Question 1

Which of the following is a source of government failure?

Accepted Answer

A)   the invisible hand
B)   the lack of bureaucracy in government
C)   the enormous size and scope of government
D)   excessive flexibilityE) A) and B)
F) A) and C)

Question 2

In which of the following cases has political corruption definitely occurred?

Accepted Answer

A)   Political candidates accept campaign contributions from people.
B)   Government agencies impose fines for such things as traffic violations.
C)   A bureaucrat allows someone to look at confidential documents for an informal fee.
D)   A government agency receives donations for distribution to charity.E) A) and B)
F) All of the above

Question 3

The field of economics that analyzes government decision making, politics, and elections is called

Accepted Answer

A)   public finance.
B)   public choice theory.
C)   collective economics.
D)   political economy.E) A) and D)
F) A) and C)

Question 4

"Informal payments" or "under-the table fees" are a common form of corruption.

Accepted Answer

A) True 
 B)False

Question 5

Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community. A proposed public good has a total cost of $1,000. All five citizens will share an equal portion of this cost in taxes. The benefit of the public good is $220 to Abby, $210 to Ben, $210 to Clara, $180 to Joe, and $120 to Matt. Who are likely to vote in favor of this proposal?

Accepted Answer

A)   Abby, Ben, Clara, and Joe
B)   Ben, Clara, Joe, and Matt
C)   Ben, Clara, and Joe
D)   Abby, Ben, and ClaraE) A) and B)
F) A) and C)

Question 6

Suppose that friends Jennifer, Stephanie, and Megan cannot agree on how much to spend for a bouquet of flowers to send to a person who allowed them to use her beach house for the weekend. Jennifer wants to buy a moderately priced bouquet, Stephanie wants to buy an expensive bouquet, and Megan wants to buy a very expensive bouquet. Assuming no paradox of voting, majority voting will result in the decision to buy

Accepted Answer

A)   an inexpensive bouquet.
B)   a very expensive bouquet.
C)   a moderately priced bouquet.
D)   an expensive bouquet.E) None of the above
F) A) and D)

Question 7

In the corporate world of business, the principal-agent problem arises between

Accepted Answer

A)   workers and managers.
B)   managers and stockholders.
C)   stockholders and bondholders.
D)   corporations and their banks.E) B) and C)
F) C) and D)

Question 8

Fiscal policy is more susceptible to politicization than monetary policy.

Accepted Answer

A) True 
 B)False

Question 9

The U.S. federal government's largest unfunded liability is

Accepted Answer

A)   Medicare.
B)   national defense.
C)   Social Security.
D)   unemployment insurance.E) B) and D)
F) All of the above

Question 10

Making blackmail, extortion, and other forms of private coercion illegal is one way that government

Accepted Answer

A)   reduces private-sector economic risk.
B)   increases private-sector economic risk.
C)   reduces the market's economic efficiency.
D)   increases the economy's deadweight losses.E) A) and B)
F) B) and D)

Question 11

Economists (particularly public choice theorists)  point out that the political process

Accepted Answer

A)   differs from the marketplace in that voters and congressional representatives often face limited and bundled choices.
B)   is less prone to failure than is the marketplace.
C)   is a much fairer way to allocate society's scarce resources than is the impersonal marketplace, which is dominated by high-income consumers.
D)   involves logrolling, which is always inefficient.E) A) and B)
F) B) and D)

Question 12

Political logrolling, or vote trading, can turn a potentially inefficient voting outcome into an efficient one.

Accepted Answer

A) True 
 B)False

Question 13

The special-interest effect in government is the reason why firms in some industries are willing to pay huge amounts of money to lobbyists.

Accepted Answer

A) True 
 B)False

Question 14

Even if individual voters have clear preferences, and they stay consistent in their preferences, we could still end up with the paradox of voting.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is related to the special-interest effect?

Accepted Answer

A)   pork-barrel politics
B)   earmarks
C)   logrolling
D)   all of theseE) A) and B)
F) A) and C)

Question 16

The study of public choice theory involves the economic analysis of the following, except

Accepted Answer

A)   government decision making.
B)   actions by elected officials.
C)   the impact of budget deficits on the public debt.
D)   voting and elections.E) A) and B)
F) A) and D)

Question 17

To curb the problem of voters wanting immediate benefits and deferred costs, many state governments in the United States have

Accepted Answer

A)   made unfunded liabilities illegal.
B)   resorted to greater use of monetary policy.
C)   passed laws requiring balanced budgets.
D)   stopped using fiscal policy.E) A) and D)
F) A) and C)

Question 18

The Road Runner Club contributes money to Senator Sly's reelection campaign fund, and Senator Sly helps pass legislation to add more jogging paths across the state. From this we can definitively conclude

Accepted Answer

A)   that political corruption has occurred.
B)   that logrolling has occurred.
C)   that a principal-agent problem has occurred.
D)   nothing; the Road Runner Club may have donated to Senator Sly because he already supported the jogging paths.E) B) and D)
F) None of the above

Question 19

Logrolling can either increase or diminish economic efficiency.

