Question 1

The median-voter model implies that:

Accepted Answer

A)  political voting will be as economically efficient as "dollar voting" in competitive markets. 
B)  all voters have about the same preferences for various public goods and services. 
C)  many people will be dissatisfied with the size of government in the economy. 
D)  with majority voting there can never be a consistent ordering of public good preferences. 
A)  political voting will be as economically efficient as "dollar voting" in competitive markets. 
B)  all voters have about the same preferences for various public goods and services. 
C)  many people will be dissatisfied with the size of government in the economy. 
D)  with majority voting there can never be a consistent ordering of public good preferences.

Question 2

A debt crisis refers to how much government spending exceeds tax revenues in a given year.

Accepted Answer

A) True 
 B)False

Question 3

In representative democracy,voters are ____________ and politicians are ______________.

Accepted Answer

A)  agents;principals 
B)  logrollers;principals 
C)  agents;employees 
D)  principals;agents 
A)  agents;principals 
B)  logrollers;principals 
C)  agents;employees 
D)  principals;agents

Question 4

Deregulation:

Accepted Answer

A)  tends to improve outcomes in industries generating substantial negative externalities. 
B)  eliminates regulatory capture and can improve outcomes by increasing competition. 
C)  is most appropriate to undertake by government agencies responsible for human safety,financial regulation,and environmental protection. 
D)  always generates greater economic efficiency. 
A)  tends to improve outcomes in industries generating substantial negative externalities. 
B)  eliminates regulatory capture and can improve outcomes by increasing competition. 
C)  is most appropriate to undertake by government agencies responsible for human safety,financial regulation,and environmental protection. 
D)  always generates greater economic efficiency.

Question 5

A government using fiscal policy in an attempt to stimulate the economy would do which of the following?

Accepted Answer

A)  Raise taxes. 
B)  Raise interest rates. 
C)  Lower interest rates. 
D)  Raise government spending. 
A)  Raise taxes. 
B)  Raise interest rates. 
C)  Lower interest rates. 
D)  Raise government spending.

Question 6

Answer the question on the basis of the following table that shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size.All figures are in millions of dollars. $\begin{array}{l}
\begin{array}{ccc}
\underline{\text { Stadium }}&\underline{\text { Total Cost }}&\underline{\text { Total Benefit }}\
\text { A } & \$ 80 & \$ 140 \
\text { B } & 100 & 200 \
\text { C } & 130 & 250 \
\text { D } & 165 & 290 \
\text { E } & 220 & 300
\end{array}
\end{array}$ Refer to the table.The marginal cost and marginal benefit of stadium B (relative to A)are:

Accepted Answer

A)  $20 million and $50 million,respectively. 
B)  $100 million and $200 million,respectively. 
C)  $30 million and $50 million,respectively. 
D)  $20 million and $60 million,respectively. 
A)  $20 million and $50 million,respectively. 
B)  $100 million and $200 million,respectively. 
C)  $30 million and $50 million,respectively. 
D)  $20 million and $60 million,respectively.

Question 7

Which of the following would be the best example of regulatory capture?

Accepted Answer

A)  Starbucks buys up all the available supplies of coffee beans. 
B)  Nike executives influence the rules for track and field events. 
C)  Federal law makers write and pass legislation that protects domestic companies from foreign competition. 
D)  Executives from the Ford,General Motors,and Chrysler companies write the rules regulating automobile safety and fuel requirements. 
A)  Starbucks buys up all the available supplies of coffee beans. 
B)  Nike executives influence the rules for track and field events. 
C)  Federal law makers write and pass legislation that protects domestic companies from foreign competition. 
D)  Executives from the Ford,General Motors,and Chrysler companies write the rules regulating automobile safety and fuel requirements.

Question 8

Individual accountability within the government bureaucracy:

Accepted Answer

A)  tends to be greater than in private firms,making government more efficient than private firms. 
B)  is not a problem because government bureaucrats are not affected by the self-interest that affects private sector individuals. 
C)  is easy to monitor because of the small size and scope of government. 
D)  tends to be lacking because of civil service protections and the complexity of government. 
A)  tends to be greater than in private firms,making government more efficient than private firms. 
B)  is not a problem because government bureaucrats are not affected by the self-interest that affects private sector individuals. 
C)  is easy to monitor because of the small size and scope of government. 
D)  tends to be lacking because of civil service protections and the complexity of government.

