Question 1

Political corruption occurs whenever:

Accepted Answer

A)   logrolling is used to secure votes for controversial legislation.
B)   government officials use unlawful misdirection of governmental resources for their own personal gain.
C)   special interest groups contribute to elected officials,who in turn support legislation that benefits the special interest group.
D)   there is pork barrel politics involved.

Question 2

Suppose three roommates cannot agree on the size of a pizza to order.Domino argues for a medium pizza,Godfather contends a large pizza will be needed,and Little Caesar wants a super-large pizza.Assuming no paradox of voting,majority voting will result in a decision to order:

Accepted Answer

A)   a medium pizza.
B)   a large pizza.
C)   a super-large pizza.
D)   two medium pizzas.

Question 3

Public choice economists hold that politicians will:

Accepted Answer

A)   favor programs entailing immediate and clear-cut costs and vaguely defined or deferred benefits.
B)   follow policies leading to an optimal allocation of resources between public and private sectors.
C)   favor programs entailing immediate and clear-cut benefits and vaguely defined or deferred costs.
D)   objectively weigh the costs and benefits of various government programs and vote accordingly.

Question 4

Answer the question on the basis of this table showing the marginal benefit that a particular public project will provide to each of the three members of a community.No vote trading is allowed.   Voter  Marginal Benefit  Xavier $500 Yoho 200 Zest 2,000\begin{array} { c c c } 	ext { Voter } & & 	ext { Marginal Benefit } \\hline	ext { Xavier } & & \$ 500 \	ext { Yoho } & & 200 \	ext { Zest } & & 2,000\end{array} Voter  Xavier  Yoho  Zest ​​ Marginal Benefit $5002002,000​​  If the tax cost of this proposed project is $600 per person,a majority vote will:

Accepted Answer

A)   defeat this project and resources will be underallocated to it.
B)   defeat this project and resources will be allocated efficiently.
C)   pass this project and resources will be overallocated to it.
D)   defeat this project and resources will be overallocated to it.

Question 5

Regulatory capture often occurs because of which of the following?

Accepted Answer

A)   Government officials want stronger control over industry regulation.
B)   Nearly everyone with expertise works in the regulated industry.
C)   Patent law allows firms to gain monopoly power easily and therefore control a market.
D)   Consumer groups are effective at lobbying the government for industry regulation.

Question 6

The pursuit through government of a "transfer of wealth" at someone else's expense refers to:

Accepted Answer

A)   logrolling.
B)   rent-seeking behavior.
C)   the paradox of voting.
D)   the median-voter model.

Question 7

Because majority voting fails to incorporate the strength of the preferences of individual voters,it:

Accepted Answer

A)   creates negative externalities.
B)   under some circumstances produces economically inefficient outcomes.
C)   leads to market failure.
D)   leads to politics dominated by special interest groups.

Question 8

The principal-agent problem is a problem for the private sector but does not apply to political decision making.

Accepted Answer

A) True 
 B)False

Question 9

The Securities and Exchange Commission's supervision of Wall Street financial firms is a possible example of regulatory capture.

Accepted Answer

A) True 
 B)False

Question 10

Government changes in interest rates to regulate the economy are part of:

Accepted Answer

A)   monetary policy.
B)   fiscal policy.
C)   debt policy.
D)   liability policy.

Question 11

Which of the following impacts would economists expect to result from chronic budget deficits?

Accepted Answer

A)   Greater economic efficiency resulting from the abundance of public goods produced.
B)   Permanently high levels of output and continued economic growth.
C)   Greater political control over monetary policy.
D)   Government control of an inefficiently large share of the economy's resources.

Question 12

According to some economists,the private sector is more efficient than the public sector mainly because:

Accepted Answer

A)   the private sector has a clear test of performance: profit and loss.
B)   wages,salaries,and fringe benefits are higher in the private sector.
C)   worker turnover is higher in the public sector.
D)   of extensive negative externalities in the public sector.

Question 13

Public choice economists:

Accepted Answer

A)   analyze the incidence of taxes.
B)   are also known as Keynesian economists.
C)   use the tools of economics to analyze decision making,politics,and elections in the public sector.
D)   are,by definition,economists employed by federal,state,and local governments.

Question 14

Government loan guarantees tend to have the effect of:

Accepted Answer

A)   socializing losses and privatizing gains.
B)   socializing gains and privatizing losses.
C)   socializing both gains and losses.
D)   privatizing both gains and losses.

Question 15

Answer the question on the basis of this table showing the marginal benefit a particular public project will provide to each of the three members of a community.No vote trading is allowed.   Voter  Marginal Benefit  Xavier $800 Yoho 800 Zest 100\begin{array} { c c c } 	ext { Voter } & & 	ext { Marginal Benefit } \\hline	ext { Xavier } & & \$ 800 \	ext { Yoho } & & 800 \	ext { Zest } & & 100\end{array} Voter  Xavier  Yoho  Zest ​​ Marginal Benefit $800800100​​  If the tax cost of this proposed project is $600 per person,a majority vote will:

Accepted Answer

A)   defeat this project and resources will be underallocated to it.
B)   pass this project and resources will be allocated efficiently.
C)   pass this project and resources will be overallocated to it.
D)   pass this project and resources will be underallocated to it.

