Question 1

Majority voting produces efficient outcomes because it takes into account the strength of the preferences of individual voters.

Accepted Answer

A) True 
 B)False

Question 2

"Voter failure" is one cause of government failure.

Accepted Answer

A) True 
 B)False

Question 3

Voters' preference for having government programs serve them is inherently in conflict with their preference to pay no taxes.

Accepted Answer

A) True 
 B)False

Question 4

Nobody gains from pork-barrel politics other than the politicians.

Accepted Answer

A) True 
 B)False

Question 5

Unfunded liabilities are one consequence of the preference for "clear benefits, hidden costs" by politicians.

Accepted Answer

A) True 
 B)False

Question 6

The government's ability to coerce people to do things is always detrimental to the achievement of economic efficiency.

Accepted Answer

A) True 
 B)False

Question 7

So-called business cycles refer to the multi-year periods:

Accepted Answer

A)  From when new products are launched to the point when they become obsolete 
B)  Between the purchases of new capital equipment and the point when they become junk 
C)  From the origination of a business loan to the retirement or full repayment of the loan 
D)  During which the economy's overall output and employment expands and contracts 
A)  From when new products are launched to the point when they become obsolete 
B)  Between the purchases of new capital equipment and the point when they become junk 
C)  From the origination of a business loan to the retirement or full repayment of the loan 
D)  During which the economy's overall output and employment expands and contracts

Question 8

Even if individual voters have clear preferences, and they stay consistent in their preferences, we could still end up with the paradox of voting.

Accepted Answer

A) True 
 B)False

Question 9

All of the following are consequences of a government's having to deal with a "debt crisis", except:

Accepted Answer

A)  Very restricted ability to borrow money 
B)  Being forced to drastically raise taxes 
C)  Being forced to make drastic cuts in spending 
D)  Being forced to make huge increases in government spending 
A)  Very restricted ability to borrow money 
B)  Being forced to drastically raise taxes 
C)  Being forced to make drastic cuts in spending 
D)  Being forced to make huge increases in government spending

Question 10

Only politicians, not the voters, are to blame for the problem of chronic budget deficits that many nations face.

Accepted Answer

A) True 
 B)False

Question 11

The so-called pork-barrel politics refers to congressional members:

Accepted Answer

A)  Trading votes with one another 
B)  Receiving perks and freebies from businesses trying to sway their votes 
C)  Paying close attention to the vocal special interest groups 
D)  Inserting provisions for local narrow projects into comprehensive legislation 
A)  Trading votes with one another 
B)  Receiving perks and freebies from businesses trying to sway their votes 
C)  Paying close attention to the vocal special interest groups 
D)  Inserting provisions for local narrow projects into comprehensive legislation

Question 12

In making sure that laws are uniformly enforced and applied, one consequence is that government creates inflexibility.

Accepted Answer

A) True 
 B)False

Question 13

The appeal to government for special benefits at taxpayers' or someone else's expense is the paradox of voting.

Accepted Answer

A) True 
 B)False

Question 14

Refer to the above table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. This situation illustrates the voting inconsistency where a majority of voters prefer the:

Accepted Answer

A)  Stadium over the park, the park over the jail, and the jail over the stadium 
B)  Park and jail over the stadium, and the jail over the park 
C)  Stadium over the jail, the jail over the park, and the park over the stadium 
D)  Stadium and jail over the park, and the park over the jail 
A)  Stadium over the park, the park over the jail, and the jail over the stadium 
B)  Park and jail over the stadium, and the jail over the park 
C)  Stadium over the jail, the jail over the park, and the park over the stadium 
D)  Stadium and jail over the park, and the park over the jail

Question 15

"Regulatory capture" refers to the situation where a government agency charged with supervising and regulating a particular industry is:

Accepted Answer

A)  Strongly influenced by the firms in that industry 
B)  Headed by bureaucrats who have a "lock" on their positions, without any rivals 
C)  Completely dominating the actions of firms in the industry 
D)  Headed by unelected government officials 
A)  Strongly influenced by the firms in that industry 
B)  Headed by bureaucrats who have a "lock" on their positions, without any rivals 
C)  Completely dominating the actions of firms in the industry 
D)  Headed by unelected government officials

Question 16

In which of the following cases has political corruption definitely occurred?

