Question 1

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.E) C) and D)
F) A) and B)

Question 2

The collective action problem makes it hard for voters to counter the influence of special-interest groups.

Accepted Answer

A) True 
 B)False

Question 3

(Consider This)  Suppose voters pass laws that restrict immigration, which results in lower national output and higher prices for consumer goods. This would be an example of

Accepted Answer

A)   the paradox of voting.
B)   voter failure.
C)   logrolling.
D)   adverse selection.E) All of the above
F) A) and B)

Question 4

Suppose that Steve and Susie each perceive $200 of marginal benefit from a proposed new park, whereas Elizabeth perceives $800. If the proposed tax levied on each for the park would be $300, 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 efficiently allocated.
C)   pass this project and resources will be underallocated to it.
D)   pass this project and resources will be overallocated to it.E) A) and B)
F) B) and D)

Question 5

The median-voter model indicates that political parties will

Accepted Answer

A)   target only those voters who can be influenced by rent seeking.
B)   direct their work to voters who can be influenced by special interests.
C)   campaign at one end of the distribution of voter sentiments.
D)   try to appeal to the sentiments of the voter holding the middle position.E) All of the above
F) A) and D)

Question 6

Under what circumstances would government loan guarantees be socially beneficial?

Accepted Answer

A)   when the guarantees socialize losses and privatize gains
B)   when the guarantees stimulate production of goods generating significant spillover costs
C)   when the guarantees promote production of goods otherwise underproduced by the private sector
D)   when the guarantees increase company profitsE) A) and D)
F) A) and C)

Question 7

Loan guarantees provided by the government for specific private-sector investments tend to

Accepted Answer

A)   generate high positive returns for the government.
B)   increase the financial risk faced by the private investors.
C)   attract private investors into the specific project.
D)   eliminate the moral hazard problem among investors.E) All of the above
F) C) and D)

Question 8

Problems with collective decision making and policy making in government are subjects that are studied in an area of economics called public

Accepted Answer

A)   finance.
B)   choice.
C)   policy.
D)   interest.E) A) and D)
F) None of the above

Question 9

When voters have different opinions about an issue, the position that is most likely to be adopted is that of the

Accepted Answer

A)   lobbyist.
B)   logroller.
C)   rent seeker.
D)   median voter.E) B) and C)
F) A) and B)

Question 10

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 D)
F) A) and C)

Question 11

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

Question 12

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 13

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

Question 14

Public choice economists contend public bureaucracies are inefficient primarily because

Accepted Answer

A)   the value of public goods is more easily measured than is the value of private goods.
B)   of the absence of competitive market pressures.
C)   public sector workers are more security-conscious than are private sector workers.
D)   relatively low pay in government attracts workers of lesser quality.E) B) and D)
F) A) and B)

Question 15

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

Question 17

In 2015, U.S. federal government legislation authorized

Accepted Answer

A)   152 earmarks, totaling $3.3 billion.
B)   105 earmarks, totaling $4.2 billion.
C)   1,160 earmarks, totaling $19.6 billion.
D)   11,700 earmarks, totaling $16.9 billion.E) C) and D)
F) All of the above

Question 18

Majority voting fails to incorporate the strength of the preferences of individual voters and therefore

Accepted Answer

A)   reduces the power of the median voter.
B)   is the primary reason for public sector failure.
C)   may produce economically inefficient outcomes.
D)   creates the opportunity for the fallacy of limited decisions.E) B) and C)
F) A) and D)

Question 19

Assume that Matt, Joe, and Teresa are the only citizens in a community. A proposed public good has a total cost of $1,000. All three citizens will share an equal portion of this cost in taxes. The benefit of the public good is $500 for Matt, $280 for Joe, and $260 for Teresa. In a majority vote, this proposal will most likely be

Accepted Answer

A)   accepted; the public good is produced, even though it is economically inefficient.
B)   defeated; the public good is not produced, even though it would have been efficient to do so.
C)   accepted; the public good is produced, which is economically efficient.
D)   defeated; the public good is not produced, which is the proper outcome.E) A) and D)
F) B) and C)

Question 20

The "principal-agent problem" often arises in public choice when politicians pursue the best interests of their constituents.

Accepted Answer

A) True 
 B)False

Exam 5: Governments Role and Government Failure

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

Correct Answer
verified

In 2015, U.S. federal government legislation authorized

Correct Answer
verified

(Consider This) Suppose voters pass laws that restrict immigration, which results in lower national output and higher prices for consumer goods. This would be an example of

Correct Answer
verified

The "principal-agent problem" often arises in public choice when politicians pursue the best interests of their constituents.

Correct Answer
verified

Majority voting fails to incorporate the strength of the preferences of individual voters and therefore

Correct Answer
verified

The collective action problem makes it hard for voters to counter the influence of special-interest groups.

Correct Answer
verified

The median-voter model indicates that political parties will

Correct Answer
verified

A special-interest issue is one whose passage yields

Correct Answer
verified

When voters have different opinions about an issue, the position that is most likely to be adopted is that of the

Correct Answer
verified

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

Correct Answer
verified

Public choice economists contend public bureaucracies are inefficient primarily because

Correct Answer
verified

Suppose that Steve and Susie each perceive $200 of marginal benefit from a proposed new park, whereas Elizabeth perceives $800. If the proposed tax levied on each for the park would be $300, a majority vote will

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Loan guarantees provided by the government for specific private-sector investments tend to

Correct Answer
verified

Under what circumstances would government loan guarantees be socially beneficial?

Correct Answer
verified

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

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

Problems with collective decision making and policy making in government are subjects that are studied in an area of economics called public

Correct Answer
verified

Exam 5: Governments Role and Government Failure

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

Correct AnswerverifiedShow Answer

In 2015, U.S. federal government legislation authorized

Correct AnswerverifiedShow Answer

(Consider This) Suppose voters pass laws that restrict immigration, which results in lower national output and higher prices for consumer goods. This would be an example of

Correct AnswerverifiedShow Answer

The "principal-agent problem" often arises in public choice when politicians pursue the best interests of their constituents.

Correct AnswerverifiedShow Answer

Majority voting fails to incorporate the strength of the preferences of individual voters and therefore

Correct AnswerverifiedShow Answer

The collective action problem makes it hard for voters to counter the influence of special-interest groups.

Correct AnswerverifiedShow Answer

The median-voter model indicates that political parties will

Correct AnswerverifiedShow Answer

A special-interest issue is one whose passage yields

Correct AnswerverifiedShow Answer

When voters have different opinions about an issue, the position that is most likely to be adopted is that of the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Public choice economists contend public bureaucracies are inefficient primarily because

Correct AnswerverifiedShow Answer

Suppose that Steve and Susie each perceive $200 of marginal benefit from a proposed new park, whereas Elizabeth perceives $800. If the proposed tax levied on each for the park would be $300, a majority vote will

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Loan guarantees provided by the government for specific private-sector investments tend to

Correct AnswerverifiedShow Answer

Under what circumstances would government loan guarantees be socially beneficial?

Correct AnswerverifiedShow Answer

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

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

Problems with collective decision making and policy making in government are subjects that are studied in an area of economics called public

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