Question 1

Young John recently took a job with the U.S. Department of Agriculture. His supervisor gave him an assignment and a two-week deadline. He finished the job in three days and turned it in. Now his coworkers are mad at John. Why?

Accepted Answer

The answer of Young John recently took a job with...

Question 2

Public choice analysis indicates

Accepted Answer

A)  politicians under representative democracy are led as if by an invisible hand to adopt legislation that enhances the wealth of a nation. 
B)  political structures consistent with economic efficiency tend to emerge naturally from the ordinary political process. 
C)  constitutional rules establishing procedures and limiting the ability of the political process to engage in redistributive activities can improve the economic efficiency of government. 
D)  all of the above are correct.

Question 3

Which of the following increases the political power of special interest groups and makes counterproductive government action more likely?

Accepted Answer

A)  logrolling and pork barrel legislation 
B)  the rational-ignorance effect 
C)  public goods 
D)  both a and b, but not c

Question 4

In a representative democracy, government action results from the

Accepted Answer

A)  choices of voters. 
B)  legislative decisions by politicians. 
C)  political action of organized interest groups. 
D)  complex interaction of all of the above.

Question 5

The methodology of public choice analysis

Accepted Answer

A)  develops a logically consistent theory based on how individual actors (such as voters, politicians, and bureaucrats) respond to incentives. 
B)  assumes that all decisions made by individual actors in the public sector are done with the public interest in mind, rather than their private interests. 
C)  assumes that individuals generally react to the incentives they face when making choices in the private sector but not in the public sector. 
D)  focuses on the development of a single theory of government as a whole rather than on analyzing the choices made by individual agents in the public sector.

Question 6

Public choice analysis suggests that voters considering whether to vote for a candidate will ask,

Accepted Answer

A)  "What will the candidate do that will promote the general welfare of society?" 
B)  "What will the candidate do that will benefit me, and how much will it cost me?" 
C)  "Will the candidate pursue only programs that increase economic efficiency?" 
D)  "What will the candidate do that will benefit everyone in the country?"

Question 7

Public choice theory indicates competitive forces provide a politician with a strong incentive to offer voters a bundle of political goods that she believes

Accepted Answer

A)  is best for the economic and political situations the country faces. 
B)  will most likely clear the legislative process. 
C)  will increase the welfare of society. 
D)  will increase her chances of winning elections.

Question 8

In which case is the political process most likely to result in the acceptance of efficient projects and rejection of inefficient projects?

Accepted Answer

A)  The benefits are highly concentrated, and costs are widespread among voters. 
B)  The costs are highly concentrated, and the benefits are widespread among voters. 
C)  Both the benefits and costs are widespread among voters. 
D)  The benefits accrue primarily in the future, while the costs are more visible during the current period.

Question 9

Which of the following is the most likely explanation for the imposition of a price floor in the market for corn?

Accepted Answer

A)  Policymakers have studied the effects of the price floor carefully and they recognize that the price floor will improve the efficiency of resource use. 
B)  Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into enacting the price floor. 
C)  Buyers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor. 
D)  Sellers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor.

Question 10

Public choice theory indicates that competitive forces between candidates in elections provide a politician with a strong incentive to offer voters a bundle of political goods that she believes

Accepted Answer

A)  is best for the economic and political situations the country faces. 
B)  will most likely clear the legislative process. 
C)  will increase the welfare of society. 
D)  will increase her chances of winning elections.

Question 11

Special-interest programs are highly attractive to vote-seeking politicians because

Accepted Answer

A)  these programs are highly efficient, and therefore, they tend to enhance the general welfare of the populace. 
B)  members of special interest groups favoring these programs are less likely to vote than the taxpayers who pay for them. 
C)  low-income recipients are the primary beneficiaries of special-interest programs. 
D)  members of special interest groups favoring these programs feel strongly about them while most other voters are rationally uninformed about them.

