Question 1

Which of the following statements is FALSE?

Accepted Answer

A)  The root cause of mass starvation is a lack of food. 
B)  Most mass starvations have been intentional. 
C)  Mass starvation is less likely in democracies. 
D)  Greater political competition is associated with higher levels of food distribution. 
A)  The root cause of mass starvation is a lack of food. 
B)  Most mass starvations have been intentional. 
C)  Mass starvation is less likely in democracies. 
D)  Greater political competition is associated with higher levels of food distribution.

Question 2

The main reason that government legislation on sugar quotas passes is that:

Accepted Answer

A)  a large number of consumers bear small economic costs while a small number of domestic sugar producers receive its benefits. 
B)  a small number of consumers bear its economic costs while a large number of domestic sugar producers receive its benefits. 
C)  its economic benefits totally offset its economic costs. 
D)  both consumers and producers are rationally ignorant. 
A)  a large number of consumers bear small economic costs while a small number of domestic sugar producers receive its benefits. 
B)  a small number of consumers bear its economic costs while a large number of domestic sugar producers receive its benefits. 
C)  its economic benefits totally offset its economic costs. 
D)  both consumers and producers are rationally ignorant.

Question 3

If voters are myopic, which of the following would we expect to see?

Accepted Answer

A)  Government benefits increase before an election while taxes increase only after an election. 
B)  Government benefits increase after an election while taxes hardly ever do. 
C)  Government benefits decrease after an election while taxes increase only before an election. 
D)  Government benefits decrease before an election while taxes decrease only after an election. 
A)  Government benefits increase before an election while taxes increase only after an election. 
B)  Government benefits increase after an election while taxes hardly ever do. 
C)  Government benefits decrease after an election while taxes increase only before an election. 
D)  Government benefits decrease before an election while taxes decrease only after an election.

Question 4

Representative John Murphy has secured around $200 million of federal government money for a small airport near Juneburg, PA, that averages about 30 passengers a day. The costs of this government support:

Accepted Answer

A)  represent an external cost paid mostly by taxpayers who will never use the airport. 
B)  are well justified given that the benefits of the airport are locally concentrated. 
C)  are well justified given that the residents near the airport would pay little of the cost. 
D)  represent an external cost paid mostly by taxpayers who will begin to use the airport once it is completed. 
A)  represent an external cost paid mostly by taxpayers who will never use the airport. 
B)  are well justified given that the benefits of the airport are locally concentrated. 
C)  are well justified given that the residents near the airport would pay little of the cost. 
D)  represent an external cost paid mostly by taxpayers who will begin to use the airport once it is completed.

Question 5

Personal disposable income

Accepted Answer

A)  is even throughout the political business cycle. 
B)  grows most quickly during nonelection years. 
C)  grows most quickly during election years. 
D)  does not follow any sort of predictable pattern. 
A)  is even throughout the political business cycle. 
B)  grows most quickly during nonelection years. 
C)  grows most quickly during election years. 
D)  does not follow any sort of predictable pattern.

Question 6

Use the following to answer questions:
Figure: Economic Freedom and Living Standards  
-(Figure: Economic Freedom and Living Standards) Refer to the figure. Based on the data in this chart, the country with the lowest level of economic freedom is:

Accepted Answer

A)  Angola. 
B)  Venezuela. 
C)  Hong Kong. 
D)  Haiti. 
A)  Angola. 
B)  Venezuela. 
C)  Hong Kong. 
D)  Haiti.

Question 7

Sugar consumers are likely to oppose sugar quotas because the widespread costs, although small, fall on all households in the form of higher prices.

Accepted Answer

A) True 
 B)False

Question 8

At one time, even coffee roasting was defined as a form of manufacturing.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following theories works to explain which voters will get their way in a democratic election?

Accepted Answer

A)  the theory on rational ignorance 
B)  the median voter theorem 
C)  the special interests theory 
D)  the political business cycle theory 
A)  the theory on rational ignorance 
B)  the median voter theorem 
C)  the special interests theory 
D)  the political business cycle theory

Question 10

Which of the following is TRUE about the relationship between democracy and economic growth?

