes on issues, especially when those issues benefit only special interest groups.

Question 2

Pork-barrel legislation typically bundles the pet projects of several special interest groups. Such legislation

Accepted Answer

A)  is frequently enacted, even though the overall benefits to society are less than the overall costs to society. 
B)  seldom benefits special interest groups. 
C)  usually, if successful, helps the majority of taxpayers. 
D)  seldom passes because social benefits are far smaller than social costs. 
A)  is frequently enacted, even though the overall benefits to society are less than the overall costs to society. 
B)  seldom benefits special interest groups. 
C)  usually, if successful, helps the majority of taxpayers. 
D)  seldom passes because social benefits are far smaller than social costs.

Question 3

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 type would the government most likely fail to undertake many projects that would be considered efficient or productive (in other words, do too few of them relative to economic efficiency)?

Accepted Answer

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

Question 4

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 5

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 6

In 2006, the American Association of Retired Persons (AARP) spent over $70 million on lobbying-related expenses in an attempt to get policies enacted that would benefit retirees. In economics, the term used to describe such activity is

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 7

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 8

Which of the following increases the political power of special interest groups and makes counterproductive government action more likely?

Accepted Answer

A)  logrolling and pork barrel legislation 
B)  the rational-ignorance effect 
C)  public goods 
D)  both a and b, but not c 
A)  logrolling and pork barrel legislation 
B)  the rational-ignorance effect 
C)  public goods 
D)  both a and b, but not c

Question 9

According to the economic way of thinking, personal benefits and costs influence the actions of

Accepted Answer

A)  consumers in the private sector but not voters in the public sector. 
B)  producers in the private sector but not politicians in the public sector. 
C)  taxpayers but not recipients of government-provided goods and services. 
D)  consumers, producers, voters, and politicians in both the private and the public sectors. 
A)  consumers in the private sector but not voters in the public sector. 
B)  producers in the private sector but not politicians in the public sector. 
C)  taxpayers but not recipients of government-provided goods and services. 
D)  consumers, producers, voters, and politicians in both the private and the public sectors.

Question 10

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 11

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 12

When governments become more heavily involved in taxing one group in order to provide benefits to other groups, which of the following will be encouraged?

Accepted Answer

A)  rapid economic growth 
B)  rent-seeking activity 
C)  an improvement in the efficiency of government bureaucracies 
D)  competitive private markets 
A)  rapid economic growth 
B)  rent-seeking activity 
C)  an improvement in the efficiency of government bureaucracies 
D)  competitive private markets

Question 13

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 14

Assume that you are a member of the U.S. House of Representatives from your home state and district. Which of the following best explains why you have a strong incentive to get the federal government to finance pork-barrel projects in your district?

Accepted Answer

A)  Most of the benefits of pork-barrel projects within your district will accrue to your constituents, while most of the costs will be imposed on voters from other districts. 
B)  Most of the costs of pork-barrel projects within your district will be imposed on your constituents, while most of the benefits will accrue to voters from other districts. 
C)  Pork producers are a powerful political lobby that will influence the actions of legislators in all districts. 
D)  This is a trick question; in a representative democracy, there is little incentive for legislators to support pork-barrel projects. 
A)  Most of the benefits of pork-barrel projects within your district will accrue to your constituents, while most of the costs will be imposed on voters from other districts. 
B)  Most of the costs of pork-barrel projects within your district will be imposed on your constituents, while most of the benefits will accrue to voters from other districts. 
C)  Pork producers are a powerful political lobby that will influence the actions of legislators in all districts. 
D)  This is a trick question; in a representative democracy, there is little incentive for legislators to support pork-barrel projects.

Question 15

Public choice analysis indicates that politicians will find

Accepted Answer

A)  budget deficits more attractive than budget surpluses. 
B)  budget surpluses more attractive than budget deficits. 
C)  budget deficits attractive during an economic boom, but surpluses attractive during a recession. 
D)  tax increases more attractive than increases in government spending. 
A)  budget deficits more attractive than budget surpluses. 
B)  budget surpluses more attractive than budget deficits. 
C)  budget deficits attractive during an economic boom, but surpluses attractive during a recession. 
D)  tax increases more attractive than increases in government spending.

