Question 1

Public choice theory indicates that the behavior of people in government

Accepted Answer

A)  differs from the behavior of people in the private sector because they are motivated by the public interest rather than their own personal self-interest. 
B)  differs from the behavior of people in the private sector because public sector decision roles do not allow people to pursue their own self-interests. 
C)  is the same as people in the private sector only if decisions are made by majority vote. 
D)  is best understood by applying the same principles we use to predict the behavior of people in the private sector.

Question 2

In economics, actions by individuals and interest groups designed to influence public policy in a manner that will either directly or indirectly redistribute more income to themselves are known as

Accepted Answer

A)  logrolling. 
B)  rent seeking. 
C)  influence peddling. 
D)  redistribution searching.

Question 3

Legislators often gain by bundling a number of projects benefiting local districts at the expense of general taxpayers together on a single bill. Such legislation is called

Accepted Answer

A)  market failure legislation. 
B)  the rational-ignorance effect. 
C)  public-goods legislation. 
D)  pork-barrel legislation.

Question 4

When the government is heavily involved in projects that provide benefits to some businesses at the expense of others, this will increase the incentive of businesses to

Accepted Answer

A)  develop better products in order to satisfy consumers. 
B)  invest in projects that increase the value of the resources. 
C)  spend more time lobbying and seeking government favors. 
D)  spend less time lobbying and seeking government favors.

Question 5

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 6

When subsidies, tax credits, and government favoritism are increasingly used to allocate goods and services,

Accepted Answer

A)  lobbying activities will increase. 
B)  contributions for political campaigns will increase. 
C)  political corruption will become more widespread. 
D)  All of the above are true.

Question 7

Legislation that contains a number of projects benefiting local interests at the expense of the general taxpayer is called

Accepted Answer

A)  balanced-budget legislation. 
B)  pork-barrel legislation. 
C)  voucher legislation. 
D)  public-goods legislation.

Question 8

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 9

Most income transfer programs in the United States

Accepted Answer

A)  are means-tested programs that transfer income to the poor. 
B)  allocate income to small businesses and small farmers. 
C)  are designed to help those with very little economic and political power. 
D)  allocate income to concentrated interest groups, such as the elderly, large farmers, and business interests.

Question 10

Which of the following factors explains why managers of government agencies have little incentive to achieve operational efficiency?

Accepted Answer

A)  Public-sector managers have no fear of bankruptcy when operational efficiency is not achieved. 
B)  Public-sector managers face fierce competition. 
C)  It is relatively easy for voters to detect operational inefficiency in the public sector and do something to correct it. 
D)  All of the above explain why government agencies have little incentive to be efficient.

Question 11

A local government operates a city recreation center with a pool and tennis courts. The center is financed through $50 annual membership fees (required for members to use it). This type of financing is an example of a

Accepted Answer

A)  head tax. 
B)  excise fee. 
C)  user charge. 
D)  progressive tax.

Question 12

When the federal government becomes heavily involved in programs that favor well-organized business interest at the expense of others, the expected result is

Accepted Answer

A)  more rapid economic growth, because programs of this type are generally productive. 
B)  a reduction in rent seeking activities because political decision-makers will want to promote smaller, innovative firms rather than large firms that are a major source of political contributions. 
C)  less innovation because political decision-makers will tend to favor older firms with a stronger record of providing political support rather than newer, innovative start-up firms. 
D)  a decline in the competitiveness of elections, because politicians will find it more difficult to raise campaign contributions.

Question 13

Which of the following is most likely to result in an increase in crony capitalism?

Accepted Answer

A)  a reduction in entry barriers and an increase in the competitiveness of markets. 
B)  an increase in government spending and growth of government regulation 
C)  a reduction in the size of government 
D)  an increase in the share of the population voting in elections

Question 14

When decisions are made by majority rule, elected officials have a strong incentive to

Accepted Answer

A)  serve the interest of consumers and taxpayers, and undertake only projects that are efficient. 
B)  protect individual rights and avoid favoritism of some individuals and voting blocs relative to others. 
C)  keep taxes low, run budget surpluses, and spend taxpayer funds wisely. 
D)  take resources from taxpayers and use them to provide favors for various voting blocs in exchange for contributions and other forms of political support.

Question 15

Public choice analysis

Accepted Answer

A)  assumes individuals in the public sector act in their own self-interests. 
B)  assumes individuals seek to serve the public interest rather than their own personal interests. 
C)  is the study of decision making in the formation and operation of private organizations. 
D)  assumes the government is a corrective device that takes the necessary action to offset economic inefficiency arising from market failure.

Question 16

Use the figure below to answer the following question(s). Figure 6-2
 Figure 6-2 illustrates the four possibilities of the structure of production and consumption for a good or service. In which case is the incentive of producers and consumers to economize the strongest?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D

Question 17

Measured as a share of national income, government expenditures on income transfers during the last 70 years have

Accepted Answer

A)  grown rapidly. 
B)  declined substantially. 
C)  been virtually unchanged. 
D)  increased throughout much of that period, but they have declined substantially since 1980.

Question 18

Public choice theory assumes each voter will tend to support the political candidate who offers

Accepted Answer

A)  programs with the largest benefits to society. 
B)  the highest potential for being a good leader in times of war. 
C)  programs that create the most equal distribution of income. 
D)  to provide the voter with the most personal benefits at the least personal cost.

Question 19

At the most basic level, the distinguishing characteristic of government that makes it different from private firms is

Accepted Answer

A)  the difference in incentive structure motivating economic activity. 
B)  its ability to direct resources in a manner that is more economically efficient. 
C)  its ability to produce goods and services that people value. 
D)  its ability to use coercive force against people to modify their behavior or force them to pay for a good or service whether they benefit from it or not.

Question 20

Market allocation and the political process differ in that

Accepted Answer

A)  competition is present in the market sector but not in the political sector. 
B)  scarcity is a constraint in the market sector but not the political sector. 
C)  there is a one-to-one link between payment for and receipt of a good in the market sector, but this is often not true in the political sector. 
D)  in the political sector, voters have a strong incentive to acquire information that will help them make better decisions, but in the market sector, consumers do not have much incentive to acquire information.

Exam 6: The Economics of Political Action