Question 1

Which of the following factors explains why managers of government agencies (the public sector) have little incentive to operate efficiently?

Accepted Answer

A)  It is relatively easy for voters to detect operational inefficiency in the public sector and do something to correct it. 
B)  Public-sector managers face fierce competition. 
C)  Public-sector managers have no fear of losses and bankruptcy when operational efficiency is not achieved. 
D)  All of the above explain why government agencies have little incentive to be efficient. 
A)  It is relatively easy for voters to detect operational inefficiency in the public sector and do something to correct it. 
B)  Public-sector managers face fierce competition. 
C)  Public-sector managers have no fear of losses and bankruptcy when operational efficiency is not achieved. 
D)  All of the above explain why government agencies have little incentive to be efficient.

Question 2

In which of the following situations is the political process likely to result in the inefficient and wasteful use of resources?

Accepted Answer

A)  when the benefits are concentrated and the costs are concentrated 
B)  when the benefits are concentrated and the costs widespread 
C)  when the benefits are widespread and the costs are concentrated 
D)  when the benefits are widespread and the costs are widespread 
A)  when the benefits are concentrated and the costs are concentrated 
B)  when the benefits are concentrated and the costs widespread 
C)  when the benefits are widespread and the costs are concentrated 
D)  when the benefits are widespread and the costs are widespread

Question 3

Congressman Localstuff always votes for a balanced budget amendment to the U.S. Constitution. He also always votes for spending bills supported by the leadership of his political party. Is this rational?

Accepted Answer

Congressman Localstuff's constituents pr

Question 4

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 5

The term pork-barrel legislation refers to

Accepted Answer

A)  government spending programs financed with user charges. 
B)  the exchange between legislators of their votes on issues. 
C)  legislation that bundles together a number of projects, each benefiting local interests at the expense of general taxpayers. 
D)  the actions of legislators who are willing to trade their political votes for campaign contributions from special interest groups. 
A)  government spending programs financed with user charges. 
B)  the exchange between legislators of their votes on issues. 
C)  legislation that bundles together a number of projects, each benefiting local interests at the expense of general taxpayers. 
D)  the actions of legislators who are willing to trade their political votes for campaign contributions from special interest groups.

Question 6

Public choice analysis

Accepted Answer

A)  assumes individuals in the public sector seek to serve the public interest rather than their own personal interests. 
B)  is the study of the decision making of individual actors (such as voters, politicians, and bureaucrats) in the public sector. 
C)  suggests that individual voters have a greater incentive to become informed when making choices among political candidates than when making choices about the products they consume. 
D)  finds that the individuals managing government agencies generally have a much stronger incentive to be efficient than do individuals managing private businesses. 
A)  assumes individuals in the public sector seek to serve the public interest rather than their own personal interests. 
B)  is the study of the decision making of individual actors (such as voters, politicians, and bureaucrats) in the public sector. 
C)  suggests that individual voters have a greater incentive to become informed when making choices among political candidates than when making choices about the products they consume. 
D)  finds that the individuals managing government agencies generally have a much stronger incentive to be efficient than do individuals managing private businesses.

Question 7

Which one of the following is a major difference between market and collective action through government?

Accepted Answer

A)  Individuals are motivated by personal interests when making market choices, but they will be motivated primarily by the public interest when making collective choices. 
B)  Competitive behavior is present when decisions are made in the marketplace, but competition is absent when choices are made collectively. 
C)  Scarcity constrains output when decisions are made in the market sector, but scarcity is absent when goods are provided by the government. 
D)  In the market sector, there is generally a one-to-one link between payment and consumption; this link is often absent in the government sector. 
A)  Individuals are motivated by personal interests when making market choices, but they will be motivated primarily by the public interest when making collective choices. 
B)  Competitive behavior is present when decisions are made in the marketplace, but competition is absent when choices are made collectively. 
C)  Scarcity constrains output when decisions are made in the market sector, but scarcity is absent when goods are provided by the government. 
D)  In the market sector, there is generally a one-to-one link between payment and consumption; this link is often absent in the government sector.

