Question 1

The appeal to government for special benefits at taxpayers' or someone else's expense is called the paradox of voting.

Accepted Answer

A) True 
 B)False

Question 2

Only politicians, not the voters, are to blame for the problem of chronic budget deficits that many nations face.

Accepted Answer

A) True 
 B)False

Question 3

Voters' preference for having government programs serve them is inherently in conflict with their preference to pay no taxes.

Accepted Answer

A) True 
 B)False

Question 4

The concept of limited and bundled choice, as used in public choice theory, refers to the fact that

Accepted Answer

A)  politicians may not be objective in evaluating economic policy programs due to their individual biases.
B)  because of the importance of television and other modern communication media, the best and brightest candidates may not be the ones elected by voters.
C)  in an election, each voter must select a candidate who has various preferences (in a wide array of issues)  that do not exactly match the preferences of the voter.
D)  the most economically efficient public policy programs may not be selected because political leaders do not know enough about economics.E) B) and D)
F) All of the above

Question 5

If the government implements regulations and policies in the economy, it tends to replace the function of the invisible hand.

Accepted Answer

A) True 
 B)False

Question 6

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 7

"Government failure" is a prominent topic in

Accepted Answer

A)  public choice theory.
B)  Keynesian economics.
C)  socialist theory.
D)  behavioral economics.E) None of the above
F) C) and D)

Question 8

Public choice theorists contend that

Accepted Answer

A)  government can efficiently correct instances of market system failure.
B)  the existence of cost-benefit analysis has brought about the efficient use of resources in the public sector.
C)  public bureaucracies are inherently more efficient than private enterprises.
D)  public bureaucracies are inherently less efficient than private enterprises.Accessibility: Keyboard NavigationE) All of the above
F) A) and D)

Question 9

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) C) and D)
F) B) and D)

Question 10

"Earmarks" refer to

Accepted Answer

A)  the additional votes that must be taken when a voting paradox occurs.
B)  taxes that redistribute wealth or income from one income group to another.
C)  authorized expenditures benefiting a narrow, specifically designated group that are included in more comprehensive spending legislation.
D)  legislation focused on correcting negative externalities.E) All of the above
F) A) and D)

Question 11

Individual accountability within the government bureaucracy

Accepted Answer

A)  tends to be greater than in private firms, making government more efficient than private firms.
B)  is not a problem because government bureaucrats are not affected by the self-interest that affects private sector individuals.
C)  is easy to monitor because of the small size and scope of government.
D)  tends to be lacking because of civil service protections and the complexity of government.E) A) and B)
F) A) and C)

Question 12

The political tendency to favor spending priorities with immediate benefits but deferred costs results in

Accepted Answer

A)  chronic budget deficits.
B)  misdirection of stabilization policy.
C)  unfunded liabilities.
D)  all of these.E) None of the above
F) B) and D)

Question 13

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) A) and D)
F) A) and B)

Question 14

The problem of effectively aggregating and conveying information from bottom layers to top layers in massive government bureaucracies makes it hard for the high-level officials to

Accepted Answer

A)  discern the prices of specific goods and services in the economy.
B)  comprehensively assess the marginal costs and benefits of specific programs.
C)  monitor the incomes of individual firms and households.
D)  estimate the total amount of spending incurred by the government.E) A) and D)
F) A) and B)

Question 15

To prevent monetary policy from becoming highly politicized, many countries have

Accepted Answer

A)  made their central banks be politically independent.
B)  put their central banks under the full control of their law-making agencies.
C)  allowed the heads of their central banks to serve for very short terms.
D)  made elected officials be the heads of their central banks.E) All of the above
F) C) and D)

Question 16

Chronic budget deficits can lead to all of the following, except

Accepted Answer

A)  overallocation of resources to the government sector, away from the private sector.
B)  "smaller government" in the economy.
C)  investors losing faith in the government's ability to repay its debts.
D)  government being forced to make drastic cuts in its spending.E) A) and C)
F) All of the above

Question 17

The paradox of voting is that under majority voting rules, the median voter decides the election outcome.

Accepted Answer

A) True 
 B)False

Question 18

It is observed that the person representing the middle position on an issue will most likely determine the outcome of an election.This view is most closely associated with the

Accepted Answer

A)  fallacy of limited decisions.
B)  special-interest effect.
C)  paradox of voting.
D)  median-voter model.E) None of the above
F) B) and C)

Question 19

Even if a majority of the population wants a law and the law is passed, the outcome may still be economically inefficient.

Accepted Answer

A) True 
 B)False

Question 20

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 resourcesE) B) and C)
F) A) and B)

Exam 5: Governments Role and Government Failure

Public choice theorists contend that

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The political tendency to favor spending priorities with immediate benefits but deferred costs results in

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

The appeal to government for special benefits at taxpayers' or someone else's expense is called the paradox of voting.

Correct AnswerverifiedShow Answer

Individual accountability within the government bureaucracy

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

Even if a majority of the population wants a law and the law is passed, the outcome may still be economically inefficient.

Correct AnswerverifiedShow Answer

The paradox of voting is that under majority voting rules, the median voter decides the election outcome.

Correct AnswerverifiedShow Answer

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

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Voters' preference for having government programs serve them is inherently in conflict with their preference to pay no taxes.

Correct AnswerverifiedShow Answer

Chronic budget deficits can lead to all of the following, except

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The problem of effectively aggregating and conveying information from bottom layers to top layers in massive government bureaucracies makes it hard for the high-level officials to

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"Earmarks" refer to

Correct AnswerverifiedShow Answer

Only politicians, not the voters, are to blame for the problem of chronic budget deficits that many nations face.

Correct AnswerverifiedShow Answer

Monetary stimulus is most helpful to an economy

Correct AnswerverifiedShow Answer

If the government implements regulations and policies in the economy, it tends to replace the function of the invisible hand.

Correct AnswerverifiedShow Answer

"Government failure" is a prominent topic in

Correct AnswerverifiedShow Answer

To prevent monetary policy from becoming highly politicized, many countries have

Correct AnswerverifiedShow Answer

The concept of limited and bundled choice, as used in public choice theory, refers to the fact that

Correct AnswerverifiedShow Answer

It is observed that the person representing the middle position on an issue will most likely determine the outcome of an election.This view is most closely associated with the

Correct AnswerverifiedShow Answer

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