Question 1

Public choice theory suggests that 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) well-organized business groups to consumers. 
D) none of the above. 
A) the rich to the poor. 
B) unorganized taxpayers to well-organized interest groups. 
C) well-organized business groups to consumers. 
D) none of the above.

Question 2

Which of the following is true?

Accepted Answer

A) The incentives to engage in rent-seeking activities increase with the ease with which the political process can provide personal gain at the expense of others. 
B) The amount of resources devoted toward rent seeking generally has no impact on the economic prosperity of a nation. 
C) Income transfers directed toward the poor constitute about half of all income transfers in the United States. 
D) All of the above are correct. 
A) The incentives to engage in rent-seeking activities increase with the ease with which the political process can provide personal gain at the expense of others. 
B) The amount of resources devoted toward rent seeking generally has no impact on the economic prosperity of a nation. 
C) Income transfers directed toward the poor constitute about half of all income transfers in the United States. 
D) All of the above are correct.

Question 3

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.

Question 4

Logrolling refers to

Accepted Answer

A) vote trading among legislators. 
B) the tendency of voters to free-ride on the payment for public goods. 
C) the power of well-organized interest groups. 
D) the tendency of legislators to favor the interests of the timber (logging) industry. 
A) vote trading among legislators. 
B) the tendency of voters to free-ride on the payment for public goods. 
C) the power of well-organized interest groups. 
D) the tendency of legislators to favor the interests of the timber (logging) industry.

Question 5

A politician may be considered an entrepreneur in the sense that

Accepted Answer

A) he is always open to bribery. 
B) identical personal characteristics are necessary for success in politics and in business. 
C) the successful politician discovers and offers voters political goods when voter demand is strong for him. 
D) like the businessman, the politician selfishly attempts to gain at the expense of his customers. 
A) he is always open to bribery. 
B) identical personal characteristics are necessary for success in politics and in business. 
C) the successful politician discovers and offers voters political goods when voter demand is strong for him. 
D) like the businessman, the politician selfishly attempts to gain at the expense of his customers.

Question 6

Assume that you are a member of the U.S. House of Representatives from your home state and district. Which of the following best explains why you have a strong incentive to get the federal government to finance pork-barrel projects in your district?

Accepted Answer

A) Most of the benefits of pork-barrel projects within your district will accrue to your constituents, whereas most of the costs will be imposed on voters from other districts. 
B) Most of the costs of pork-barrel projects within your district will be imposed on your constituents, whereas most of the benefits will accrue to voters from other districts. 
C) Pork producers are a powerful political lobby that will influence the actions of legislators in all districts. 
D) This is a trick question; in a representative democracy, there is little incentive for legislators to support pork-barrel projects. 
A) Most of the benefits of pork-barrel projects within your district will accrue to your constituents, whereas most of the costs will be imposed on voters from other districts. 
B) Most of the costs of pork-barrel projects within your district will be imposed on your constituents, whereas most of the benefits will accrue to voters from other districts. 
C) Pork producers are a powerful political lobby that will influence the actions of legislators in all districts. 
D) This is a trick question; in a representative democracy, there is little incentive for legislators to support pork-barrel projects.

Question 7

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 8

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 9

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 10

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 11

Suppose we coupled the pay of Congress with the federal budget, so that for every billion dollars of deficit spending, a lawmaker's pay would be reduced $1,000. How would this affect fiscal policy?

Accepted Answer

If personal income matters to a majority

Question 12

Joella is a third-grade public school teacher who doesn't own a car and uses public transportation. According to public choice theory, which of the following four politicians for a public office would Joella be most likely to vote for in the upcoming election?

Accepted Answer

A) Politician A proposes increasing the property tax on personal automobiles and using the money to increase teacher salaries by 10 percent. 
B) Politician B proposes an across-the-board increase in state income tax rates and using the money to increase the benefits paid to unemployed workers. 
C) Politician C proposes increasing the property tax on personal automobiles and using the money to increase the benefits paid to unemployed workers. 
D) Politician D proposes an across-the-board increase in state income tax rates and using the money to improve the highway system. 
A) Politician A proposes increasing the property tax on personal automobiles and using the money to increase teacher salaries by 10 percent. 
B) Politician B proposes an across-the-board increase in state income tax rates and using the money to increase the benefits paid to unemployed workers. 
C) Politician C proposes increasing the property tax on personal automobiles and using the money to increase the benefits paid to unemployed workers. 
D) Politician D proposes an across-the-board increase in state income tax rates and using the money to improve the highway system.

Question 13

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 14

When is representative democracy most likely to lead to the adoption of an inefficient government program?

Accepted Answer

A) when the program provides substantial benefits to a small proportion of voters and the costs are widespread among voters 
B) when both the benefits and costs of the program are widespread among voters 
C) when the program is financed by a user charge 
D) when a close relationship exists between the personal benefits received from the program and the tax cost imposed on each voter 
A) when the program provides substantial benefits to a small proportion of voters and the costs are widespread among voters 
B) when both the benefits and costs of the program are widespread among voters 
C) when the program is financed by a user charge 
D) when a close relationship exists between the personal benefits received from the program and the tax cost imposed on each voter

Question 15

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 16

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 17

If new regulations make it illegal to sell older model electrical appliances, then

Accepted Answer

A) producers of new models that meet the regulations will see demand for their output rise. 
B) consumers who might have purchased to older appliances are clearly made better off. 
C) consumers are helped, but the profits of appliance producers are not affected. 
D) consumers will certainly gain from the change. 
A) producers of new models that meet the regulations will see demand for their output rise. 
B) consumers who might have purchased to older appliances are clearly made better off. 
C) consumers are helped, but the profits of appliance producers are not affected. 
D) consumers will certainly gain from the change.

Question 18

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 19

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.

Question 20

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

Exam 6: The Economics of Collective Decision-Making

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

Which of the following is true?

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

Logrolling refers to

A politician may be considered an entrepreneur in the sense that

Assume that you are a member of the U.S. House of Representatives from your home state and district. Which of the following best explains why you have a strong incentive to get the federal government to finance pork-barrel projects in your district?

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

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

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

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?

Suppose we coupled the pay of Congress with the federal budget, so that for every billion dollars of deficit spending, a lawmaker's pay would be reduced $1,000. How would this affect fiscal policy?

Joella is a third-grade public school teacher who doesn't own a car and uses public transportation. According to public choice theory, which of the following four politicians for a public office would Joella be most likely to vote for in the upcoming election?

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

When is representative democracy most likely to lead to the adoption of an inefficient government program?

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

If new regulations make it illegal to sell older model electrical appliances, then

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

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

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

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: Price-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

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

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

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

Filters