Question 8

In 2015, the combined expenditures of federal, state, and local governments in the United States were approximately 36 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 9

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 the senator from West Virginia approaches the senator from Florida and says that he will vote for the orange subsidy if the Florida senator votes for the coal-mining subsidy.  The Florida senator agrees. Which term best describes what just happened?

Accepted Answer

A)  the shortsightedness effect 
B)  logrolling 
C)  the use of user charges 
D)  the political voter theory 
A)  the shortsightedness effect 
B)  logrolling 
C)  the use of user charges 
D)  the political voter theory

Question 10

Public choice theory suggests 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)  middle-income taxpayers to both the rich and the poor. 
D)  well-organized businesses and labor groups to consumers. 
A)  the rich to the poor. 
B)  unorganized taxpayers to well-organized interest groups. 
C)  middle-income taxpayers to both the rich and the poor. 
D)  well-organized businesses and labor groups to consumers.

Question 11

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 12

Which of the following is a distinguishing characteristic of a user charge?

Accepted Answer

A)  Persons pay roughly in proportion to the extent that they use the good or service. 
B)  Persons with high incomes pay a larger amount than persons with lower incomes for the same good or service. 
C)  Persons with high incomes pay a larger percentage of their income than persons with lower incomes for the same good or service. 
D)  Persons with high incomes pay a smaller percentage of their income than persons with lower incomes for the same good or service. 
A)  Persons pay roughly in proportion to the extent that they use the good or service. 
B)  Persons with high incomes pay a larger amount than persons with lower incomes for the same good or service. 
C)  Persons with high incomes pay a larger percentage of their income than persons with lower incomes for the same good or service. 
D)  Persons with high incomes pay a smaller percentage of their income than persons with lower incomes for the same good or service.

Question 13

Public choice analysis suggests that bureaucrats and public-sector managers have a strong incentive to

Accepted Answer

A)  economize on their spending so more funds will be available for other government programs. 
B)  ensure that their budget is exactly the size that would be considered economically efficient. 
C)  expand their budgets to sizes beyond what would be considered economically efficient. 
D)  keep individual legislators fully informed as to every expenditure. 
A)  economize on their spending so more funds will be available for other government programs. 
B)  ensure that their budget is exactly the size that would be considered economically efficient. 
C)  expand their budgets to sizes beyond what would be considered economically efficient. 
D)  keep individual legislators fully informed as to every expenditure.

Question 14

Which of the following is an example of a good that is produced by the public sector but consumers purchase it in proportion to the benefit received?

Accepted Answer

A)  milk 
B)  public education 
C)  first-class mail delivery from the U.S. Post Office 
D)  national defense 
A)  milk 
B)  public education 
C)  first-class mail delivery from the U.S. Post Office 
D)  national defense

Question 15

In 2012, the combined expenditures of federal, state, and local governments in the United States were approximately

Accepted Answer

A)  9 percent of GDP. 
B)  24 percent of GDP. 
C)  38 percent of GDP. 
D)  45 percent of GDP. 
A)  9 percent of GDP. 
B)  24 percent of GDP. 
C)  38 percent of GDP. 
D)  45 percent of GDP.

Question 16

Which of the following is the most likely explanation for the imposition of a price floor in the market for corn?

Accepted Answer

A)  Policymakers have studied the effects of the price floor carefully and they recognize that the price floor will improve the efficiency of resource use. 
B)  Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into enacting the price floor. 
C)  Buyers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor. 
D)  Sellers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor. 
A)  Policymakers have studied the effects of the price floor carefully and they recognize that the price floor will improve the efficiency of resource use. 
B)  Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into enacting the price floor. 
C)  Buyers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor. 
D)  Sellers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor.

Question 17

According to public choice theory, which of the following groups will likely benefit the most from government income transfers under a system of representative democracy?

Accepted Answer

A)  the poor 
B)  consumers 
C)  small businesses 
D)  concentrated interest groups 
A)  the poor 
B)  consumers 
C)  small businesses 
D)  concentrated interest groups

Question 18

Government decisions tend to be biased against actions that have

Accepted Answer

A)  current costs and future benefits that are both easily observable. 
B)  future costs that are difficult to identify and current benefits that are easily observable. 
C)  future costs and future benefits that are both difficult to identify. 
D)  current costs that are easily observable and future benefits that are difficult to identify. 
A)  current costs and future benefits that are both easily observable. 
B)  future costs that are difficult to identify and current benefits that are easily observable. 
C)  future costs and future benefits that are both difficult to identify. 
D)  current costs that are easily observable and future benefits that are difficult to identify.