Question 16

A special-interest issue is one whose passage yields:

Accepted Answer

A)   private benefits equal to external benefits.
B)   large external benefits compared to private benefits.
C)   small economic losses to a small number of people and large economic losses to a large number of people.
D)   large economic gains to a small number of people and small economic losses to a large number of people.

Question 17

Narrow,specifically designated expenditures that are included in more comprehensive legislation are known as:

Accepted Answer

A)   earmarks.
B)   logrolls.
C)   benefits-received allocations.
D)   progressive expenditures.

Question 18

The political technique called logrolling:

Accepted Answer

A)   always increases economic efficiency.
B)   always decreases economic efficiency.
C)   involves trading votes to secure favorable outcomes that otherwise could be rejected.
D)   is an example of the paradox of voting.

Question 19

(Last Word) In 2004,Congress passed a corporate tax relief bill with 276 provisions for tax breaks to groups such as restaurant owners,Hollywood producers,and NASCAR track owners.This is an example of the:

Accepted Answer

A)   special-interest effect.
B)   benefits-received principle.
C)   paradox of voting.
D)   principal-agent problem.

Question 20

As it relates to corporations,the principal-agent problem is that:

Accepted Answer

A)   the goals of the corporate managers (the principals) may not match the goals of the corporate owners (the agents) .
B)   the goals of the corporate managers (the agents) may not match the goals of the corporate owners (the principals) .
C)   the federal government (the agent) taxes both corporate profits and the dividends paid to stockholders (the principals) .
D)   it is costly for the corporate owners (the principals) to obtain a corporate charter from government (the agent) .

Exam 5: Governments Role and Government Failure

The political technique called logrolling:

Correct Answer
verified

As it relates to corporations,the principal-agent problem is that:

Correct Answer
verified

Government loan guarantees tend to have the effect of:

Correct Answer
verified

The pursuit through government of a "transfer of wealth" at someone else's expense refers to:

Correct Answer
verified

Government changes in interest rates to regulate the economy are part of:

Correct Answer
verified

Narrow,specifically designated expenditures that are included in more comprehensive legislation are known as:

Correct Answer
verified

Which of the following impacts would economists expect to result from chronic budget deficits?

Correct Answer
verified

Suppose three roommates cannot agree on the size of a pizza to order.Domino argues for a medium pizza,Godfather contends a large pizza will be needed,and Little Caesar wants a super-large pizza.Assuming no paradox of voting,majority voting will result in a decision to order:

Correct Answer
verified

Political corruption occurs whenever:

Correct Answer
verified

The principal-agent problem is a problem for the private sector but does not apply to political decision making.

Correct Answer
verified

Public choice economists hold that politicians will:

Correct Answer
verified

Because majority voting fails to incorporate the strength of the preferences of individual voters,it:

Correct Answer
verified

According to some economists,the private sector is more efficient than the public sector mainly because:

Correct Answer
verified

Regulatory capture often occurs because of which of the following?

Correct Answer
verified

A special-interest issue is one whose passage yields:

Correct Answer
verified

(Last Word) In 2004,Congress passed a corporate tax relief bill with 276 provisions for tax breaks to groups such as restaurant owners,Hollywood producers,and NASCAR track owners.This is an example of the:

Correct Answer
verified

Correct Answer
verified

Public choice economists:

Correct Answer
verified

The Securities and Exchange Commission's supervision of Wall Street financial firms is a possible example of regulatory capture.

Correct Answer
verified

Correct Answer
verified

Exam 5: Governments Role and Government Failure

The political technique called logrolling:

Correct AnswerverifiedShow Answer

As it relates to corporations,the principal-agent problem is that:

Correct AnswerverifiedShow Answer

Government loan guarantees tend to have the effect of:

Correct AnswerverifiedShow Answer

The pursuit through government of a "transfer of wealth" at someone else's expense refers to:

Correct AnswerverifiedShow Answer

Government changes in interest rates to regulate the economy are part of:

Correct AnswerverifiedShow Answer

Narrow,specifically designated expenditures that are included in more comprehensive legislation are known as:

Correct AnswerverifiedShow Answer

Which of the following impacts would economists expect to result from chronic budget deficits?

Correct AnswerverifiedShow Answer

Suppose three roommates cannot agree on the size of a pizza to order.Domino argues for a medium pizza,Godfather contends a large pizza will be needed,and Little Caesar wants a super-large pizza.Assuming no paradox of voting,majority voting will result in a decision to order:

Correct AnswerverifiedShow Answer

Political corruption occurs whenever:

Correct AnswerverifiedShow Answer

The principal-agent problem is a problem for the private sector but does not apply to political decision making.

Correct AnswerverifiedShow Answer

Public choice economists hold that politicians will:

Correct AnswerverifiedShow Answer

Because majority voting fails to incorporate the strength of the preferences of individual voters,it:

Correct AnswerverifiedShow Answer

According to some economists,the private sector is more efficient than the public sector mainly because:

Correct AnswerverifiedShow Answer

Regulatory capture often occurs because of which of the following?

Correct AnswerverifiedShow Answer

A special-interest issue is one whose passage yields:

Correct AnswerverifiedShow Answer

(Last Word) In 2004,Congress passed a corporate tax relief bill with 276 provisions for tax breaks to groups such as restaurant owners,Hollywood producers,and NASCAR track owners.This is an example of the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Public choice economists:

Correct AnswerverifiedShow Answer

The Securities and Exchange Commission's supervision of Wall Street financial firms is a possible example of regulatory capture.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified