Question 1

According to the special-interest effect,which of the following groups is least likely to have a significant influence on the political process?

Accepted Answer

A) the American Federation of Labor 
B) the National Association of Manufacturers 
C) nonunion employees 
D) the American Medical Association 
A) the American Federation of Labor 
B) the National Association of Manufacturers 
C) nonunion employees 
D) the American Medical Association

Question 2

John Smith is a typical citizen.Economic theory suggests that he is likely to make a more informed choice when he buys a personal computer than when he votes for a congressional candidate.This view is

Accepted Answer

A) false because the actions of legislators will exert a greater impact on Smith's welfare than will the purchase of the computer. 
B) false;Smith will tend to choose more carefully when he makes public choices than when he makes private choices. 
C) uncertain;it would be true if,and only if,Smith's spending on personal computers exceeds his tax bill. 
D) true;since Smith can decide what computer to buy,but his individual vote is very unlikely to decide the outcome of a congressional election,he has more incentive to inform himself about the computer than the congressional election. 
A) false because the actions of legislators will exert a greater impact on Smith's welfare than will the purchase of the computer. 
B) false;Smith will tend to choose more carefully when he makes public choices than when he makes private choices. 
C) uncertain;it would be true if,and only if,Smith's spending on personal computers exceeds his tax bill. 
D) true;since Smith can decide what computer to buy,but his individual vote is very unlikely to decide the outcome of a congressional election,he has more incentive to inform himself about the computer than the congressional election.

Question 3

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

Accepted Answer

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

Question 4

Approximately what percent of government transfer payments are directed toward the poor (means tested)?

Accepted Answer

A) one-sixth 
B) one-fourth 
C) one-half 
D) three-quarters 
A) one-sixth 
B) one-fourth 
C) one-half 
D) three-quarters

Question 5

Scenario 6-1
The quotation below relates to the following question(s).
"The ideal policy,from the viewpoint of the state,is one with identifiable beneficiaries,each of whom is helped appreciably,at the cost of many unidentifiable persons,none of whom is hurt very much." (George Stigler,A Dialogue on the Proper Economic Role of the State)
-Refer to Scenario 6-1.This statement is probably

Accepted Answer

A) incorrect because voters are well informed on a wide range of political issues. 
B) incorrect because the political process dilutes the influence of special interest groups,because like other citizens,their members have only one vote. 
C) correct because the well-informed voter will favor policies that cater to the views of small groups of people. 
D) correct because voters who have a strong personal interest in an issue will tend to support candidates who cater to their views,whereas most other voters ignore the issue. 
A) incorrect because voters are well informed on a wide range of political issues. 
B) incorrect because the political process dilutes the influence of special interest groups,because like other citizens,their members have only one vote. 
C) correct because the well-informed voter will favor policies that cater to the views of small groups of people. 
D) correct because voters who have a strong personal interest in an issue will tend to support candidates who cater to their views,whereas most other voters ignore the issue.

Question 6

Public choice analysis suggests that the primary motivating factor for politicians will be finding the policies that are most likely to

Accepted Answer

A) get them reelected. 
B) improve economic efficiency. 
C) improve the welfare of society as a whole. 
D) anger the interest groups that provide substantial contributions to their campaigns. 
A) get them reelected. 
B) improve economic efficiency. 
C) improve the welfare of society as a whole. 
D) anger the interest groups that provide substantial contributions to their campaigns.

Question 7

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.

Question 8

Which of the following is most likely to result in an increase in crony capitalism?

Accepted Answer

A) a reduction in entry barriers and an increase in the competitiveness of markets. 
B) an increase in government spending and growth of government regulation 
C) a reduction in the size of government 
D) an increase in the share of the population voting in elections 
A) a reduction in entry barriers and an increase in the competitiveness of markets. 
B) an increase in government spending and growth of government regulation 
C) a reduction in the size of government 
D) an increase in the share of the population voting in elections

Question 9

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 10

At the most basic level,the distinguishing characteristic of government that makes it different from private firms is

Accepted Answer

A) the difference in incentive structure motivating economic activity. 
B) its ability to direct resources in a manner that is more economically efficient. 
C) its ability to produce goods and services that people value. 
D) its ability to use coercive force against people to modify their behavior or force them to pay for a good or service whether they benefit from it or not. 
A) the difference in incentive structure motivating economic activity. 
B) its ability to direct resources in a manner that is more economically efficient. 
C) its ability to produce goods and services that people value. 
D) its ability to use coercive force against people to modify their behavior or force them to pay for a good or service whether they benefit from it or not.

Question 11

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 12

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 13

Public choice analysis

Accepted Answer

A) assumes individuals in the public sector act in their own self-interests. 
B) assumes individuals seek to serve the public interest rather than their own personal interests. 
C) is the study of decision making in the formation and operation of private organizations. 
D) assumes the government is a corrective device that takes the necessary action to offset economic inefficiency arising from market failure. 
A) assumes individuals in the public sector act in their own self-interests. 
B) assumes individuals seek to serve the public interest rather than their own personal interests. 
C) is the study of decision making in the formation and operation of private organizations. 
D) assumes the government is a corrective device that takes the necessary action to offset economic inefficiency arising from market failure.

Question 14

Which of the following is a predictable side effect of increased government activity (e.g. ,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

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 16

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 17

With a strong and active federal government,why do we need state and local governments?

Accepted Answer

Our model of government is one of fiscal

Question 18

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 19

A local government operates a city water system and finances it through fees that it charges to water consumers.This type of financing is an example of a

Accepted Answer

A) head tax. 
B) excise fee. 
C) progressive tax. 
D) user charge. 
A) head tax. 
B) excise fee. 
C) progressive tax. 
D) user charge.

Question 20

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.

Exam 6: The Economics of Collective Decision-Making

According to the special-interest effect,which of the following groups is least likely to have a significant influence on the political process?

John Smith is a typical citizen.Economic theory suggests that he is likely to make a more informed choice when he buys a personal computer than when he votes for a congressional candidate.This view is

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

Approximately what percent of government transfer payments are directed toward the poor (means tested)?

Public choice analysis suggests that the primary motivating factor for politicians will be finding the policies that are most likely to

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

Which of the following is most likely to result in an increase in crony capitalism?

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

At the most basic level,the distinguishing characteristic of government that makes it different from private firms 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

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

Public choice analysis

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

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

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

With a strong and active federal government,why do we need state and local governments?

A local government operates a city water system and finances it through fees that it charges to water consumers.This type of financing is an example of a

The major categories of federal government spending are

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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