Question 1

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 2

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 3

Elizabeth 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 state park. According to public choice theory, which of the following four politicians for a public office would Elizabeth 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 the state park. 
C)  Politician C proposes increasing the excise tax on cigarettes and using the money to improve the camping facilities at the 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 the state park. 
C)  Politician C proposes increasing the excise tax on cigarettes and using the money to improve the camping facilities at the state park. 
D)  Politician D proposes increasing the excise tax on cigarettes and using the money to provide additional benefits for the elderly.

Question 4

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 5

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

Accepted Answer

A)  weak incentives for operational efficiency 
B)  rent-seeking 
C)  the shortsightedness effect 
D)  externalities 
A)  weak incentives for operational efficiency 
B)  rent-seeking 
C)  the shortsightedness effect 
D)  externalities

Question 6

Dairy farmers hold an annual Capitol Hill ice cream social that provides free ice cream for congressional staffers during which time representatives from the industry discuss issues with, and provide information to, congressional staff. This is an example of

Accepted Answer

A)  logrolling. 
B)  rent seeking. 
C)  pork-barrel legislation. 
D)  the shortsightedness effect. 
A)  logrolling. 
B)  rent seeking. 
C)  pork-barrel legislation. 
D)  the shortsightedness effect.

Question 7

Government action will often result in the counterproductive use of resources because

Accepted Answer

A)  there is often a conflict between winning political elections and adoption of only productive programs. 
B)  many politicians are not interested in how their legislative votes will influence their chances of winning future elections. 
C)  politicians are often unwilling to listen to interest groups that have specialized knowledge. 
D)  voter participation is low; if more people voted, the political process would be more efficient. 
A)  there is often a conflict between winning political elections and adoption of only productive programs. 
B)  many politicians are not interested in how their legislative votes will influence their chances of winning future elections. 
C)  politicians are often unwilling to listen to interest groups that have specialized knowledge. 
D)  voter participation is low; if more people voted, the political process would be more efficient.

Question 8

When voters pay taxes in proportion to the benefits they receive from government projects,

Accepted Answer

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

Question 9

Public choice analysis indicates

Accepted Answer

A)  politicians under representative democracy are led as if by an invisible hand to adopt legislation that enhances the wealth of a nation. 
B)  political structures consistent with economic efficiency tend to emerge naturally from the ordinary political process. 
C)  constitutional rules establishing procedures and limiting the ability of the political process to engage in redistributive activities can improve the economic efficiency of government. 
D)  all of the above are correct. 
A)  politicians under representative democracy are led as if by an invisible hand to adopt legislation that enhances the wealth of a nation. 
B)  political structures consistent with economic efficiency tend to emerge naturally from the ordinary political process. 
C)  constitutional rules establishing procedures and limiting the ability of the political process to engage in redistributive activities can improve the economic efficiency of government. 
D)  all of the above are correct.

Question 10

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 11

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 12

For activities in which the benefits are concentrated and the costs widespread, governments are likely to undertake

Accepted Answer

A)  too little of these activities relative to what would be efficient. 
B)  too much of these activities relative to what would be efficient. 
C)  exactly the amount of these activities that would be efficient. 
D)  none of these activities. 
A)  too little of these activities relative to what would be efficient. 
B)  too much of these activities relative to what would be efficient. 
C)  exactly the amount of these activities that would be efficient. 
D)  none of these activities.

Question 13

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

Accepted Answer

A)  externalities 
B)  the rational-ignorance effect 
C)  the shortsightedness effect 
D)  well-informed consumers 
A)  externalities 
B)  the rational-ignorance effect 
C)  the shortsightedness effect 
D)  well-informed consumers

Question 14

When the government both provides a service and covers its costs through taxation,

Accepted Answer

A)  the government has a strong incentive to supply consumers with desired goods at a low cost. 
B)  consumers are in a weak position to either discipline the suppliers or alter the quantity or quality of the service provided. 
C)  the invisible hand will direct decision makers toward the most efficient level of output. 
D)  Consumers have strong incentive to be cost conscious. 
A)  the government has a strong incentive to supply consumers with desired goods at a low cost. 
B)  consumers are in a weak position to either discipline the suppliers or alter the quantity or quality of the service provided. 
C)  the invisible hand will direct decision makers toward the most efficient level of output. 
D)  Consumers have strong incentive to be cost conscious.

