Question 1

Payments that users (consumers) are required to make if they want to receive certain services provided by the government are called

Accepted Answer

A) tax deductions. 
B) transfer payments. 
C) user charges. 
D) sales taxes. 
A) tax deductions. 
B) transfer payments. 
C) user charges. 
D) sales taxes. C

Question 2

Most voters will likely be concerned with

Accepted Answer

A) most issues since most issues have some impact, however slight, on each citizen. 
B) only a few special issues (those that exert the most impact on the voters' personal welfare). 
C) most issues since information on most issues can be obtained at a low cost. 
D) the views of a particular political candidate on all issues. 
A) most issues since most issues have some impact, however slight, on each citizen. 
B) only a few special issues (those that exert the most impact on the voters' personal welfare). 
C) most issues since information on most issues can be obtained at a low cost. 
D) the views of a particular political candidate on all issues. B

Question 3

Direct income transfers account for approximately what percentage of total government spending?

Accepted Answer

A) 10 percent 
B) 30 percent 
C) 50 percent 
D) 60 percent 
A) 10 percent 
B) 30 percent 
C) 50 percent 
D) 60 percent C

Question 4

In the case of a private good, which of the following forms of economic organization will result in the strongest incentive for consumers and producers to economize?

Accepted Answer

A) The good is produced privately and taxes are used to provide it to consumers free of charge. 
B) The good is produced privately and consumers purchase it with their own money. 
C) The good is produced by government enterprises and the cost of its production is covered by taxes. 
D) The good is produced by government enterprises and consumers purchase it with their own money. 
A) The good is produced privately and taxes are used to provide it to consumers free of charge. 
B) The good is produced privately and consumers purchase it with their own money. 
C) The good is produced by government enterprises and the cost of its production is covered by taxes. 
D) The good is produced by government enterprises and consumers purchase it with their own money.

Question 5

Public choice theory indicates that competitive forces between candidates in elections provide a politician with a strong incentive to offer voters a bundle of political goods that she believes

Accepted Answer

A) is best for the economic and political situations the country faces. 
B) will most likely clear the legislative process. 
C) will increase the welfare of society. 
D) will increase her chances of winning elections. 
A) is best for the economic and political situations the country faces. 
B) will most likely clear the legislative process. 
C) will increase the welfare of society. 
D) will increase her chances of winning elections.

Question 6

According to the special-interest effect, which of the following groups is least likely to have a significant influence on the political process?

Accepted Answer

A) the American Federation of Labor 
B) the National Association of Manufacturers 
C) nonunion employees 
D) the American Medical Association 
A) the American Federation of Labor 
B) the National Association of Manufacturers 
C) nonunion employees 
D) the American Medical Association

Question 7

Public choice analysis suggests that voters considering whether to vote for a candidate will ask,

Accepted Answer

A) "What will the candidate do that will promote the general welfare of society?" 
B) "What will the candidate do that will benefit me, and how much will it cost me?" 
C) "Will the candidate pursue only programs that increase economic efficiency?" 
D) "What will the candidate do that will benefit everyone in the country?" 
A) "What will the candidate do that will promote the general welfare of society?" 
B) "What will the candidate do that will benefit me, and how much will it cost me?" 
C) "Will the candidate pursue only programs that increase economic efficiency?" 
D) "What will the candidate do that will benefit everyone in the country?"

Question 8

Government decisions tend to be biased toward actions that have

Accepted Answer

A) current benefits that are easily observable and future costs that are difficult to identify. 
B) current benefits and future costs that are both difficult to identify. 
C) future costs that are easily observable. 
D) clear benefits to the poor at no costs to the wealthy. 
A) current benefits that are easily observable and future costs that are difficult to identify. 
B) current benefits and future costs that are both difficult to identify. 
C) future costs that are easily observable. 
D) clear benefits to the poor at no costs to the wealthy.

Question 9

Economists use the term shortsightedness effect to describe which one of the following phenomena?