Question 9

(Last Word)In 2011,Congress funded a sanctuary for white squirrels,a giant roadside coffee pot,and an antique bicycle museum.This is an example of:

Accepted Answer

A)  the paradox of voting. 
B)  pork barrel politics. 
C)  the benefits-received principle. 
D)  the adverse selection problem. 
A)  the paradox of voting. 
B)  pork barrel politics. 
C)  the benefits-received principle. 
D)  the adverse selection problem.

Question 10

To curb the problem of voters wanting immediate benefits and deferred costs,many state governments in the United States have:

Accepted Answer

A)  made unfunded liabilities illegal. 
B)  resorted to greater use of monetary policy. 
C)  passed laws requiring balanced budgets. 
D)  stopped using fiscal policy. 
A)  made unfunded liabilities illegal. 
B)  resorted to greater use of monetary policy. 
C)  passed laws requiring balanced budgets. 
D)  stopped using fiscal policy.

Question 11

As it relates to the political process,the principal-agent problem results from the:

Accepted Answer

A)  negative externalities that are created by some policy actions. 
B)  political rules that encourage elected officials to engage in unethical and illegal behavior. 
C)  inconsistency between voters' interest in programs and politicians' interest in reelection. 
D)  paradox of voting. 
A)  negative externalities that are created by some policy actions. 
B)  political rules that encourage elected officials to engage in unethical and illegal behavior. 
C)  inconsistency between voters' interest in programs and politicians' interest in reelection. 
D)  paradox of voting.

Question 12

(Consider This)Government passes a law requiring all domestic clothing factories to pay workers at least $20 per hour.As a result,domestic clothing companies move their operations overseas,leaving domestic workers unemployed.This situation illustrates the problem of:

Accepted Answer

A)  political corruption. 
B)  unintended consequences. 
C)  misdirection of stabilization policy. 
D)  principal-agent. 
A)  political corruption. 
B)  unintended consequences. 
C)  misdirection of stabilization policy. 
D)  principal-agent.

Question 13

Regulatory capture occurs when government exerts excessive control over an industry.

Accepted Answer

A) True 
 B)False

Question 14

Government's ability to enforce laws and contracts increases private-sector economic risks.

Accepted Answer

A) True 
 B)False

Question 15

Suppose that Katie and Kelly each expects to receive $500 worth of marginal benefits from a proposed new recreation center,whereas Kerry expects to receive only $100 worth.If the proposed tax levied on each for the center would be $400,a majority vote will:

Accepted Answer

A)  defeat this project and resources will be underallocated to it. 
B)  pass this project and resources will be efficiently allocated. 
C)  pass this project and resources will be underallocated to it. 
D)  pass this project and resources will be overallocated to it. 
A)  defeat this project and resources will be underallocated to it. 
B)  pass this project and resources will be efficiently allocated. 
C)  pass this project and resources will be underallocated to it. 
D)  pass this project and resources will be overallocated to it.

Question 16

Public choice economists contend public bureaucracies are inefficient primarily because:

Accepted Answer

A)  the value of public goods is more easily measured than is the value of private goods. 
B)  of the absence of competitive market pressures. 
C)  public sector workers are more security-conscious than are private sector workers. 
D)  relatively low pay in government attracts workers of lesser quality. 
A)  the value of public goods is more easily measured than is the value of private goods. 
B)  of the absence of competitive market pressures. 
C)  public sector workers are more security-conscious than are private sector workers. 
D)  relatively low pay in government attracts workers of lesser quality.

Question 17

A situation in which society may not be able to rank its preferences consistently through paired-choice majority voting refers to:

Accepted Answer

A)  logrolling. 
B)  the paradox of voting. 
C)  the median-voter model. 
D)  the special-interest effect. 
A)  logrolling. 
B)  the paradox of voting. 
C)  the median-voter model. 
D)  the special-interest effect.

Question 18

The Road Runner Club contributes money to Senator Sly's reelection campaign fund,and Senator Sly helps pass legislation to add more jogging paths across the state.From this we can definitively conclude:

Accepted Answer

A)  that political corruption has occurred. 
B)  that logrolling has occurred. 
C)  that a principal-agent problem has occurred. 
D)  nothing;the Road Runner Club may have donated to Senator Sly because he already supported the jogging paths. 
A)  that political corruption has occurred. 
B)  that logrolling has occurred. 
C)  that a principal-agent problem has occurred. 
D)  nothing;the Road Runner Club may have donated to Senator Sly because he already supported the jogging paths.