Question 15

An analysis of market failure and government failure indicates

Accepted Answer

A)  government decision making is always preferable to using markets. 
B)  market decision making is always preferable to public-sector action. 
C)  government action is necessary whenever market failure occurs. 
D)  both the market and the government may fail to meet conditions of economic efficiency; in each individual case, the choice of market or public-sector action requires careful evaluation. 
A)  government decision making is always preferable to using markets. 
B)  market decision making is always preferable to public-sector action. 
C)  government action is necessary whenever market failure occurs. 
D)  both the market and the government may fail to meet conditions of economic efficiency; in each individual case, the choice of market or public-sector action requires careful evaluation.

Question 16

The methodology of public choice analysis

Accepted Answer

A)  develops a logically consistent theory based on how individual actors (such as voters, politicians, and bureaucrats) respond to incentives. 
B)  assumes that all decisions made by individual actors in the public sector are done with the public interest in mind, rather than their private interests. 
C)  assumes that individuals generally react to the incentives they face when making choices in the private sector but not in the public sector. 
D)  focuses on the development of a single theory of government as a whole rather than on analyzing the choices made by individual agents in the public sector. 
A)  develops a logically consistent theory based on how individual actors (such as voters, politicians, and bureaucrats) respond to incentives. 
B)  assumes that all decisions made by individual actors in the public sector are done with the public interest in mind, rather than their private interests. 
C)  assumes that individuals generally react to the incentives they face when making choices in the private sector but not in the public sector. 
D)  focuses on the development of a single theory of government as a whole rather than on analyzing the choices made by individual agents in the public sector.

Question 17

Which of the following is a predictable side effect of increased government activity (for example, taxes and subsidies) designed to redistribute income among citizens?

Accepted Answer

A)  improvement in the operational efficiency of government agencies 
B)  budget surpluses 
C)  reduction in the poverty rate 
D)  an increase in rent-seeking activity 
A)  improvement in the operational efficiency of government agencies 
B)  budget surpluses 
C)  reduction in the poverty rate 
D)  an increase in rent-seeking activity

Question 18

Which of the following is true of government activities under a system of representative democracy?

Accepted Answer

A)  When voters pay in proportion to benefits received, all voters will gain if the government activity is productive. 
B)  If a majority opposes an activity, it must be counterproductive. 
C)  When voters must pay in proportion to benefits received for an activity undertaken by the government, the activity will most likely be rejected by the majority of voters. 
D)  Government activities must be productive in order to be eligible for vote. 
A)  When voters pay in proportion to benefits received, all voters will gain if the government activity is productive. 
B)  If a majority opposes an activity, it must be counterproductive. 
C)  When voters must pay in proportion to benefits received for an activity undertaken by the government, the activity will most likely be rejected by the majority of voters. 
D)  Government activities must be productive in order to be eligible for vote.

Question 19

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 to be efficient and the incentive for consumers to economize the weakest?

Accepted Answer

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

Question 20

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.

Which of the following is true?

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

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

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

Dairy farmers hold an annual Capitol Hill ice cream social that provides free ice cream for congressional staffers during which time representatives from the industry discuss issues with, and provide information to, congressional staff. This is an example of

Government action will often result in the counterproductive use of resources because

When voters pay taxes in proportion to the benefits they receive from government projects,

Public choice analysis indicates

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

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

For activities in which the benefits are concentrated and the costs widespread, governments are likely to undertake

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

When the government both provides a service and covers its costs through taxation,

An analysis of market failure and government failure indicates

The methodology of public choice analysis

Which of the following is a predictable side effect of increased government activity (for example, taxes and subsidies) designed to redistribute income among citizens?

Which of the following is true of government activities under a system of representative democracy?

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

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 is true?

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

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

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

Dairy farmers hold an annual Capitol Hill ice cream social that provides free ice cream for congressional staffers during which time representatives from the industry discuss issues with, and provide information to, congressional staff. This is an example of

Government action will often result in the counterproductive use of resources because

When voters pay taxes in proportion to the benefits they receive from government projects,

Public choice analysis indicates

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

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

For activities in which the benefits are concentrated and the costs widespread, governments are likely to undertake

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

When the government both provides a service and covers its costs through taxation,

An analysis of market failure and government failure indicates

The methodology of public choice analysis

Which of the following is a predictable side effect of increased government activity (for example, taxes and subsidies) designed to redistribute income among citizens?

Which of the following is true of government activities under a system of representative democracy?

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

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