Accepted Answer

A) Politicians tend to support actions that have immediate and easily recognized current benefits. 
B) Individuals are apt to spend their income on goods that bring immediate personal benefits. 
C) Voters elect politicians on the basis of campaign promises, regardless of what they may do once they are in office. 
D) Politicians support the programs of special interest groups in order to get elected; however, special interest support may be detrimental later, costing politicians popularity after the programs are implemented. 
A) Politicians tend to support actions that have immediate and easily recognized current benefits. 
B) Individuals are apt to spend their income on goods that bring immediate personal benefits. 
C) Voters elect politicians on the basis of campaign promises, regardless of what they may do once they are in office. 
D) Politicians support the programs of special interest groups in order to get elected; however, special interest support may be detrimental later, costing politicians popularity after the programs are implemented.

Question 10

Government action will often result in the counterproductive use of resources because

Accepted Answer

A) there is often a conflict between winning political elections and adoption of only productive programs. 
B) many politicians are not interested in how their legislative votes will influence their chances of winning future elections. 
C) politicians are often unwilling to listen to interest groups that have specialized knowledge. 
D) voter participation is low; if more people voted, the political process would be more efficient. 
A) there is often a conflict between winning political elections and adoption of only productive programs. 
B) many politicians are not interested in how their legislative votes will influence their chances of winning future elections. 
C) politicians are often unwilling to listen to interest groups that have specialized knowledge. 
D) voter participation is low; if more people voted, the political process would be more efficient.

Question 11

Scenario 6-1
The quotation below relates to the following question(s).
"The ideal policy, from the viewpoint of the state, is one with identifiable beneficiaries, each of whom is helped appreciably, at the cost of many unidentifiable persons, none of whom is hurt very much." (George Stigler, A Dialogue on the Proper Economic Role of the State)
-Which of the following groups does the quotation in Scenario 6-1 suggest would have the most influence on public sector action?

Accepted Answer

A) taxpayers 
B) nonunion workers 
C) special interest groups 
D) consumers 
A) taxpayers 
B) nonunion workers 
C) special interest groups 
D) consumers

Question 12

A survey of income by county revealed that four of the five wealthiest counties were located in the suburbs surrounding Washington, D.C. Why?

Accepted Answer

Normally, wealth is associated with prod

Question 13

Which of the following is an example of a good that is produced by the public sector but consumers purchase it in proportion to the benefit received?

Accepted Answer

A) milk 
B) public education 
C) first-class mail delivery from the U.S. Post Office 
D) national defense 
A) milk 
B) public education 
C) first-class mail delivery from the U.S. Post Office 
D) national defense

Question 14

When analyzing public sector decision making, economic theory assumes voters, politicians, and government officials will

Accepted Answer

A) respond to changes in personal benefits and costs when making public sector choices. 
B) always pursue the public interest even when it conflicts with their private interests. 
C) generally ignore the personal costs and benefits associated with their choices. 
D) make decisions that seek to maximize the amount of benefits created for society as a whole. 
A) respond to changes in personal benefits and costs when making public sector choices. 
B) always pursue the public interest even when it conflicts with their private interests. 
C) generally ignore the personal costs and benefits associated with their choices. 
D) make decisions that seek to maximize the amount of benefits created for society as a whole.

Question 15

The branch of economics that applies the principles and methodology of economics to the operation of the political process is known as

Accepted Answer

A) private choice analysis. 
B) public choice analysis. 
C) government operations analysis. 
D) policy preference analysis. 
A) private choice analysis. 
B) public choice analysis. 
C) government operations analysis. 
D) policy preference analysis.

Question 16

Which of the following is an example of political action that reflects the shortsightedness effect?

Accepted Answer

A) budget surpluses 
B) the promise of future benefits without providing for their funding 
C) spending on roads and highways 
D) spending on programs that transfer income from the rich to the poor 
A) budget surpluses 
B) the promise of future benefits without providing for their funding 
C) spending on roads and highways 
D) spending on programs that transfer income from the rich to the poor

Question 17

Which of the following increases the political power of special interest groups and makes counterproductive government action more likely?

