Question 1

Rational ignorance still leads to an efficient outcome, since the decision itself is rational.

Accepted Answer

A) True 
 B)False

Question 2

Presidents have an easier time changing ________ than ________ during an election year.

Accepted Answer

A)  GDP; taxes and transfer payments 
B)  the overall economy; GDP 
C)  taxes and transfer payments; GDP 
D)  GDP; overall economy 
A)  GDP; taxes and transfer payments 
B)  the overall economy; GDP 
C)  taxes and transfer payments; GDP 
D)  GDP; overall economy

Question 3

Why are special interest groups so powerful?

Accepted Answer

A)  Because voters are rationally ignorant about how laws designed to help special interest groups are harmful to everyone else. 
B)  Because special interest groups have a self-interest in passing favorable legislation-they stand to gain millions of dollars, while each taxpayer loses only several dollars. 
C)  Neither A nor B is correct. 
D)  Both A and B are correct. 
A)  Because voters are rationally ignorant about how laws designed to help special interest groups are harmful to everyone else. 
B)  Because special interest groups have a self-interest in passing favorable legislation-they stand to gain millions of dollars, while each taxpayer loses only several dollars. 
C)  Neither A nor B is correct. 
D)  Both A and B are correct.

Question 4

The reason democracies typically become richer is because:

Accepted Answer

A)  rational ignorance is eliminated. 
B)  special interest groups expand the role of government. 
C)  they garner more foreign aid from other democracies. 
D)  it is in the self-interest of its citizens to support policies that increase economic growth. 
A)  rational ignorance is eliminated. 
B)  special interest groups expand the role of government. 
C)  they garner more foreign aid from other democracies. 
D)  it is in the self-interest of its citizens to support policies that increase economic growth.

Question 5

Which of the following statements is TRUE?
I. A rising standard of living increases the demand for democracy.
II. Democracy is associated with better institutions that lead to economic growth and high standard of living.
III. The public is usually better informed about policies in nondemocracies.

Accepted Answer

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

Question 6

Which of the following would be the most likely outcome if a college professor awards grades based on average test scores and assigns the same grade to everyone in the class?

Accepted Answer

A)  Students will collaborate to get a better grade and achieve higher payoff. 
B)  Students will study more because studying has a higher payoff. 
C)  Students will study less because studying has a lower payoff. 
D)  Students will study the same amount as they did before because their scores will still impact the average score. 
A)  Students will collaborate to get a better grade and achieve higher payoff. 
B)  Students will study more because studying has a higher payoff. 
C)  Students will study less because studying has a lower payoff. 
D)  Students will study the same amount as they did before because their scores will still impact the average score.

Question 7

The incumbent party will most likely get reelected when economic conditions are worsening in an economy.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is the smallest part of the United States budget?

Accepted Answer

A)  defense 
B)  interest on the federal debt 
C)  foreign aid 
D)  welfare 
A)  defense 
B)  interest on the federal debt 
C)  foreign aid 
D)  welfare

Question 9

The greater the share of the population that is brought into power, the:

Accepted Answer

A)  less likely that policies will offer something for everyone in the society. 
B)  more likely that policies will offer something for everyone in the society. 
C)  less likely that policies will be efficient. 
D)  more likely that policies will impede economic growth. 
A)  less likely that policies will offer something for everyone in the society. 
B)  more likely that policies will offer something for everyone in the society. 
C)  less likely that policies will be efficient. 
D)  more likely that policies will impede economic growth.

Question 10

The median voter is defined as the voter such that half the other voters are on one end of the spectrum and half are on the other.

Accepted Answer

A) True 
 B)False

Question 11

Rational ignorance may cause voters to make uninformed decisions; however, the outcomes tend to be the same as if voters had full information.