Accepted Answer

A)  Democracy and economic growth are unrelated for most countries. 
B)  Democracy generally leads to institutions that promote economic growth. 
C)  Economic growth leads to democracy, but democracy does not lead to economic growth. 
D)  Democracy leads to economic growth only when a country's special interest groups represent a very small part of society. 
A)  Democracy and economic growth are unrelated for most countries. 
B)  Democracy generally leads to institutions that promote economic growth. 
C)  Economic growth leads to democracy, but democracy does not lead to economic growth. 
D)  Democracy leads to economic growth only when a country's special interest groups represent a very small part of society.

Question 11

When voters are myopic, politicians will prefer policies that generate:

Accepted Answer

A)  small benefits now and large costs later. 
B)  small costs now and large benefits later. 
C)  higher taxes now, but more economic growth later. 
D)  lower unemployment but higher inflation. 
A)  small benefits now and large costs later. 
B)  small costs now and large benefits later. 
C)  higher taxes now, but more economic growth later. 
D)  lower unemployment but higher inflation.

Question 12

Government ownership of the press and of radio:

Accepted Answer

A)  increases quality of government. 
B)  decreases quality of government. 
C)  increases the degree of economic freedom. 
D)  decreases social corruption. 
A)  increases quality of government. 
B)  decreases quality of government. 
C)  increases the degree of economic freedom. 
D)  decreases social corruption.

Question 13

Suppose that a special interest group makes up 0.5% of the population. If a policy transfers $600 to the special interest at a cost of $100,000 to society, will the special interest group lobby for this policy?

Accepted Answer

A)  Yes, the benefits of $600 outweigh the costs of $500. 
B)  No, the benefits of $30 are less than the costs of $100,000. 
C)  No, the benefits of $30 are less than the costs of $50,000 
D)  They'll be indifferent since the benefits equal the costs. 
A)  Yes, the benefits of $600 outweigh the costs of $500. 
B)  No, the benefits of $30 are less than the costs of $100,000. 
C)  No, the benefits of $30 are less than the costs of $50,000 
D)  They'll be indifferent since the benefits equal the costs.

Question 14

According to the median voter theorem, what percentage of the tax dollars will be spent on the military under the following conditions:
25% of voters want to spend 20% of their tax dollars on the military;
20% of voters want to spend 15% of their tax dollars on the military;
15% of voters want to spend 10% of their tax dollars on the military; and
10% of voters want to spend 5% of the tax dollars on the military; while
30% of voters do not want to spend any tax dollars on the military.

Accepted Answer

A)  0% 
B)  5% 
C)  10% 
D)  20% 
A)  0% 
B)  5% 
C)  10% 
D)  20%

Question 15

Mass starvation in Ukraine in the 1920s was the result of:

Accepted Answer

A)  bad weather conditions that destroyed more than 45% of the crops. 
B)  Soviet leader Joseph Stalin's deliberate policies to eliminate potential political threats. 
C)  the majority of Ukrainians voting for collectivized farms. 
D)  the democratic policies voted on by the Russian people. 
A)  bad weather conditions that destroyed more than 45% of the crops. 
B)  Soviet leader Joseph Stalin's deliberate policies to eliminate potential political threats. 
C)  the majority of Ukrainians voting for collectivized farms. 
D)  the democratic policies voted on by the Russian people.

Question 16

The key formula for political success behind the sugar quota is:

Accepted Answer

A)  diffused costs and concentrated benefits. 
B)  diffused benefits and concentrated costs. 
C)  diffused costs and diffused benefits. 
D)  concentrated costs and concentrated benefits. 
A)  diffused costs and concentrated benefits. 
B)  diffused benefits and concentrated costs. 
C)  diffused costs and diffused benefits. 
D)  concentrated costs and concentrated benefits.

