Question 1

Arrow's impossibility theorem is not relevant to modern analysis of political economy.

Accepted Answer

A) True 
 B)False  False

Question 2

Governments grow because low income individuals can not use the political process to redistribute income towards themselves.

Accepted Answer

A) True 
 B)False  False

Question 3

Suppose that you have two people in an economy,Ms.Hundley and Mr.McKenna,who want to produce a public good S.Suppose we calculate the Lindahl equilibrium using the method in your textbook.In this case,the demand curve for Ms.Hundley is S=P1/2.The demand curve for Mr.McKenna is S=8/P.If the marginal social cost of the project is 10,what is the Lindahl equilibrium quantity of S? What are the Lindahl prices?

Accepted Answer

Set P^1/2 = 8/P.Multiply both sides by P,leaving P^3/2 = 8.Therefore,P = 8^2/3 = 4.At P = 4,S* = 2.Mr.McKenna pays 4.Ms.Hundley pays 6.

Question 4

Rent seeking involves

Accepted Answer

A) finding reasonable rent rates. 
B) price floors. 
C) price ceilings. 
D) citizen groups lobbying elected officials to manipulate government policy. 
A) finding reasonable rent rates. 
B) price floors. 
C) price ceilings. 
D) citizen groups lobbying elected officials to manipulate government policy.

Question 5

The Marxist view would say that there is an overproduction of goods by the private sector.

Accepted Answer

A) True 
 B)False

Question 6

Lindahl prices

Accepted Answer

A) result in efficient levels of public goods provision. 
B) require honest revelation of preferences. 
C) result in different prices for the same amount of output. 
D) cause all of the above. 
E) cause none of the above. 
A) result in efficient levels of public goods provision. 
B) require honest revelation of preferences. 
C) result in different prices for the same amount of output. 
D) cause all of the above. 
E) cause none of the above.

Question 7

Political parties

Accepted Answer

A) have a large influence on setting the political agenda of candidates. 
B) are only concerned with market efficiency. 
C) have primaries that influence the party platform. 
D) a and b. 
E) a and c. 
A) have a large influence on setting the political agenda of candidates. 
B) are only concerned with market efficiency. 
C) have primaries that influence the party platform. 
D) a and b. 
E) a and c.

Question 8

In William Niskanen's model of bureaucracy,the efficient level of government output is greater than the actual level of output.

Accepted Answer

A) True 
 B)False

Question 9

It is stated that,in democracy,every vote counts.To be a contentious voter in a democracy,one should

Accepted Answer

A) spend some time learning about the issues. 
B) find out about the positions of the candidates. 
C) be sure to vote. 
D) do all of the above. 
A) spend some time learning about the issues. 
B) find out about the positions of the candidates. 
C) be sure to vote. 
D) do all of the above.

Question 10

Special interest groups are established on the basis of

Accepted Answer

A) sources of labor. 
B) size of income. 
C) sources of income. 
D) region. 
E) all of the above. 
A) sources of labor. 
B) size of income. 
C) sources of income. 
D) region. 
E) all of the above.

Question 11

Which of the following is an example of a special-interest group?

Accepted Answer

A) Democratic party 
B) Bureau of Alcohol,Tobacco,and Firearms 
C) National Rifle Association 
D) Association of State Legislators 
E) all of the above 
A) Democratic party 
B) Bureau of Alcohol,Tobacco,and Firearms 
C) National Rifle Association 
D) Association of State Legislators 
E) all of the above

Question 12

In 2007 which country had the highest ratio of government expenditures to GDP?

Accepted Answer

A) Canada 
B) Switzerland 
C) United States 
D) none of the above 
A) Canada 
B) Switzerland 
C) United States 
D) none of the above

Question 13

In a representative democracy,there are

Accepted Answer

A) elected politicians. 
B) public employees. 
C) special interests. 
D) all of the above. 
A) elected politicians. 
B) public employees. 
C) special interests. 
D) all of the above.