Accepted Answer

A) logrolling and pork barrel legislation 
B) the rational-ignorance effect 
C) public goods 
D) both a and b, but not c 
A) logrolling and pork barrel legislation 
B) the rational-ignorance effect 
C) public goods 
D) both a and b, but not c

Question 18

The rational-ignorance effect refers to the

Accepted Answer

A) lack of incentive voters have to become well-informed about candidates and issues because their vote is unlikely to affect the outcome of an election. 
B) fact that most people choose to become just as well-informed when making choices as consumers as they do when making choices as voters. 
C) lack of rational analysis on the part of voters when they choose not to become informed about candidates and issues even though this knowledge would produce great personal benefit to them. 
D) problem of not enough information being supplied to voters because politicians are not spending enough on campaign adds to inform voters of their positions on issues. 
A) lack of incentive voters have to become well-informed about candidates and issues because their vote is unlikely to affect the outcome of an election. 
B) fact that most people choose to become just as well-informed when making choices as consumers as they do when making choices as voters. 
C) lack of rational analysis on the part of voters when they choose not to become informed about candidates and issues even though this knowledge would produce great personal benefit to them. 
D) problem of not enough information being supplied to voters because politicians are not spending enough on campaign adds to inform voters of their positions on issues.

Question 19

Which of the following is true of government activities under a system of representative democracy?

Accepted Answer

A) If a majority favors an activity, it must be productive. 
B) If a majority opposes an activity, it must be counterproductive. 
C) When voters pay in proportion to benefits received, productive activities undertaken by the government will be favored by an overwhelming majority of voters. 
D) When voters pay in proportion to benefits received, productive activities will generally be defeated under a majority rule vote. 
A) If a majority favors an activity, it must be productive. 
B) If a majority opposes an activity, it must be counterproductive. 
C) When voters pay in proportion to benefits received, productive activities undertaken by the government will be favored by an overwhelming majority of voters. 
D) When voters pay in proportion to benefits received, productive activities will generally be defeated under a majority rule vote.

Question 20

In which of the following situations is the political process likely to result in the inefficient and wasteful use of resources?

Accepted Answer

A) when the benefits are concentrated and the costs are concentrated 
B) when the benefits are concentrated and the costs widespread 
C) when the benefits are widespread and the costs are concentrated 
D) when the benefits are widespread and the costs are widespread 
A) when the benefits are concentrated and the costs are concentrated 
B) when the benefits are concentrated and the costs widespread 
C) when the benefits are widespread and the costs are concentrated 
D) when the benefits are widespread and the costs are widespread

Exam 6: The Economics of Collective Decision-Making

Payments that users (consumers) are required to make if they want to receive certain services provided by the government are called

Most voters will likely be concerned with

Direct income transfers account for approximately what percentage of total government spending?

In the case of a private good, which of the following forms of economic organization will result in the strongest incentive for consumers and producers to economize?

Public choice theory indicates that competitive forces between candidates in elections provide a politician with a strong incentive to offer voters a bundle of political goods that she believes

According to the special-interest effect, which of the following groups is least likely to have a significant influence on the political process?

Public choice analysis suggests that voters considering whether to vote for a candidate will ask,

Government decisions tend to be biased toward actions that have

Economists use the term shortsightedness effect to describe which one of the following phenomena?

Government action will often result in the counterproductive use of resources because

A survey of income by county revealed that four of the five wealthiest counties were located in the suburbs surrounding Washington, D.C. Why?

Which of the following is an example of a good that is produced by the public sector but consumers purchase it in proportion to the benefit received?

When analyzing public sector decision making, economic theory assumes voters, politicians, and government officials will

The branch of economics that applies the principles and methodology of economics to the operation of the political process is known as

Which of the following is an example of political action that reflects the shortsightedness effect?

Which of the following increases the political power of special interest groups and makes counterproductive government action more likely?

The rational-ignorance effect refers to the

Which of the following is true of government activities under a system of representative democracy?

In which of the following situations is the political process likely to result in the inefficient and wasteful use of resources?

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

Appendix: the Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

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