Question 17

Public ignorance is generally higher in less democratic countries because:

Accepted Answer

A)  the public is mostly irrational in those countries. 
B)  there is no incentive for the public to be informed in those countries. 
C)  the public receives too much information about how the country runs. 
D)  the public is not well-informed as a result of government control or censorship of the media. 
A)  the public is mostly irrational in those countries. 
B)  there is no incentive for the public to be informed in those countries. 
C)  the public receives too much information about how the country runs. 
D)  the public is not well-informed as a result of government control or censorship of the media.

Question 18

Part of the American Recovery and Reinvestment Act allocated $3.8 million in stimulus funds to build an artwork project in Rochester, NY. Funds were included for building decorative sidewalks, art in the sidewalks, interactive plazas with private art, and other amenities. Was this an efficient use of government funds? (Be sure to explain what an efficient use of funds would entail!) Why did more people not oppose funding this project?

Accepted Answer

For this to be an efficient use of gover

Question 19

A simple logic underlying the apparent chaos of seemingly unique and momentous elections is that:

Accepted Answer

A)  voters are so unresponsive to economic conditions that the winner of a presidential election cannot be predicted with any accuracy. 
B)  voters are so responsive to economic conditions that the winner of a presidential election can be predicted with considerable accuracy. 
C)  pundits scrutinize the daily chronicle of events to divine how the candidates advance and retreat in public opinion. 
D)  personalities and leadership of the candidates loom large and are reckoned to swing voters one way or another. 
A)  voters are so unresponsive to economic conditions that the winner of a presidential election cannot be predicted with any accuracy. 
B)  voters are so responsive to economic conditions that the winner of a presidential election can be predicted with considerable accuracy. 
C)  pundits scrutinize the daily chronicle of events to divine how the candidates advance and retreat in public opinion. 
D)  personalities and leadership of the candidates loom large and are reckoned to swing voters one way or another.

Question 20

Governments are more responsive to food crises:
I. when there is more widespread newspaper circulation.
II. if they are democracies.
III. when there is more political competition.

Accepted Answer

A)  I and II only 
B)  II and III only 
C)  II only 
D)  I, II, and III 
A)  I and II only 
B)  II and III only 
C)  II only 
D)  I, II, and III

Exam 20: Political Economy and Public Choice

Which of the following statements is FALSE?

The main reason that government legislation on sugar quotas passes is that:

If voters are myopic, which of the following would we expect to see?

Representative John Murphy has secured around $200 million of federal government money for a small airport near Juneburg, PA, that averages about 30 passengers a day. The costs of this government support:

Personal disposable income

Use the following to answer questions: Figure: Economic Freedom and Living Standards -(Figure: Economic Freedom and Living Standards) Refer to the figure. Based on the data in this chart, the country with the lowest level of economic freedom is:

Sugar consumers are likely to oppose sugar quotas because the widespread costs, although small, fall on all households in the form of higher prices.

At one time, even coffee roasting was defined as a form of manufacturing.

Which of the following theories works to explain which voters will get their way in a democratic election?

Which of the following is TRUE about the relationship between democracy and economic growth?

When voters are myopic, politicians will prefer policies that generate:

Government ownership of the press and of radio:

Suppose that a special interest group makes up 0.5% of the population. If a policy transfers $600 to the special interest at a cost of $100,000 to society, will the special interest group lobby for this policy?

Mass starvation in Ukraine in the 1920s was the result of:

The key formula for political success behind the sugar quota is:

Public ignorance is generally higher in less democratic countries because:

A simple logic underlying the apparent chaos of seemingly unique and momentous elections is that:

Governments are more responsive to food crises: I. when there is more widespread newspaper circulation. II. if they are democracies. III. when there is more political competition.

The Big Ideas

The Power of Trade and Comparative

Supply and Demand

Equilibrium

Elasticity and Its Applications

Taxes and Subsidies

The Price System

Price Ceilings and Floors

International Trade

Externalities- When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination

Oligopoly and Game Theory

Competing for Monopoly

Monopolistic Competition and Advertising

Labor Markets

Public Goods and the Tragedy of the Commons

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Price Discrimination

Consumer Choice

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