Accepted Answer

A) True 
 B)False

Question 20

The invisible hand guides government's economic activity just as it does with private economic activity.

Accepted Answer

A) True 
 B)False

Exam 5: Governments Role and Government Failure

Political logrolling, or vote trading, can turn a potentially inefficient voting outcome into an efficient one.

Correct Answer
verified

The study of public choice theory involves the economic analysis of the following, except

Correct Answer
verified

Correct Answer
verified

In the corporate world of business, the principal-agent problem arises between

Correct Answer
verified

Logrolling can either increase or diminish economic efficiency.

Correct Answer
verified

Which of the following is a source of government failure?

Correct Answer
verified

Fiscal policy is more susceptible to politicization than monetary policy.

Correct Answer
verified

The U.S. federal government's largest unfunded liability is

Correct Answer
verified

"Informal payments" or "under-the table fees" are a common form of corruption.

Correct Answer
verified

Economists (particularly public choice theorists) point out that the political process

Correct Answer
verified

Even if individual voters have clear preferences, and they stay consistent in their preferences, we could still end up with the paradox of voting.

Correct Answer
verified

The Road Runner Club contributes money to Senator Sly's reelection campaign fund, and Senator Sly helps pass legislation to add more jogging paths across the state. From this we can definitively conclude

Correct Answer
verified

The invisible hand guides government's economic activity just as it does with private economic activity.

Correct Answer
verified

Correct Answer
verified

The field of economics that analyzes government decision making, politics, and elections is called

Correct Answer
verified

Making blackmail, extortion, and other forms of private coercion illegal is one way that government

Correct Answer
verified

In which of the following cases has political corruption definitely occurred?

Correct Answer
verified

The special-interest effect in government is the reason why firms in some industries are willing to pay huge amounts of money to lobbyists.

Correct Answer
verified

To curb the problem of voters wanting immediate benefits and deferred costs, many state governments in the United States have

Correct Answer
verified

Which of the following is related to the special-interest effect?

Correct Answer
verified

Exam 5: Governments Role and Government Failure

Political logrolling, or vote trading, can turn a potentially inefficient voting outcome into an efficient one.

Correct AnswerverifiedShow Answer

The study of public choice theory involves the economic analysis of the following, except

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the corporate world of business, the principal-agent problem arises between

Correct AnswerverifiedShow Answer

Logrolling can either increase or diminish economic efficiency.

Correct AnswerverifiedShow Answer

Which of the following is a source of government failure?

Correct AnswerverifiedShow Answer

Fiscal policy is more susceptible to politicization than monetary policy.

Correct AnswerverifiedShow Answer

The U.S. federal government's largest unfunded liability is

Correct AnswerverifiedShow Answer

"Informal payments" or "under-the table fees" are a common form of corruption.

Correct AnswerverifiedShow Answer

Economists (particularly public choice theorists) point out that the political process

Correct AnswerverifiedShow Answer

Even if individual voters have clear preferences, and they stay consistent in their preferences, we could still end up with the paradox of voting.

Correct AnswerverifiedShow Answer

The Road Runner Club contributes money to Senator Sly's reelection campaign fund, and Senator Sly helps pass legislation to add more jogging paths across the state. From this we can definitively conclude

Correct AnswerverifiedShow Answer

The invisible hand guides government's economic activity just as it does with private economic activity.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The field of economics that analyzes government decision making, politics, and elections is called

Correct AnswerverifiedShow Answer

Making blackmail, extortion, and other forms of private coercion illegal is one way that government

Correct AnswerverifiedShow Answer

In which of the following cases has political corruption definitely occurred?

Correct AnswerverifiedShow Answer

The special-interest effect in government is the reason why firms in some industries are willing to pay huge amounts of money to lobbyists.

Correct AnswerverifiedShow Answer

To curb the problem of voters wanting immediate benefits and deferred costs, many state governments in the United States have

Correct AnswerverifiedShow Answer

Which of the following is related to the special-interest effect?

Correct AnswerverifiedShow Answer

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