Question 1

If a public good provides social benefits that are greater than its costs, then the majority of voters would always vote in favor of producing the good.

Accepted Answer

A) True 
 B)False

Question 2

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference.This situation illustrates the voting inconsistency where a majority of voters prefer the

Accepted Answer

A)  stadium over the park, the park over the jail, and the jail over the stadium.
B)  park and jail over the stadium, and the jail over the park.
C)  stadium over the jail, the jail over the park, and the park over the stadium.
D)  stadium and jail over the park, and the park over the jail.E) All of the above
F) A) and D)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

The government would be running a budget surplus if

Accepted Answer

A)  government spending were lower than consumer spending.
B)  tax revenues were less than government spending.
C)  it imported less from abroad than it exported.
D)  government spent less than it collected in taxes.E) B) and C)
F) B) and D)

Question 5

A budget deficit will require the government to issue bonds to fill in the gap in the budget.

Accepted Answer

A) True 
 B)False

Question 6

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.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) B) and C)
F) None of the above

Question 7

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) A) and C)

Question 8

One implication of the median-voter model, as applied to a vote regarding how much government involvement to have in the economy, is that most voters would find the resulting government involvement either too large or too small.

Accepted Answer

A) True 
 B)False

Question 9

Lobbying actions that seek government legislation to provide tax breaks to specific organizations or industries would be an example of

Accepted Answer

A)  how the median-voter model works.
B)  how political choices are bundled.
C)  rent-seeking behavior.
D)  the paradox of voting.E) A) and D)
F) A) and C)

Question 10

The principal-agent problem refers to the problem of

Accepted Answer

A)  communication between sports and entertainment stars with their agents.
B)  how to split profits between labor and management.
C)  the interests of delegates deviating from the interests of the delegators.
D)  how stockholders of a corporation can elect a board of directors.E) B) and C)
F) All of the above

Question 11

Regulatory capture often occurs because of which of the following?

Accepted Answer

A)  Government officials want stronger control over industry regulation.
B)  Nearly everyone with expertise works in the regulated industry.
C)  Patent law allows firms to gain monopoly power easily and therefore control a market.
D)  Consumer groups are effective at lobbying the government for industry regulation.E) B) and D)
F) None of the above

Question 12

Budget deficit is another name for the public debt.

Accepted Answer

A) True 
 B)False

Question 13

In a market economy, the government's ability to coerce is beneficial in the following cases, except in

Accepted Answer

A)  correcting for positive externalities.
B)  correcting for negative externalities.
C)  producing public goods.
D)  fixing resource prices.E) B) and C)
F) A) and D)

Question 14

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 15

Changes in tax rates are a form of monetary policy.

Accepted Answer

A) True 
 B)False

Question 16

To make up for a shortfall in its annual budget, the government must borrow money by

Accepted Answer

A)  issuing government (Treasury)  bonds.
B)  buying government (Treasury)  bonds.
C)  reducing its total public debt.
D)  selling government stock.E) None of the above
F) All of the above

Question 17

Government officials tend to make

Accepted Answer

A)  better economic decisions than private individuals because of the wealth of information at their disposal.
B)  better economic decisions than private individuals because of the efficient processes and flexibility built into the government bureaucracy.
C)  inefficient choices because they lack the information necessary to accurately weigh marginal benefits and marginal costs.
D)  inefficient choices because the invisible hand directs them away from the resource allocation where marginal benefits equal marginal costs.E) A) and C)
F) C) and D)

Question 18

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) A) and B)
F) All of the above

Question 19

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

Question 20

The reason why, under majority voting and consistent voter preferences, the median voter's choice will tend to predominate is because

Accepted Answer

A)  the median voter has the strongest preferences compared to the other voters.
B)  most voters strongly prefer the median view.
C)  extreme voters on either side of the median would prefer the median over the opposite extreme.
D)  voters' preferences are bell-shaped, with most of them falling on the median.E) B) and D)
F) C) and D)

Exam 5: Governments Role and Government Failure

To make up for a shortfall in its annual budget, the government must borrow money by

Correct Answer
verified

Budget deficit is another name for the public debt.

Correct Answer
verified

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

Correct Answer
verified

Lobbying actions that seek government legislation to provide tax breaks to specific organizations or industries would be an example of

Correct Answer
verified

Changes in tax rates are a form of monetary policy.

Correct Answer
verified

The reason why, under majority voting and consistent voter preferences, the median voter's choice will tend to predominate is because

Correct Answer
verified

One implication of the median-voter model, as applied to a vote regarding how much government involvement to have in the economy, is that most voters would find the resulting government involvement either too large or too small.

Correct Answer
verified

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

Correct Answer
verified

Public choice economists contend public bureaucracies are inefficient primarily because

Correct Answer
verified

Government officials tend to make

Correct Answer
verified

Correct Answer
verified

A budget deficit will require the government to issue bonds to fill in the gap in the budget.

Correct Answer
verified

Regulatory capture often occurs because of which of the following?

Correct Answer
verified

The government would be running a budget surplus if

Correct Answer
verified

The principal-agent problem refers to the problem of

Correct Answer
verified

In a market economy, the government's ability to coerce is beneficial in the following cases, except in

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

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference.This situation illustrates the voting inconsistency where a majority of voters prefer the

Correct Answer
verified

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

Correct Answer
verified

If a public good provides social benefits that are greater than its costs, then the majority of voters would always vote in favor of producing the good.

Correct Answer
verified

Exam 5: Governments Role and Government Failure

To make up for a shortfall in its annual budget, the government must borrow money by

Correct AnswerverifiedShow Answer

Budget deficit is another name for the public debt.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Lobbying actions that seek government legislation to provide tax breaks to specific organizations or industries would be an example of

Correct AnswerverifiedShow Answer

Changes in tax rates are a form of monetary policy.

Correct AnswerverifiedShow Answer

The reason why, under majority voting and consistent voter preferences, the median voter's choice will tend to predominate is because

Correct AnswerverifiedShow Answer

One implication of the median-voter model, as applied to a vote regarding how much government involvement to have in the economy, is that most voters would find the resulting government involvement either too large or too small.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Public choice economists contend public bureaucracies are inefficient primarily because

Correct AnswerverifiedShow Answer

Government officials tend to make

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A budget deficit will require the government to issue bonds to fill in the gap in the budget.

Correct AnswerverifiedShow Answer

Regulatory capture often occurs because of which of the following?

Correct AnswerverifiedShow Answer

The government would be running a budget surplus if

Correct AnswerverifiedShow Answer

The principal-agent problem refers to the problem of

Correct AnswerverifiedShow Answer

In a market economy, the government's ability to coerce is beneficial in the following cases, except in

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

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference.This situation illustrates the voting inconsistency where a majority of voters prefer the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a public good provides social benefits that are greater than its costs, then the majority of voters would always vote in favor of producing the good.

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