Question 1

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) C) and D)
F) None of the above

Question 2

Because of the force of law and bureaucratic structure,government accountability is less of a problem than in the private sector.

Accepted Answer

A) True 
 B)False

Question 3

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

Question 4

The trading of votes by elected officials to secure favorable outcomes is called:

Accepted Answer

A)   splitting the difference.
B)   social engineering.
C)   logrolling.
D)   grandstanding.E) A) and D)
F) B) and D)

Question 5

As it relates to owners and managers,the principal-agent problem results from the:

Accepted Answer

A)   separation of corporate ownership and control.
B)   double taxation of corporate profit.
C)   limited liability of corporate owners.
D)   differing interests of corporate stockholders and bondholders.E) C) and D)
F) A) and B)

Question 6

Suppose a college economics department decides to use a single economics text for all sections of principles of economics.Also assume that the three individual members of the textbook selection committee have the following preferences. 
Assuming all other textbook qualities except analytical level are the same,paired-choice majority voting will result in the committee:

Accepted Answer

A)   being deadlocked and unable to decide on a book.
B)   selecting the C/F book.
C)   selecting the M/B book.
D)   selecting the O/S book.E) A) and B)
F) B) and C)

Question 7

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 8

When congressional representatives vote on an appropriations bill,they must vote yea or nay,taking the bad with the good.This statement best reflects the:

Accepted Answer

A)   paradox of voting.
B)   regulatory capture effect.
C)   benefits-received principle.
D)   concept of limited and bundled choices.E) A) and B)
F) All of the above

Question 9

Factors that impede the attainment of economic efficiency in the public sector are called:

Accepted Answer

A)   market failures.
B)   externalities.
C)   government failures.
D)   voting irregularities.E) None of the above
F) A) and B)

Question 10

The pursuit through government of a transfer of wealth at society's expense is called "rent seeking."

Accepted Answer

A) True 
 B)False

Question 11

The size and scope of government inhibit the flow of information to decision makers,leading to inefficient outcomes.

Accepted Answer

A) True 
 B)False

Question 12

Fiscal policy is more susceptible to politicization than monetary policy.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following would be the best example of regulatory capture?

Accepted Answer

A)   Starbucks buys up all the available supplies of coffee beans.
B)   Nike executives influence the rules for track and field events.
C)   Federal law makers write and pass legislation that protects domestic companies from foreign competition.
D)   Executives from the Ford,General Motors,and Chrysler companies write the rules regulating automobile safety and fuel requirements.E) A) and B)
F) C) and D)

Question 14

A government using fiscal policy in an attempt to stimulate the economy would do which of the following?

Accepted Answer

A)   Raise taxes.
B)   Raise interest rates.
C)   Lower interest rates.
D)   Raise government spending.E) A) and D)
F) B) and C)

Question 15

Majority voting assures that government will provide a public good if it yields total benefits in excess of total costs.

Accepted Answer

A) True 
 B)False

Question 16

The idea of government failure includes all of the following except:

Accepted Answer

A)   special-interest effect.
B)   bureaucratic inefficiency.
C)   pressure by special-interest groups.
D)   extensive positive externalities from public and quasi-public goods.E) B) and D)
F) A) and D)

Question 17

Deregulation is seen as a solution to regulatory capture because it eliminates the regulatory agency that can or has been captured.

Accepted Answer

A) True 
 B)False

Question 18

Proponents of deregulation point to all of the following industries as examples of successful deregulation except for:

Accepted Answer

A)   airlines.
B)   pharmaceuticals.
C)   railroads.
D)   interstate trucking.E) None of the above
F) All of the above

Question 19

Public choice theory focuses on the economics of:

Accepted Answer

A)   fiscal and monetary policy.
B)   the behavior of business firms.
C)   antitrust and regulatory policy.
D)   government decision making,politics,and elections.E) C) and D)
F) B) and D)

Question 20

The government of Southland wants to improve resource allocation in the country.Which of the following actions by the Southland government is most likely to accomplish this?