Question 16

Which of the following refers to when legislators trade votes on legislation?

Accepted Answer

A)  the shortsightedness effect 
B)  the special-interest effect 
C)  rational-ignorance effect 
D)  logrolling 
A)  the shortsightedness effect 
B)  the special-interest effect 
C)  rational-ignorance effect 
D)  logrolling

Question 17

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 18

In a representative democracy, government action results from the

Accepted Answer

A)  choices of voters. 
B)  legislative decisions by politicians. 
C)  political action of organized interest groups. 
D)  complex interaction of all of the above. 
A)  choices of voters. 
B)  legislative decisions by politicians. 
C)  political action of organized interest groups. 
D)  complex interaction of all of the above.

Question 19

From the standpoint of society as a whole, rent seeking is

Accepted Answer

A)  counterproductive because it takes resources away from the creation of wealth in the private sector. 
B)  counterproductive because it fails to alter public policy. 
C)  productive because each interest group gains more than they spend on rent-seeking activities. 
D)  productive because the resources used in rent seeking have no opportunity cost to society. 
A)  counterproductive because it takes resources away from the creation of wealth in the private sector. 
B)  counterproductive because it fails to alter public policy. 
C)  productive because each interest group gains more than they spend on rent-seeking activities. 
D)  productive because the resources used in rent seeking have no opportunity cost to society.

Question 20

When the tax to fund a government project is allocated among voters in proportion to the benefits they receive from the project,

Accepted Answer

A)  productive (efficient) projects will tend to be opposed by a majority of voters. 
B)  counterproductive (inefficient) projects will often be favored by a majority of voters. 
C)  projects that are productive (efficient) will tend to be favored by an overwhelming majority of voters. 
D)  democratic political decision making can be expected to work poorly. 
A)  productive (efficient) projects will tend to be opposed by a majority of voters. 
B)  counterproductive (inefficient) projects will often be favored by a majority of voters. 
C)  projects that are productive (efficient) will tend to be favored by an overwhelming majority of voters. 
D)  democratic political decision making can be expected to work poorly.

The shortsightedness effect suggests that

Pork-barrel legislation typically bundles the pet projects of several special interest groups. Such legislation

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?

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

In 2006, the American Association of Retired Persons (AARP) spent over $70 million on lobbying-related expenses in an attempt to get policies enacted that would benefit retirees. In economics, the term used to describe such activity is

Logrolling refers to

Which of the following increases the political power of special interest groups and makes counterproductive government action more likely?

According to the economic way of thinking, personal benefits and costs influence the actions of

Crony capitalism is present when

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

When governments become more heavily involved in taxing one group in order to provide benefits to other groups, which of the following will be encouraged?

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

Assume that you are a member of the U.S. House of Representatives from your home state and district. Which of the following best explains why you have a strong incentive to get the federal government to finance pork-barrel projects in your district?

Public choice analysis indicates that politicians will find

Which of the following refers to when legislators trade votes on legislation?

In a representative democracy, government action results from the

From the standpoint of society as a whole, rent seeking is

When the tax to fund a government project is allocated among voters in proportion to the benefits they receive from the project,

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

The shortsightedness effect suggests that

Pork-barrel legislation typically bundles the pet projects of several special interest groups. Such legislation

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?

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

In 2006, the American Association of Retired Persons (AARP) spent over $70 million on lobbying-related expenses in an attempt to get policies enacted that would benefit retirees. In economics, the term used to describe such activity is

Logrolling refers to

Which of the following increases the political power of special interest groups and makes counterproductive government action more likely?

According to the economic way of thinking, personal benefits and costs influence the actions of

Crony capitalism is present when

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

When governments become more heavily involved in taxing one group in order to provide benefits to other groups, which of the following will be encouraged?

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

Assume that you are a member of the U.S. House of Representatives from your home state and district. Which of the following best explains why you have a strong incentive to get the federal government to finance pork-barrel projects in your district?

Public choice analysis indicates that politicians will find

Which of the following refers to when legislators trade votes on legislation?

In a representative democracy, government action results from the

From the standpoint of society as a whole, rent seeking is

When the tax to fund a government project is allocated among voters in proportion to the benefits they receive from the project,

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