Question 1

Between 1930 and 1980,government expenditures as a percent of GDP in the United States

Accepted Answer

A) more than tripled. 
B) remained constant at 10 percent. 
C) declined from 30 percent to 20 percent. 
D) increased from 30 percent to 40 percent. 
A) more than tripled. 
B) remained constant at 10 percent. 
C) declined from 30 percent to 20 percent. 
D) increased from 30 percent to 40 percent.

Question 2

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 undertake many projects that would be considered inefficient or counterproductive (in other words,do too many 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 3

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 4

Public choice theory indicates that the behavior of people in government

Accepted Answer

A) differs from the behavior of people in the private sector because they are motivated by the public interest rather than their own personal self-interest. 
B) differs from the behavior of people in the private sector because public sector decision roles do not allow people to pursue their own self-interests. 
C) is the same as people in the private sector only if decisions are made by majority vote. 
D) is best understood by applying the same principles we use to predict the behavior of people in the private sector. 
A) differs from the behavior of people in the private sector because they are motivated by the public interest rather than their own personal self-interest. 
B) differs from the behavior of people in the private sector because public sector decision roles do not allow people to pursue their own self-interests. 
C) is the same as people in the private sector only if decisions are made by majority vote. 
D) is best understood by applying the same principles we use to predict the behavior of people in the private sector.

Question 5

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 6

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.Programs that give subsidies to a small group of producers at general taxpayer expense would be considered

Accepted Answer

A) type A projects,and the government would be likely to undertake these projects if they were efficient and to reject them if they were inefficient. 
B) type B projects,and the government would be likely to undertake many of these projects even when they were counterproductive (inefficient). 
C) type C projects,and the government would be likely to fail to undertake many of these projects even when they were productive (efficient). 
D) type D projects,and the government would be likely to undertake these projects if they were efficient and to reject them if they were inefficient. 
A) type A projects,and the government would be likely to undertake these projects if they were efficient and to reject them if they were inefficient. 
B) type B projects,and the government would be likely to undertake many of these projects even when they were counterproductive (inefficient). 
C) type C projects,and the government would be likely to fail to undertake many of these projects even when they were productive (efficient). 
D) type D projects,and the government would be likely to undertake these projects if they were efficient and to reject them if they were inefficient.

Question 7

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 8

The fact that voters perceive their votes as unlikely to actually change the outcome of an election causes

Accepted Answer

A) voters to have little incentive to become informed about candidates and political issues. 
B) voters to spend a great deal of effort becoming informed about candidates and political issues. 
C) the percent of people who actually turn out to cast a vote on election day to be very high. 
D) people to be extremely reluctant to "waste" their votes on a third-party candidate. 
A) voters to have little incentive to become informed about candidates and political issues. 
B) voters to spend a great deal of effort becoming informed about candidates and political issues. 
C) the percent of people who actually turn out to cast a vote on election day to be very high. 
D) people to be extremely reluctant to "waste" their votes on a third-party candidate.

Question 9

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 10

People who spend more time and effort investigating the advantages and disadvantages of different automobile models when they go to purchase one than they do investigating the strengths and weaknesses of presidential candidates are saying,in effect,that

Accepted Answer

A) a good car is more important to their well-being than a good president. 
B) they expect to use the information on the merits of alternative cars to greater personal advantage than they could information on the merits of alternative presidential candidates. 
C) they are irrational,because the choice of a president is obviously far more important than the choice of a car. 
D) they do not think it matters who is elected president. 
A) a good car is more important to their well-being than a good president. 
B) they expect to use the information on the merits of alternative cars to greater personal advantage than they could information on the merits of alternative presidential candidates. 
C) they are irrational,because the choice of a president is obviously far more important than the choice of a car. 
D) they do not think it matters who is elected president.

Question 11

Which of the following is accurate regarding government expenditures in the United States?