Accepted Answer

A)   Weakening enforcement of laws and contracts.
B)   Promising to cover every risk of loss for private firms.
C)   Coercing all firms to innovate and invest.
D)   Taxing polluters and subsidizing firms that are creating significant positive externalities.E) All of the above
F) A) and B)

Exam 5: Governments Role and Government Failure

Public choice theory focuses on the economics of:

Correct Answer
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The trading of votes by elected officials to secure favorable outcomes is called:

Correct Answer
verified

Factors that impede the attainment of economic efficiency in the public sector are called:

Correct Answer
verified

Because of the force of law and bureaucratic structure,government accountability is less of a problem than in the private sector.

Correct Answer
verified

Which of the following would be the best example of regulatory capture?

Correct Answer
verified

As it relates to owners and managers,the principal-agent problem results from the:

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

Proponents of deregulation point to all of the following industries as examples of successful deregulation except for:

Correct Answer
verified

The size and scope of government inhibit the flow of information to decision makers,leading to inefficient outcomes.

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

The pursuit through government of a transfer of wealth at society's expense is called "rent seeking."

Correct Answer
verified

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. If the tax cost of this proposed project is $600 per person,a majority vote will:

Correct Answer
verified

Fiscal policy is more susceptible to politicization than monetary policy.

Correct Answer
verified

The idea of government failure includes all of the following except:

Correct Answer
verified

Correct Answer
verified

Majority voting assures that government will provide a public good if it yields total benefits in excess of total costs.

Correct Answer
verified

The government of Southland wants to improve resource allocation in the country.Which of the following actions by the Southland government is most likely to accomplish this?

Correct Answer
verified

When congressional representatives vote on an appropriations bill,they must vote yea or nay,taking the bad with the good.This statement best reflects the:

Correct Answer
verified

A government using fiscal policy in an attempt to stimulate the economy would do which of the following?

Correct Answer
verified

Deregulation is seen as a solution to regulatory capture because it eliminates the regulatory agency that can or has been captured.

Correct Answer
verified

Exam 5: Governments Role and Government Failure

Public choice theory focuses on the economics of:

Correct AnswerverifiedShow Answer

The trading of votes by elected officials to secure favorable outcomes is called:

Correct AnswerverifiedShow Answer

Factors that impede the attainment of economic efficiency in the public sector are called:

Correct AnswerverifiedShow Answer

Because of the force of law and bureaucratic structure,government accountability is less of a problem than in the private sector.

Correct AnswerverifiedShow Answer

Which of the following would be the best example of regulatory capture?

Correct AnswerverifiedShow Answer

As it relates to owners and managers,the principal-agent problem results from the:

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

Proponents of deregulation point to all of the following industries as examples of successful deregulation except for:

Correct AnswerverifiedShow Answer

The size and scope of government inhibit the flow of information to decision makers,leading to inefficient outcomes.

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

The pursuit through government of a transfer of wealth at society's expense is called "rent seeking."

Correct AnswerverifiedShow Answer

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. If the tax cost of this proposed project is $600 per person,a majority vote will:

Correct AnswerverifiedShow Answer

Fiscal policy is more susceptible to politicization than monetary policy.

Correct AnswerverifiedShow Answer

The idea of government failure includes all of the following except:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Majority voting assures that government will provide a public good if it yields total benefits in excess of total costs.

Correct AnswerverifiedShow Answer

The government of Southland wants to improve resource allocation in the country.Which of the following actions by the Southland government is most likely to accomplish this?

Correct AnswerverifiedShow Answer

When congressional representatives vote on an appropriations bill,they must vote yea or nay,taking the bad with the good.This statement best reflects the:

Correct AnswerverifiedShow Answer

A government using fiscal policy in an attempt to stimulate the economy would do which of the following?

Correct AnswerverifiedShow Answer

Deregulation is seen as a solution to regulatory capture because it eliminates the regulatory agency that can or has been captured.

Correct AnswerverifiedShow Answer

Correct Answer
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