Question 19

(Consider This)Subsidies for mohair production illustrate:

Accepted Answer

A)  why special-interest effects are often characterized by concentrated benefits and diffuse costs. 
B)  why special-interest effects are often characterized by concentrated costs and diffuse benefits. 
C)  that larger groups carry greater political weight than smaller groups. 
D)  the moral hazard problem. 
A)  why special-interest effects are often characterized by concentrated benefits and diffuse costs. 
B)  why special-interest effects are often characterized by concentrated costs and diffuse benefits. 
C)  that larger groups carry greater political weight than smaller groups. 
D)  the moral hazard problem.

Question 20

The U.S.federal government's largest unfunded liability is:

Accepted Answer

A)  Medicare. 
B)  national defense. 
C)  Social Security. 
D)  unemployment insurance. 
A)  Medicare. 
B)  national defense. 
C)  Social Security. 
D)  unemployment insurance.

The median-voter model implies that:

A debt crisis refers to how much government spending exceeds tax revenues in a given year.

In representative democracy,voters are and politicians are __.

Deregulation:

A government using fiscal policy in an attempt to stimulate the economy would do which of the following?

Which of the following would be the best example of regulatory capture?

Individual accountability within the government bureaucracy:

(Last Word)In 2011,Congress funded a sanctuary for white squirrels,a giant roadside coffee pot,and an antique bicycle museum.This is an example of:

To curb the problem of voters wanting immediate benefits and deferred costs,many state governments in the United States have:

As it relates to the political process,the principal-agent problem results from the:

(Consider This)Government passes a law requiring all domestic clothing factories to pay workers at least $20 per hour.As a result,domestic clothing companies move their operations overseas,leaving domestic workers unemployed.This situation illustrates the problem of:

Regulatory capture occurs when government exerts excessive control over an industry.

Government's ability to enforce laws and contracts increases private-sector economic risks.

Suppose that Katie and Kelly each expects to receive $500 worth of marginal benefits from a proposed new recreation center,whereas Kerry expects to receive only $100 worth.If the proposed tax levied on each for the center would be $400,a majority vote will:

Public choice economists contend public bureaucracies are inefficient primarily because:

A situation in which society may not be able to rank its preferences consistently through paired-choice majority voting refers to:

The Road Runner Club contributes money to Senator Sly's reelection campaign fund,and Senator Sly helps pass legislation to add more jogging paths across the state.From this we can definitively conclude:

(Consider This)Subsidies for mohair production illustrate:

The U.S.federal government's largest unfunded liability is:

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

Technology RD and Efficiency

The Demand for Resources

Wage Determination

Rent Interest and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Filters

Exam 5: Governments Role and Government Failure

The median-voter model implies that:

A debt crisis refers to how much government spending exceeds tax revenues in a given year.

In representative democracy,voters are ____________ and politicians are ______________.

Deregulation:

A government using fiscal policy in an attempt to stimulate the economy would do which of the following?

Which of the following would be the best example of regulatory capture?

Individual accountability within the government bureaucracy:

(Last Word)In 2011,Congress funded a sanctuary for white squirrels,a giant roadside coffee pot,and an antique bicycle museum.This is an example of:

To curb the problem of voters wanting immediate benefits and deferred costs,many state governments in the United States have:

As it relates to the political process,the principal-agent problem results from the:

(Consider This)Government passes a law requiring all domestic clothing factories to pay workers at least $20 per hour.As a result,domestic clothing companies move their operations overseas,leaving domestic workers unemployed.This situation illustrates the problem of:

Regulatory capture occurs when government exerts excessive control over an industry.

Government's ability to enforce laws and contracts increases private-sector economic risks.

Suppose that Katie and Kelly each expects to receive $500 worth of marginal benefits from a proposed new recreation center,whereas Kerry expects to receive only $100 worth.If the proposed tax levied on each for the center would be $400,a majority vote will:

Public choice economists contend public bureaucracies are inefficient primarily because:

A situation in which society may not be able to rank its preferences consistently through paired-choice majority voting refers to:

The Road Runner Club contributes money to Senator Sly's reelection campaign fund,and Senator Sly helps pass legislation to add more jogging paths across the state.From this we can definitively conclude:

(Consider This)Subsidies for mohair production illustrate:

The U.S.federal government's largest unfunded liability is:

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

Technology RD and Efficiency

The Demand for Resources

Wage Determination

Rent Interest and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Filters

In representative democracy,voters are and politicians are __.