Question 1

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 2

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 3

Legislation that contains a number of projects benefiting local interests at the expense of the general taxpayer is called

Accepted Answer

A) balanced-budget legislation. 
B) pork-barrel legislation. 
C) voucher legislation. 
D) public-goods legislation. 
A) balanced-budget legislation. 
B) pork-barrel legislation. 
C) voucher legislation. 
D) public-goods legislation.

Question 4

Legislation that offers immediate and easily recognized benefits,at the expense of costs that are observable only in the distant future,is often enacted even when economic inefficiency results.This can be expected because of

Accepted Answer

A) a lack of incentive for operational efficiency in the public sector. 
B) market failure. 
C) the special-interest effect. 
D) the shortsightedness effect. 
A) a lack of incentive for operational efficiency in the public sector. 
B) market failure. 
C) the special-interest effect. 
D) the shortsightedness effect.

Question 5

Giving local governments more power is less dangerous than giving the same power to the national government because

Accepted Answer

A) local governments generally have more strict constitutional rules they must operate under. 
B) it is easier to vote in local elections than national elections. 
C) only national-level governments are allowed to use coercive force. 
D) higher exit options exist at the local level--it is easier for people to move away from a bad local government. 
A) local governments generally have more strict constitutional rules they must operate under. 
B) it is easier to vote in local elections than national elections. 
C) only national-level governments are allowed to use coercive force. 
D) higher exit options exist at the local level--it is easier for people to move away from a bad local government.

Question 6

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 7

Legislation that offers immediate and easily recognized benefits,at the expense of costs that are observable only in the distant future,is often enacted,even when economic inefficiency results.In economics this is referred to as the

Accepted Answer

A) long-term effect. 
B) political-fallacy effect. 
C) shortsightedness effect. 
D) inefficiency effect. 
A) long-term effect. 
B) political-fallacy effect. 
C) shortsightedness effect. 
D) inefficiency effect.

Question 8

Direct income transfers account for approximately what percentage of total government spending?

Accepted Answer

A) 10 percent 
B) 30 percent 
C) 50 percent 
D) 60 percent 
A) 10 percent 
B) 30 percent 
C) 50 percent 
D) 60 percent

Question 9

As methods of economic organization,the market and the public sector are similar in which of the following ways?

Accepted Answer

A) Income and power are distributed equally in both sectors. 
B) In both sectors,economic activity is undertaken only when it satisfies the criterion for economic efficiency. 
C) In both sectors,economic exchange is completely voluntary. 
D) Someone must cover the cost associated with the provision of scarce goods in both sectors. 
A) Income and power are distributed equally in both sectors. 
B) In both sectors,economic activity is undertaken only when it satisfies the criterion for economic efficiency. 
C) In both sectors,economic exchange is completely voluntary. 
D) Someone must cover the cost associated with the provision of scarce goods in both sectors.

Question 10

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 11

When analyzing public sector decision making,economic theory assumes that voters,politicians,and government officials will

Accepted Answer

A) respond to changes in personal benefits and costs when making public sector choices. 
B) pursue the public interest even when it conflicts with their private interests. 
C) pursue primarily public interests because competition is less intense in the public sector. 
D) do none of the above. 
A) respond to changes in personal benefits and costs when making public sector choices. 
B) pursue the public interest even when it conflicts with their private interests. 
C) pursue primarily public interests because competition is less intense in the public sector. 
D) do none of the above.

Question 12

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 13

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 14

Other things constant,if both the benefits and costs of a public-sector activity are widespread among voters,the political process will generally result in the

Accepted Answer

A) rejection of productive activities and acceptance of unproductive activities. 
B) acceptance of both productive and unproductive activities. 
C) rejection of both productive and unproductive activities. 
D) acceptance of productive activities and rejection of unproductive activities. 
A) rejection of productive activities and acceptance of unproductive activities. 
B) acceptance of both productive and unproductive activities. 
C) rejection of both productive and unproductive activities. 
D) acceptance of productive activities and rejection of unproductive activities.

Question 15

A survey of income by county revealed that four of the five wealthiest counties were located in the suburbs surrounding Washington,D.C.Why?

Accepted Answer

Normally,wealth is associated with produ

Question 16

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

Accepted Answer

A) use coercive force against adults to modify their behavior or force them to pay for a good or service. 
B) direct resources in a manner that serves the public interest rather than the private interest of individuals. 
C) produce goods and services that people value. 
D) escape the constraints imposed by scarcity. 
A) use coercive force against adults to modify their behavior or force them to pay for a good or service. 
B) direct resources in a manner that serves the public interest rather than the private interest of individuals. 
C) produce goods and services that people value. 
D) escape the constraints imposed by scarcity.

Question 17

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 18

In 2008,the combined expenditures of federal,state,and local governments in the United States were approximately

Accepted Answer

A) 14 percent of GDP. 
B) 24 percent of GDP. 
C) 35 percent of GDP. 
D) 44 percent of GDP. 
A) 14 percent of GDP. 
B) 24 percent of GDP. 
C) 35 percent of GDP. 
D) 44 percent of GDP.

Question 19

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 20

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.

Exam 6: The Economics of Collective Decision-Making

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

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?

Legislation that contains a number of projects benefiting local interests at the expense of the general taxpayer is called

Legislation that offers immediate and easily recognized benefits,at the expense of costs that are observable only in the distant future,is often enacted even when economic inefficiency results.This can be expected because of

Giving local governments more power is less dangerous than giving the same power to the national government because

The shortsightedness effect suggests that

Legislation that offers immediate and easily recognized benefits,at the expense of costs that are observable only in the distant future,is often enacted,even when economic inefficiency results.In economics this is referred to as the

Direct income transfers account for approximately what percentage of total government spending?

As methods of economic organization,the market and the public sector are similar in which of the following ways?

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

When analyzing public sector decision making,economic theory assumes that voters,politicians,and government officials will

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

Other things constant,if both the benefits and costs of a public-sector activity are widespread among voters,the political process will generally result in the

A survey of income by county revealed that four of the five wealthiest counties were located in the suburbs surrounding Washington,D.C.Why?

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

An analysis of market failure and government failure indicates

In 2008,the combined expenditures of federal,state,and local governments in the United States were approximately

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

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

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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