Accepted Answer

A) True 
 B)False

Question 12

A special interest project that costs 200 million citizens $1 each, but benefits 100 citizens a total of $100 million is an inefficient use of government funds.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following do democracies usually support?
I. institutions that are bad for economic growth
II. free markets, property rights, and the rule of law
III. policies that don't kill their own citizens

Accepted Answer

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

Question 14

Of the following, which is the largest part of the United States budget?

Accepted Answer

A)  foreign aid 
B)  interest on the federal debt 
C)  Social Security 
D)  welfare 
A)  foreign aid 
B)  interest on the federal debt 
C)  Social Security 
D)  welfare

Question 15

As a predictive theory of politics the median voter theorem is applicable to almost all circumstances in politics.

Accepted Answer

A) True 
 B)False

Question 16

The greater the share of the population that is brought into political power, the more likely it is that policies will favor economic growth.

Accepted Answer

A) True 
 B)False

Question 17

Higher standards of living are associated with

Accepted Answer

A)  a closed economy that allocates resources based on a centralized industrial policy. 
B)  a high ratio of government spending to GDP. 
C)  tightly regulated labor and capital markets. 
D)  greater economic freedom. 
A)  a closed economy that allocates resources based on a centralized industrial policy. 
B)  a high ratio of government spending to GDP. 
C)  tightly regulated labor and capital markets. 
D)  greater economic freedom.

Question 18

Sugar producers likely won't do much to oppose a law that reduces the supply of sugar and raises prices.

Accepted Answer

A) True 
 B)False

Question 19

________ argues that ________.

Accepted Answer

A)  Amartya Sen; famines don't happen in democracies 
B)  Rico Raines; starvation in many parts of the world could be avoided with adequate price controls 
C)  Amartya Sen; famines are more likely to occur where there are unfettered newspapers and political competition 
D)  David Ricardo; mass starvations are more likely in democracies 
A)  Amartya Sen; famines don't happen in democracies 
B)  Rico Raines; starvation in many parts of the world could be avoided with adequate price controls 
C)  Amartya Sen; famines are more likely to occur where there are unfettered newspapers and political competition 
D)  David Ricardo; mass starvations are more likely in democracies

Question 20

Many people are concerned about voter apathy. Use economics to explain why there is a lack of interest in voting and politics.

Accepted Answer

Voters have an incentive to be ignorant.

Exam 20: Political Economy and Public Choice

Rational ignorance still leads to an efficient outcome, since the decision itself is rational.

Presidents have an easier time changing ________ than ________ during an election year.

Why are special interest groups so powerful?

The reason democracies typically become richer is because:

Which of the following statements is TRUE? I. A rising standard of living increases the demand for democracy. II. Democracy is associated with better institutions that lead to economic growth and high standard of living. III. The public is usually better informed about policies in nondemocracies.

Which of the following would be the most likely outcome if a college professor awards grades based on average test scores and assigns the same grade to everyone in the class?

The incumbent party will most likely get reelected when economic conditions are worsening in an economy.

Which of the following is the smallest part of the United States budget?

The greater the share of the population that is brought into power, the:

The median voter is defined as the voter such that half the other voters are on one end of the spectrum and half are on the other.

Rational ignorance may cause voters to make uninformed decisions; however, the outcomes tend to be the same as if voters had full information.

A special interest project that costs 200 million citizens $1 each, but benefits 100 citizens a total of $100 million is an inefficient use of government funds.

Which of the following do democracies usually support? I. institutions that are bad for economic growth II. free markets, property rights, and the rule of law III. policies that don't kill their own citizens

Of the following, which is the largest part of the United States budget?

As a predictive theory of politics the median voter theorem is applicable to almost all circumstances in politics.

The greater the share of the population that is brought into political power, the more likely it is that policies will favor economic growth.

Higher standards of living are associated with

Sugar producers likely won't do much to oppose a law that reduces the supply of sugar and raises prices.

________ argues that ________.

Many people are concerned about voter apathy. Use economics to explain why there is a lack of interest in voting and politics.

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

Filters

Presidents have an easier time changing than during an election year.

argues that .