Question 1

Suppose domestic automobiles were allocated in the United States the way public education is allocated. Describe how this system might work.

Accepted Answer

The country would be divided into thirds...

Question 2

Congressman Localstuff always votes for a balanced budget amendment to the U.S. Constitution. He also always votes for spending bills supported by the leadership of his political party. Is this rational?

Accepted Answer

Congressman Localstuff's constituents pr...

Question 3

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 4

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 5

The fact that voters perceive their votes as unlikely to actually change the outcome of an election causes

Accepted Answer

A)  voters to have little incentive to become informed about candidates and political issues.
B)  voters to spend a great deal of effort becoming informed about candidates and political issues.
C)  the percent of people who actually turn out to cast a vote on election day to be very high.
D)  people to be extremely reluctant to "waste" their votes on a third-party candidate.

Question 6

The major categories of federal government spending are

Accepted Answer

A)  health care, national defense, Social Security, and other income transfers.
B)  law enforcement, environmental protection, and national defense.
C)  public education, garbage collection, and public parks.
D)  health care, public education, and highways.

Question 7

The branch of economics that attempts to understand the outcomes observed in the public sector by examining the incentives faced by the individual actors involved (such as voters, politicians, and bureaucrats)  is known as

Accepted Answer

A)  private choice analysis.
B)  public choice analysis.
C)  government operations analysis.
D)  incentive analysis.

Question 8

Economics indicates that government funding of special interest projects and favoritism of some business firms relative to others will lead to

Accepted Answer

A)  efficient allocation of resources because the government action will correct the failures of the market.
B)  the funding of productive projects that will improve the well-being of most citizens.
C)  economic inefficiency because the funding will be driven by political rather than economic considerations.
D)  a decline in political contributions and a reduction in the quality of the candidates willing to run for political office.

Question 9

The rational-ignorance effect is a result of

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.

Question 10

In which of the following situations is representative democracy most likely to lead to the adoption of an inefficient government program?

Accepted Answer

A)  The program provides substantial benefits to a small interest group, and the costs are widespread among voters.
B)  Both the benefits and costs of the program are widespread among voters.
C)  The program is financed by a user charge that makes the individuals who benefit from the program pay for its cost.
D)  The program provides widespread benefits to all voters and imposes a significant cost on a small interest group.

Question 11

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 12

Dairy farmers hold an annual Capitol Hill ice cream social that provides free ice cream for congressional staffers during which time representatives from the industry discuss issues with, and provide information to, congressional staff. This is an example of

Accepted Answer

A)  logrolling.
B)  rent seeking.
C)  pork-barrel legislation.
D)  the shortsightedness effect.

Question 13

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

Accepted Answer

A)  When voters pay in proportion to benefits received, all voters will gain if the government activity is productive.
B)  If a majority opposes an activity, it must be counterproductive.
C)  When voters must pay in proportion to benefits received for an activity undertaken by the government, the activity will most likely be rejected by the majority of voters.
D)  Government activities must be productive in order to be eligible for vote.

Question 14

Which of the following factors weakens the case for private-sector provision of goods and services as opposed to public-sector provision?

Accepted Answer

A)  weak incentives for operational efficiency
B)  rent-seeking
C)  the shortsightedness effect
D)  externalities

Question 15

In 2008, the combined expenditures of federal, state, and local governments in the United States were approximately

Accepted Answer

A)  14 percent of GDP.
B)  24 percent of GDP.
C)  35 percent of GDP.
D)  44 percent of GDP.

Question 16

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.

Question 17

Legislation that offers immediate and easily recognized benefits, at the expense of costs that are observable only in the distant future, is often enacted, even when economic inefficiency results. In economics this is referred to as the

Accepted Answer

A)  long-term effect.
B)  political-fallacy effect.
C)  shortsightedness effect.
D)  inefficiency effect.

Question 18

An analysis of market failure and government failure indicates

Accepted Answer

A)  government decision making is always preferable to using markets.
B)  market decision making is always preferable to public-sector action.
C)  government action is necessary whenever market failure occurs.
D)  both the market and the government may fail to meet conditions of economic efficiency; in each individual case, the choice of market or public-sector action requires careful evaluation.

Question 19

Which of the following explains why pork-barrel spending is often approved, even when the spending is inefficient?

Accepted Answer

A)  Each representative has little incentive to oppose pork-barrel spending since the tax savings would accrue to taxpayers throughout the nation.
B)  General opposition to pork-barrel spending by a legislator would make it more difficult for the legislator to arrange for pork-barrel projects that provide concentrated benefits for his district.
C)  Logrolling increases the likelihood that pork-barrel projects will be approved.
D)  All of the above are correct.

Question 20

Other things constant, if both the benefits and costs of a public-sector activity are widespread among voters, the political process will generally result in the

Accepted Answer

A)  rejection of productive activities and acceptance of unproductive activities.
B)  acceptance of both productive and unproductive activities.
C)  rejection of both productive and unproductive activities.
D)  acceptance of productive activities and rejection of unproductive activities.

Exam 6: The Economics of Collective Decision-Making

Economics indicates that government funding of special interest projects and favoritism of some business firms relative to others will lead to

Correct AnswerverifiedShow Answer

Which of the following factors weakens the case for private-sector provision of goods and services as opposed to public-sector provision?

Correct AnswerverifiedShow Answer

The fact that voters perceive their votes as unlikely to actually change the outcome of an election causes

Correct AnswerverifiedShow Answer

In which of the following situations is representative democracy most likely to lead to the adoption of an inefficient government program?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An analysis of market failure and government failure indicates

Correct AnswerverifiedShow Answer

Which of the following explains why pork-barrel spending is often approved, even when the spending is inefficient?

Correct AnswerverifiedShow Answer

Legislation that offers immediate and easily recognized benefits, at the expense of costs that are observable only in the distant future, is often enacted, even when economic inefficiency results. In economics this is referred to as the

Correct AnswerverifiedShow Answer

Dairy farmers hold an annual Capitol Hill ice cream social that provides free ice cream for congressional staffers during which time representatives from the industry discuss issues with, and provide information to, congressional staff. This is an example of

Correct AnswerverifiedShow Answer

Other things constant, if both the benefits and costs of a public-sector activity are widespread among voters, the political process will generally result in the

Correct AnswerverifiedShow Answer

The branch of economics that attempts to understand the outcomes observed in the public sector by examining the incentives faced by the individual actors involved (such as voters, politicians, and bureaucrats) is known as

Correct AnswerverifiedShow Answer

In 2008, the combined expenditures of federal, state, and local governments in the United States were approximately

Correct AnswerverifiedShow Answer

The major categories of federal government spending are

Correct AnswerverifiedShow Answer

Congressman Localstuff always votes for a balanced budget amendment to the U.S. Constitution. He also always votes for spending bills supported by the leadership of his political party. Is this rational?

Correct AnswerverifiedCongressman Localstuff's constituents pr...View AnswerShow Answer

The methodology of public choice analysis

Correct AnswerverifiedShow Answer

Suppose domestic automobiles were allocated in the United States the way public education is allocated. Describe how this system might work.

Correct AnswerverifiedThe country would be divided into thirds...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The rational-ignorance effect is a result of

Correct AnswerverifiedShow Answer

Market allocation and the political process differ in that

Correct AnswerverifiedShow Answer

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Congressman Localstuff's constituents pr...
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The country would be divided into thirds...
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