Question 1

According to the paradox of voting,

Accepted Answer

A)   public goods that cost more than the total benefits they confer may get produced under majority voting.
B)   trading of votes may either add to or subtract from economic efficiency.
C)   the median voter decides what public goods all voters should have.
D)   majority voting fails under some circumstances to make consistent choices that reflect the community's underlying preferences.E) None of the above
F) All of the above

Question 2

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.E) B) and D)
F) All of the above

Question 3

(Consider This)  Smaller groups are sometimes able to achieve political victories against larger groups. This is referred to as the

Accepted Answer

A)   moral hazard problem.
B)   featherbedding problem.
C)   collective action problem.
D)   pork barrel problem.E) A) and C)
F) A) and B)

Question 4

An economic analysis of the relationship between proposed legislation affecting major employers in each state and the voting patterns of senators and representatives in Congress on that legislation would fit within the subcategory of economics called

Accepted Answer

A)   the economics of fiscal policy.
B)   public choice theory.
C)   behavioral economics.
D)   monetarism.E) B) and C)
F) All of the above

Question 5

Medicare is the U.S. government's largest unfunded liability.

Accepted Answer

A) True 
 B)False

Question 6

The U.S. Federal Reserve, the Bank of Japan, the Bank of England, and the European Central Bank are all in charge of what for the countries they represent?

Accepted Answer

A)   debt management
B)   unfunded liabilities
C)   monetary policy
D)   fiscal policyE) B) and D)
F) None of the above

Question 7

Government can raise economic efficiency through all of the following policies, except

Accepted Answer

A)   outlawing various forms of commercial deception.
B)   imposing pollution taxes on polluting firms.
C)   using tax money to subsidize goods with external benefits.
D)   fixing the prices of various resources and products.E) C) and D)
F) A) and D)

Question 8

Loan guarantees provided by government will reduce the willingness of investors to take on the risk in a project.

Accepted Answer

A) True 
 B)False

Question 9

Unintended consequences can result from the government's desire to enforce laws uniformly.

Accepted Answer

A) True 
 B)False

Question 10

The many layers of the federal government in the United States

Accepted Answer

A)   lead to economic inefficiencies because of difficulty aggregating and conveying information.
B)   enhance government's ability make effective decisions quickly.
C)   better allow the invisible hand to direct government resources to their best uses.
D)   improve accountability of government officials, thus leading to more efficient policies.E) A) and D)
F) A) and C)

Question 11

One primary reason why regulatory capture may occur in an industry is that

Accepted Answer

A)   the government designates unelected officials to head the various regulatory agencies of different industries.
B)   there is a lot of bribery and corruption going on in all major industries that the government seeks to regulate.
C)   the industry's leaders are the ones who pushed for the government to impose supervision and regulation over their industry.
D)   people who are qualified to supervise and regulate the industry often come from the industry itself.E) All of the above
F) None of the above

Question 12

"Voter failure" is one cause of government failure.

Accepted Answer

A) True 
 B)False

Question 13

Government's unfunded liabilities

Accepted Answer

A)   result from the political bias toward immediate benefits and deferred costs.
B)   result in more efficient policies in an attempt to satisfy these liabilities.
C)   are caused primarily by market failures.
D)   only occur in democratically elected governments.E) C) and D)
F) A) and C)

Question 14

The situation where politicians make decisions that will raise their chances of reelection, even if those decisions are detrimental to the general public, is referred to as the

Accepted Answer

A)   moral hazard problem.
B)   principal-agent problem.
C)   adverse selection problem.
D)   common good problem.E) B) and D)
F) B) and C)

Question 15

Monetary stimulus is most helpful to an economy

Accepted Answer

A)   that is experiencing high inflation.
B)   that is in recession.
C)   experiencing significant negative externalities.
D)   with few public goods.E) A) and D)
F) B) and C)

Question 16

In assessing the efficiency of government policy, economic analysis would focus on

Accepted Answer

A)   the size of government: big versus small.
B)   marginal benefits versus costs of government policy and action.
C)   presence or absence of the invisible hand.
D)   revenues and profitability of the government agencies.E) A) and D)
F) B) and C)

Question 17

Government can use its ability to coerce toward 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.E) All of the above
F) C) and D)

Question 18

In representative democracy, voters are and politicians are _.