Accepted Answer

A)  Political candidates accept campaign contributions from people 
B)  Government agencies impose fines for such things as traffic violations 
C)  A bureaucrat allows someone to look at confidential documents for an informal fee 
D)  A government agency receives donations for distribution to charity 
A)  Political candidates accept campaign contributions from people 
B)  Government agencies impose fines for such things as traffic violations 
C)  A bureaucrat allows someone to look at confidential documents for an informal fee 
D)  A government agency receives donations for distribution to charity

Question 17

The information-aggregation problem faced by the top layers of government can make it hard for the high-level officials to:

Accepted Answer

A)  Discern the prices of specific goods and services in the economy 
B)  Comprehensively assess the marginal costs and benefits of specific programs 
C)  Monitor the incomes of individual firms and households 
D)  Estimate the total amount of spending incurred by the government 
A)  Discern the prices of specific goods and services in the economy 
B)  Comprehensively assess the marginal costs and benefits of specific programs 
C)  Monitor the incomes of individual firms and households 
D)  Estimate the total amount of spending incurred by the government

Question 18

Majority voting on whether or not a public good should be produced could lead to a result where a public good whose costs are bigger than the benefits would end up getting approved by the voters.

Accepted Answer

A) True 
 B)False

Question 19

Government can use its ability to coerce towards improving economic efficiency by:

Accepted Answer

A)  Reducing the production of output with external benefits 
B)  Reducing the production of output with public-goods characteristics 
C)  Increasing the production of output with external benefits 
D)  Increasing the production of output with external costs 
A)  Reducing the production of output with external benefits 
B)  Reducing the production of output with public-goods characteristics 
C)  Increasing the production of output with external benefits 
D)  Increasing the production of output with external costs

Question 20

Assume that voters are asked to vote for either more police protection or more schools in a community. More schools are likely to win if:

Accepted Answer

A)  There is a paradox of voting 
B)  Median voters prefer that choice 
C)  Voters are ill-informed about the choice 
D)  There is revealed preference through voting 
A)  There is a paradox of voting 
B)  Median voters prefer that choice 
C)  Voters are ill-informed about the choice 
D)  There is revealed preference through voting

Exam 5: Governments Role and Government Failure

Majority voting produces efficient outcomes because it takes into account the strength of the preferences of individual voters.

"Voter failure" is one cause of government failure.

Voters' preference for having government programs serve them is inherently in conflict with their preference to pay no taxes.

Nobody gains from pork-barrel politics other than the politicians.

Unfunded liabilities are one consequence of the preference for "clear benefits, hidden costs" by politicians.

The government's ability to coerce people to do things is always detrimental to the achievement of economic efficiency.

So-called business cycles refer to the multi-year periods:

Even if individual voters have clear preferences, and they stay consistent in their preferences, we could still end up with the paradox of voting.

All of the following are consequences of a government's having to deal with a "debt crisis", except:

Only politicians, not the voters, are to blame for the problem of chronic budget deficits that many nations face.

The so-called pork-barrel politics refers to congressional members:

In making sure that laws are uniformly enforced and applied, one consequence is that government creates inflexibility.

The appeal to government for special benefits at taxpayers' or someone else's expense is the paradox of voting.

Refer to the above table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. This situation illustrates the voting inconsistency where a majority of voters prefer the:

"Regulatory capture" refers to the situation where a government agency charged with supervising and regulating a particular industry is:

In which of the following cases has political corruption definitely occurred?

The information-aggregation problem faced by the top layers of government can make it hard for the high-level officials to:

Majority voting on whether or not a public good should be produced could lead to a result where a public good whose costs are bigger than the benefits would end up getting approved by the voters.

Government can use its ability to coerce towards improving economic efficiency by:

Assume that voters are asked to vote for either more police protection or more schools in a community. More schools are likely to win if:

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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