Accepted Answer

A) The federal government spends considerably more than state and local governments combined. 
B) The federal government spends more than local governments but less than state governments. 
C) Local governments spend more than state governments,which in turn,spend more than the federal government. 
D) Since 1930,total government expenditures as a share of GDP have declined. 
A) The federal government spends considerably more than state and local governments combined. 
B) The federal government spends more than local governments but less than state governments. 
C) Local governments spend more than state governments,which in turn,spend more than the federal government. 
D) Since 1930,total government expenditures as a share of GDP have declined.

Question 12

Most income transfer programs in the United States

Accepted Answer

A) are means-tested programs that transfer income to the poor. 
B) allocate income to small businesses and small farmers. 
C) are designed to help those with very little economic and political power. 
D) allocate income to concentrated interest groups,such as the elderly,large farmers,and business interests. 
A) are means-tested programs that transfer income to the poor. 
B) allocate income to small businesses and small farmers. 
C) are designed to help those with very little economic and political power. 
D) allocate income to concentrated interest groups,such as the elderly,large farmers,and business interests.

Question 13

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 14

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 15

Legislators often gain by bundling a number of projects benefiting local districts at the expense of general taxpayers together on a single bill.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 16

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 17

Which of the following is true regarding government expenditures in the United States?

Accepted Answer

A) As a share of GDP,government expenditures were higher in 1950 than 2010. 
B) Government expenditures were more than 30 percent of GDP in 1930. 
C) Government expenditures as a share of GDP grew rapidly between 1930 and 1980. 
D) In 2010,government expenditures at all levels summed to approximately 10 percent of GDP. 
A) As a share of GDP,government expenditures were higher in 1950 than 2010. 
B) Government expenditures were more than 30 percent of GDP in 1930. 
C) Government expenditures as a share of GDP grew rapidly between 1930 and 1980. 
D) In 2010,government expenditures at all levels summed to approximately 10 percent of GDP.

Question 18

Public choice analysis suggests that voters considering whether to vote for a candidate will ask,

Accepted Answer

A) "What will the candidate do that will promote the general welfare of society?" 
B) "What will the candidate do that will benefit me,and how much will it cost me?" 
C) "Will the candidate pursue only programs that increase economic efficiency?" 
D) "What will the candidate do that will benefit everyone in the country?" 
A) "What will the candidate do that will promote the general welfare of society?" 
B) "What will the candidate do that will benefit me,and how much will it cost me?" 
C) "Will the candidate pursue only programs that increase economic efficiency?" 
D) "What will the candidate do that will benefit everyone in the country?"

Question 19

Current tax rates are insufficient to finance the benefits promised by both the Social Security and Medicare programs.Are these unfunded promises surprising according to economic theory?

Accepted Answer

A) Yes,political representatives have a strong incentive to levy taxes that are sufficient to cover the cost of all programs they favor. 
B) No,the unfunded promises reflect the shortsighted nature of the political process. 
C) Yes,political representatives generally favor balancing the government budget because this is best for the economy. 
D) No,even though debt financing often makes sense,politicians are reluctant to use it because it will damage their chances of being reelected. 
A) Yes,political representatives have a strong incentive to levy taxes that are sufficient to cover the cost of all programs they favor. 
B) No,the unfunded promises reflect the shortsighted nature of the political process. 
C) Yes,political representatives generally favor balancing the government budget because this is best for the economy. 
D) No,even though debt financing often makes sense,politicians are reluctant to use it because it will damage their chances of being reelected.

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.

Exam 6: The Economics of Collective Decision-Making

Between 1930 and 1980,government expenditures as a percent of GDP in the United States

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?

Public choice theory indicates that the behavior of people in government

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

The fact that voters perceive their votes as unlikely to actually change the outcome of an election causes

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?

People who spend more time and effort investigating the advantages and disadvantages of different automobile models when they go to purchase one than they do investigating the strengths and weaknesses of presidential candidates are saying,in effect,that

Which of the following is accurate regarding government expenditures in the United States?

Most income transfer programs in the United States

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

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

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

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

Which of the following is true regarding government expenditures in the United States?

Public choice analysis suggests that voters considering whether to vote for a candidate will ask,

Current tax rates are insufficient to finance the benefits promised by both the Social Security and Medicare programs.Are these unfunded promises surprising according to economic theory?

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

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

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

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney 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

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-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

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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