Question 14

In the presidential election of 2008 ,record numbers of people vote in national,state,and local elections.This phenomenon was even more pronounced among young voters.What are possible explanations for this?

Accepted Answer

Increasingly,young people felt disaffect

Question 15

Consider Figure 6.5 in your textbook.If the equation for the demand curve were P = 10 - Q and MC constant at 4,
(a)Find the competitive level of output and price.
(b)Find the marginal revenue and derive the rent seeking cartel's of output and price.
(c)How much rent is being raised?

Accepted Answer

(a)Set Demand = Supply,10 - Q

Question 16

Majority rule voting

Accepted Answer

A) requires a simple majority greater than half the voters. 
B) requires that rules of order be established. 
C) does not occur in democracies. 
D) can only be applied to single issues. 
A) requires a simple majority greater than half the voters. 
B) requires that rules of order be established. 
C) does not occur in democracies. 
D) can only be applied to single issues.

Question 17

Special interest groups are not always perceived to add a positive to society.Discuss why this is so.

Accepted Answer

Often small groups of people form groups

Question 18

A deadweight loss is never

Accepted Answer

A) found when people are still living. 
B) found when marginal benefits equal marginal costs. 
C) found in open economies. 
D) allowed in the US. 
A) found when people are still living. 
B) found when marginal benefits equal marginal costs. 
C) found in open economies. 
D) allowed in the US.

Question 19

Consider the following net benefits (measured in billions of dollars)that will result from the passage of two legislative bills,X and Y:   
(a)Identify the logrolling opportunity present in this situation.
(b)Identify the potential gains to voters.
(c)Explain why logrolling is efficiency enhancing.

Accepted Answer

(a)On their own,neither issue X nor Y wi

Question 20

With multiple-peaked preferences,

Accepted Answer

A) a unique political equilibrium does not exist. 
B) all individuals have a point that is most preferred. 
C) the law of transitivity is violated. 
D) all of the above. 
A) a unique political equilibrium does not exist. 
B) all individuals have a point that is most preferred. 
C) the law of transitivity is violated. 
D) all of the above.

Exam 6: Political Economy

Arrow's impossibility theorem is not relevant to modern analysis of political economy.

Governments grow because low income individuals can not use the political process to redistribute income towards themselves.

Rent seeking involves

The Marxist view would say that there is an overproduction of goods by the private sector.

Lindahl prices

Political parties

In William Niskanen's model of bureaucracy,the efficient level of government output is greater than the actual level of output.

It is stated that,in democracy,every vote counts.To be a contentious voter in a democracy,one should

Special interest groups are established on the basis of

Which of the following is an example of a special-interest group?

In 2007 which country had the highest ratio of government expenditures to GDP?

In a representative democracy,there are

In the presidential election of 2008 ,record numbers of people vote in national,state,and local elections.This phenomenon was even more pronounced among young voters.What are possible explanations for this?

Consider Figure 6.5 in your textbook.If the equation for the demand curve were P = 10 - Q and MC constant at 4, (a)Find the competitive level of output and price. (b)Find the marginal revenue and derive the rent seeking cartel's of output and price. (c)How much rent is being raised?

Majority rule voting

Special interest groups are not always perceived to add a positive to society.Discuss why this is so.

A deadweight loss is never

Consider the following net benefits (measured in billions of dollars)that will result from the passage of two legislative bills,X and Y: (a)Identify the logrolling opportunity present in this situation. (b)Identify the potential gains to voters. (c)Explain why logrolling is efficiency enhancing.

With multiple-peaked preferences,

Introduction

Tools of Positive Analysis

Tools of Normative Analysis

Public Goods

Externalities

Education

Cost-Benefit Analysis

The Health Care Market

Government and the Market for Health Care

Social Security

Income Redistribution: Conceptual Issues

Expenditure Programs for the Poor

Taxation and Income Distribution

Taxation and Efficiency

Efficient and Equitable Taxation

The Personal Income Tax

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Fundamental Tax Reform: Taxes on Consumption and Wealth

Public Finance in a Federal System

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