Question 19

An issue that generates substantial benefits to a small group of individuals while imposing a small cost on many others is called a

Accepted Answer

A)  special-interest issue. 
B)  minority application. 
C)  commons policy. 
D)  national service. 
A)  special-interest issue. 
B)  minority application. 
C)  commons policy. 
D)  national service.

Question 20

Special-interest programs are highly attractive to vote-seeking politicians because

Accepted Answer

A)  these programs are highly efficient, and therefore, they tend to enhance the general welfare of the populace. 
B)  members of special interest groups favoring these programs are less likely to vote than the taxpayers who pay for them. 
C)  low-income recipients are the primary beneficiaries of special-interest programs. 
D)  members of special interest groups favoring these programs feel strongly about them while most other voters are rationally uninformed about them. 
A)  these programs are highly efficient, and therefore, they tend to enhance the general welfare of the populace. 
B)  members of special interest groups favoring these programs are less likely to vote than the taxpayers who pay for them. 
C)  low-income recipients are the primary beneficiaries of special-interest programs. 
D)  members of special interest groups favoring these programs feel strongly about them while most other voters are rationally uninformed about them.

Which of the following factors explains why managers of government agencies (the public sector) have little incentive to operate efficiently?

In which of the following situations is the political process likely to result in the inefficient and wasteful use of resources?

Congressman Localstuff always votes for a balanced budget amendment to the U.S. Constitution. He also always votes for spending bills supported by the leadership of his political party. Is this rational?

Economic theory indicates that the behavior of

The term pork-barrel legislation refers to

Public choice analysis

Which one of the following is a major difference between market and collective action through government?

In 2015, the combined expenditures of federal, state, and local governments in the United States were approximately 36 percent of gross domestic product (GDP). Approximately what percentage of GDP were government expenditures in 1930?

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

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

Which of the following is a distinguishing characteristic of a user charge?

Public choice analysis suggests that bureaucrats and public-sector managers have a strong incentive to

Which of the following is an example of a good that is produced by the public sector but consumers purchase it in proportion to the benefit received?

In 2012, the combined expenditures of federal, state, and local governments in the United States were approximately

Which of the following is the most likely explanation for the imposition of a price floor in the market for corn?

According to public choice theory, which of the following groups will likely benefit the most from government income transfers under a system of representative democracy?

Government decisions tend to be biased against actions that have

An issue that generates substantial benefits to a small group of individuals while imposing a small cost on many others is called a

Special-interest programs are highly attractive to vote-seeking politicians because

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

Which of the following factors explains why managers of government agencies (the public sector) have little incentive to operate efficiently?

In which of the following situations is the political process likely to result in the inefficient and wasteful use of resources?

Congressman Localstuff always votes for a balanced budget amendment to the U.S. Constitution. He also always votes for spending bills supported by the leadership of his political party. Is this rational?

Economic theory indicates that the behavior of

The term pork-barrel legislation refers to

Public choice analysis

Which one of the following is a major difference between market and collective action through government?

In 2015, the combined expenditures of federal, state, and local governments in the United States were approximately 36 percent of gross domestic product (GDP). Approximately what percentage of GDP were government expenditures in 1930?

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

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

Which of the following is a distinguishing characteristic of a user charge?

Public choice analysis suggests that bureaucrats and public-sector managers have a strong incentive to

Which of the following is an example of a good that is produced by the public sector but consumers purchase it in proportion to the benefit received?

In 2012, the combined expenditures of federal, state, and local governments in the United States were approximately

Which of the following is the most likely explanation for the imposition of a price floor in the market for corn?

According to public choice theory, which of the following groups will likely benefit the most from government income transfers under a system of representative democracy?

Government decisions tend to be biased against actions that have

An issue that generates substantial benefits to a small group of individuals while imposing a small cost on many others is called a

Special-interest programs are highly attractive to vote-seeking politicians because

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