Question 1

The "Bridge to Nowhere":

Accepted Answer

A)  cost the local community about $35,000 per person. 
B)  is a special case in which special interests can maximize society's well-being. 
C)  would have created large external costs,an example of the inefficient projects proposed by self-interested politicians. 
D)  connects Cuba to Key West,Florida. 
A)  cost the local community about $35,000 per person. 
B)  is a special case in which special interests can maximize society's well-being. 
C)  would have created large external costs,an example of the inefficient projects proposed by self-interested politicians. 
D)  connects Cuba to Key West,Florida.

Question 2

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 3

President Nixon increased his popularity just before the 1972 election by:

Accepted Answer

A)  lowering income taxes before the election. 
B)  lowering taxes after the election. 
C)  increasing Social Security benefits. 
D)  removing all price controls from the markets. 
A)  lowering income taxes before the election. 
B)  lowering taxes after the election. 
C)  increasing Social Security benefits. 
D)  removing all price controls from the markets.

Question 4

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 5

The theory of the median voter may not work if: I.voters do not vote.
II.voters do not vote for the policy closest to their own positions.
III.there are multiple dimensions over which the voting occurs.

Accepted Answer

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

Question 6

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 7

In September 2009,President Obama placed high tariffs on imported tires from China.Why did the President do this?

Accepted Answer

A)  Because reducing imports from China will make America more prosperous. 
B)  The costs of the tariffs will be small compared with the benefits of saving American jobs. 
C)  Because tariffs will lower tire prices,which is especially important with the high unemployment at the time. 
D)  Although the policy harms the consumers of tires,the policy directly benefited the United Steelworkers,a special interest group that provides political support to the Democratic Party,of which President Obama is a member. 
A)  Because reducing imports from China will make America more prosperous. 
B)  The costs of the tariffs will be small compared with the benefits of saving American jobs. 
C)  Because tariffs will lower tire prices,which is especially important with the high unemployment at the time. 
D)  Although the policy harms the consumers of tires,the policy directly benefited the United Steelworkers,a special interest group that provides political support to the Democratic Party,of which President Obama is a member.

Question 8

If consumers are hurt by quotas and tariffs such as the sugar quota,why do they remain rationally ignorant about these policies?

Accepted Answer

Although the sugar quota costs consumers

Question 9

Which of the following is TRUE about the effects of democracy?

Accepted Answer

A)  Democracy can perfectly align self-interest with the social interest. 
B)  Because of democracy,there is no incentive for the public to align self-interest with the social interest. 
C)  Democracy leads to good institutions that help align self-interest with the social interest. 
D)  Democracy has no effect on the alignment between self-interest and the social interest. 
A)  Democracy can perfectly align self-interest with the social interest. 
B)  Because of democracy,there is no incentive for the public to align self-interest with the social interest. 
C)  Democracy leads to good institutions that help align self-interest with the social interest. 
D)  Democracy has no effect on the alignment between self-interest and the social interest.

Question 10

Rational ignorance:

Accepted Answer

A)  makes it difficult for voters to make informed decisions regarding government intervention in the economy. 
B)  may cause voters to give credit to or blame politicians for things not under their control. 
C)  may allow special interest groups to take advantage of the uninformed. 
D)  All of these possibilities are correct. 
A)  makes it difficult for voters to make informed decisions regarding government intervention in the economy. 
B)  may cause voters to give credit to or blame politicians for things not under their control. 
C)  may allow special interest groups to take advantage of the uninformed. 
D)  All of these possibilities are correct.

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

During election years personal disposable income ________ more than at other times,while inflation tends to ________.

Accepted Answer

A)  falls;rise. 
B)  grows;rise. 
C)  grows;fall. 
D)  falls;fall 
A)  falls;rise. 
B)  grows;rise. 
C)  grows;fall. 
D)  falls;fall

Question 13

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 14

A good incentive system aligns self-interest with the social interest.

Accepted Answer

A) True 
 B)False

Question 15

Use the following to answer questions 
Figure: Smoking Ban Policy Spectrum  
-(Figure: Smoking Ban Policy Spectrum)Refer to the figure.If there are only two candidates,A and B,and a smoking ban is the only issue being debated in this election,which one of the voters is the median voter?

Accepted Answer

A)  Victoria 
B)  Edward 
C)  O'Rourke 
D)  Abdul 
A)  Victoria 
B)  Edward 
C)  O'Rourke 
D)  Abdul

Question 16

In general,there is a high positive correlation between per capita income and economic freedom across countries.

Accepted Answer

A) True 
 B)False

Question 17

The median voter theorem holds that the:

Accepted Answer

A)  policy that caters to the median voter will beat any other policy in a majority rule election. 
B)  policy that adjusts the left of the median voter will beat any policy further to the right. 
C)  policy that adjusts to the right of the median voter will beat any policy further to the left. 
D)  median voter's preferences cannot be met. 
A)  policy that caters to the median voter will beat any other policy in a majority rule election. 
B)  policy that adjusts the left of the median voter will beat any policy further to the right. 
C)  policy that adjusts to the right of the median voter will beat any policy further to the left. 
D)  median voter's preferences cannot be met.

Question 18

Rational ignorance in voting comes from:

Accepted Answer

A)  externalities that lead to an excess supply of information. 
B)  the limited incentive of the news media to cover political campaigns. 
C)  the expectation of individual voters that their vote will not be decisive. 
D)  the lack of a college education on the part of most voters in the United States. 
A)  externalities that lead to an excess supply of information. 
B)  the limited incentive of the news media to cover political campaigns. 
C)  the expectation of individual voters that their vote will not be decisive. 
D)  the lack of a college education on the part of most voters in the United States.

Question 19

Explain why economists say that voters are rationally ignorant about politics.

Accepted Answer

The incentives for voters to be informed

Question 20

Which of the following conditions best predicts when the incumbent party will NOT win the presidential election?

Accepted Answer

A)  personal disposable income is growing 
B)  the inflation rate is low 
C)  the unemployment rate is low 
D)  the incumbent party has been in power for too many terms in a row 
A)  personal disposable income is growing 
B)  the inflation rate is low 
C)  the unemployment rate is low 
D)  the incumbent party has been in power for too many terms in a row

Exam 21: Political Economy and Public Choice

The "Bridge to Nowhere":

The reason democracies typically become richer is because:

President Nixon increased his popularity just before the 1972 election by:

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

The theory of the median voter may not work if: I.voters do not vote. II.voters do not vote for the policy closest to their own positions. III.there are multiple dimensions over which the voting occurs.

Higher standards of living are associated with

In September 2009,President Obama placed high tariffs on imported tires from China.Why did the President do this?

If consumers are hurt by quotas and tariffs such as the sugar quota,why do they remain rationally ignorant about these policies?

Which of the following is TRUE about the effects of democracy?

Rational ignorance:

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

During election years personal disposable income ________ more than at other times,while inflation tends to ________.

Personal disposable income

A good incentive system aligns self-interest with the social interest.

Use the following to answer questions Figure: Smoking Ban Policy Spectrum -(Figure: Smoking Ban Policy Spectrum)Refer to the figure.If there are only two candidates,A and B,and a smoking ban is the only issue being debated in this election,which one of the voters is the median voter?

In general,there is a high positive correlation between per capita income and economic freedom across countries.

The median voter theorem holds that the:

Rational ignorance in voting comes from:

Explain why economists say that voters are rationally ignorant about politics.

Which of the following conditions best predicts when the incumbent party will NOT win the presidential election?

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Filters

During election years personal disposable income more than at other times,while inflation tends to .