Question 12

Senator Dogood is pushing for the construction of a new military base in his state even though, from the standpoint of national security, it is clear that there are better places to locate the new military base. Economic theory would suggest that Senator Dogood is

Accepted Answer

A)  acting irrationally; he must not know that the base would be better located in a different state. 
B)  acting rationally; he realizes that constructing the base in his state will increase his chances of getting reelected. 
C)  acting rationally if the country is currently at war but is acting irrationally if the country is not at war. 
D)  trying to do what is best for the country.

Question 13

Which of the following is true of government activities under a system of representative democracy?

Accepted Answer

A)  If a majority favors an activity, it must be productive. 
B)  If a majority opposes an activity, it must be counterproductive. 
C)  When voters pay in proportion to benefits received, productive activities undertaken by the government will be favored by an overwhelming majority of voters. 
D)  When voters pay in proportion to benefits received, productive activities will generally be defeated under a majority rule vote.

Question 14

Which of the following is a predictable side effect of increased government activity (e.g., taxes and subsidies) designed to redistribute income among citizens?

Accepted Answer

A)  improvement in the operational efficiency of government agencies 
B)  budget surpluses 
C)  reduction in the poverty rate 
D)  an increase in rent-seeking activity

Question 15

John Smith is a typical citizen. Economic theory suggests that he is likely to make a more informed choice when he buys a personal computer than when he votes for a congressional candidate. This view is

Accepted Answer

A)  false because the actions of legislators will exert a greater impact on Smith's welfare than will the purchase of the computer. 
B)  false; Smith will tend to choose more carefully when he makes public choices than when he makes private choices. 
C)  uncertain; it would be true if, and only if, Smith's spending on personal computers exceeds his tax bill. 
D)  true; since Smith can decide what computer to buy, but his individual vote is very unlikely to decide the outcome of a congressional election, he has more incentive to inform himself about the computer than the congressional election.

Question 16

Legislation that offers immediate and easily recognized benefits, at the expense of uncertain costs that are in the distant future (such as financing by government debt), is often enacted even when economic inefficiency results. This can be expected because of

Accepted Answer

A)  a lack of incentive for operational efficiency in the public sector. 
B)  market failure. 
C)  the special-interest effect. 
D)  the shortsightedness effect.

Question 17

Government action will often result in the counterproductive use of resources because

Accepted Answer

A)  there is often a conflict between winning political elections and adoption of only productive programs. 
B)  many politicians are not interested in how their legislative votes will influence their chances of winning future elections. 
C)  politicians are often unwilling to listen to interest groups that have specialized knowledge. 
D)  voter participation is low; if more people voted, the political process would be more efficient.

Question 18

Which of the following is true?

Accepted Answer

A)  To remain in office, a politician must try to enact policies that gain him votes for his reelection and increase the support coming from contributors. 
B)  A politician always attempts to pursue policies that are good for society even if they are strongly opposed by many of her constituents or contributors. 
C)  Politicians generally place more weight on how their decisions affect future costs and benefits than on how they affect present costs and benefits. 
D)  The value of being in office is so low that most political candidates spend very little on campaigns to try to win (or keep) elected office.

Question 19

When voters pay taxes in proportion to the benefits they receive from government projects,

Accepted Answer

A)  efficient projects will tend to be opposed by a majority of voters. 
B)  inefficient projects will often be favored by a majority of voters. 
C)  projects that are efficient will tend to be favored by an overwhelming majority of voters. 
D)  democratic political decision making can be expected to work poorly.

Question 20

Economic analysis suggests that bureaucrats and public-sector managers have a strong incentive to

Accepted Answer

A)  make sure that their budgets are as small as possible so more funds will be available for other government programs. 
B)  expand their budgets to sizes beyond what would be considered economically efficient. 
C)  ensure that their budgets are exactly the size that would be considered economically efficient. 
D)  economize on their spending and return unspent funds to the general treasury.

Exam 6: The Economics of Political Action