Accepted Answer

A)   agents; principals
B)   logrollers; principals
C)   agents; employees
D)   principals; agentsE) None of the above
F) All of the above

Question 19

Professional sports teams will sometimes seek public subsidies for stadium financing projects that produce large benefits for a relatively small number of fans and impose small costs on a relatively large number of people. Sometimes these efforts to secure public funding are successful even though the decision is not efficient. This is an example of

Accepted Answer

A)   log-rolling.
B)   pork-barrel politics.
C)   the special-interest effect.
D)   market failure.E) A) and D)
F) None of the above

Question 20

The sometimes inconsistent results coming from a series of paired-choice voting is due to

Accepted Answer

A)   voters changing their preferences.
B)   irrational preferences among some voters.
C)   a normal consequence of majority voting.
D)   voters not having a good idea of their preferences.E) None of the above
F) C) and D)

Exam 5: Governments Role and Government Failure

One primary reason why regulatory capture may occur in an industry is that

Correct Answer
verified

In representative democracy, voters are and politicians are _.

Correct Answer
verified

(Consider This) Smaller groups are sometimes able to achieve political victories against larger groups. This is referred to as the

Correct Answer
verified

The sometimes inconsistent results coming from a series of paired-choice voting is due to

Correct Answer
verified

In assessing the efficiency of government policy, economic analysis would focus on

Correct Answer
verified

The situation where politicians make decisions that will raise their chances of reelection, even if those decisions are detrimental to the general public, is referred to as the

Correct Answer
verified

Monetary stimulus is most helpful to an economy

Correct Answer
verified

The many layers of the federal government in the United States

Correct Answer
verified

"Voter failure" is one cause of government failure.

Correct Answer
verified

Medicare is the U.S. government's largest unfunded liability.

Correct Answer
verified

According to the paradox of voting,

Correct Answer
verified

Government can use its ability to coerce toward improving economic efficiency by

Correct Answer
verified

Correct Answer
verified

The U.S. Federal Reserve, the Bank of Japan, the Bank of England, and the European Central Bank are all in charge of what for the countries they represent?

Correct Answer
verified

An economic analysis of the relationship between proposed legislation affecting major employers in each state and the voting patterns of senators and representatives in Congress on that legislation would fit within the subcategory of economics called

Correct Answer
verified

Unintended consequences can result from the government's desire to enforce laws uniformly.

Correct Answer
verified

Government can raise economic efficiency through all of the following policies, except

Correct Answer
verified

Loan guarantees provided by government will reduce the willingness of investors to take on the risk in a project.

Correct Answer
verified

Government's unfunded liabilities

Correct Answer
verified

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

Correct Answer
verified

Exam 5: Governments Role and Government Failure

One primary reason why regulatory capture may occur in an industry is that

Correct AnswerverifiedShow Answer

In representative democracy, voters are and politicians are _.

Correct AnswerverifiedShow Answer

(Consider This) Smaller groups are sometimes able to achieve political victories against larger groups. This is referred to as the

Correct AnswerverifiedShow Answer

The sometimes inconsistent results coming from a series of paired-choice voting is due to

Correct AnswerverifiedShow Answer

In assessing the efficiency of government policy, economic analysis would focus on

Correct AnswerverifiedShow Answer

The situation where politicians make decisions that will raise their chances of reelection, even if those decisions are detrimental to the general public, is referred to as the

Correct AnswerverifiedShow Answer

Monetary stimulus is most helpful to an economy

Correct AnswerverifiedShow Answer

The many layers of the federal government in the United States

Correct AnswerverifiedShow Answer

"Voter failure" is one cause of government failure.

Correct AnswerverifiedShow Answer

Medicare is the U.S. government's largest unfunded liability.

Correct AnswerverifiedShow Answer

According to the paradox of voting,

Correct AnswerverifiedShow Answer

Government can use its ability to coerce toward improving economic efficiency by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The U.S. Federal Reserve, the Bank of Japan, the Bank of England, and the European Central Bank are all in charge of what for the countries they represent?

Correct AnswerverifiedShow Answer

An economic analysis of the relationship between proposed legislation affecting major employers in each state and the voting patterns of senators and representatives in Congress on that legislation would fit within the subcategory of economics called

Correct AnswerverifiedShow Answer

Unintended consequences can result from the government's desire to enforce laws uniformly.

Correct AnswerverifiedShow Answer

Government can raise economic efficiency through all of the following policies, except

Correct AnswerverifiedShow Answer

Loan guarantees provided by government will reduce the willingness of investors to take on the risk in a project.

Correct AnswerverifiedShow Answer

Government's unfunded liabilities

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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