Question 1

"Vote for my special local project and I will vote for yours." This political technique:

Accepted Answer

A)   illustrates the paradox of voting.
B)   is called "logrolling."
C)   illustrates the median voter model.
D)   undermines the benefits-received principle.E) C) and D)
F) B) and D) B

Question 2

Which of the following would best explain why regulatory capture is a problem?

Accepted Answer

A)   The regulations implemented tend to reduce the profitability of the regulated industry and reduce global competitiveness.
B)   Regulatory capture unduly increases the size and power of government,increasing costs for taxpayers.
C)   Individuals implementing the regulations lack expertise about the industry and therefore make poor regulatory choices.
D)   The regulations implemented serve the private interests of the regulated industry,rather than addressing social interests such as consumer safety and environmental protection.E) A) and B)
F) A) and D)

Question 3

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

Question 4

Which one of the following topics would be of the most interest to a public choice economist?

Accepted Answer

A)   The theory of comparative advantage.
B)   The law of increasing opportunity cost.
C)   Inflation and unemployment.
D)   Rent-seeking behavior.E) B) and D)
F) A) and D)

Question 5

"Earmarks" refer to:

Accepted Answer

A)   the additional votes that must be taken when a voting paradox occurs.
B)   taxes that redistribute wealth or income from one income group to another.
C)   authorized expenditures benefiting a narrow,specifically designated group that are included in more comprehensive spending legislation.
D)   legislation focused on correcting negative externalities.E) C) and D)
F) A) and C)

Question 6

Logrolling can either increase or diminish economic efficiency.

Accepted Answer

A) True 
 B)False

Question 7

Economists widely support deregulation of industries that tend toward monopoly or generate substantial negative externalities.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is an activity of government that is not an activity of private firms?

Accepted Answer

A)   Enforcing involuntary transactions.
B)   Paying equitable wages.
C)   Creating positive externalities.
D)   Pursuing economic efficiency.E) All of the above
F) None of the above

Question 9

In a market economy,the government's power to coerce can:

Accepted Answer

A)   undermine economic efficiency by increasing private-sector risk.
B)   improve economic efficiency by directing all resources to their most valued uses.
C)   reduce private-sector risk and increase economic efficiency.
D)   cause significant negative externalities.E) A) and B)
F) A) and C)

Question 10

Regulatory capture is said to have occurred when which of the following is true?

Accepted Answer

A)   Rules and enforcement in an industry are heavily influenced by the industry being regulated.
B)   One firm controls an entire market,having captured customers away from other firms.
C)   Government imposes excessive regulations in an industry,resulting in inefficiencies.
D)   Consumers make all the rules for an industry,forcing firms into inefficient production methods.E) A) and B)
F) B) and D)

Question 11

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) A) and B)
F) A) and C)

Question 12

Which of the following is considered a potential solution to some regulatory capture?

Accepted Answer

A)   Bringing industry experts into the regulatory process.
B)   Creating a standard set of regulations for all industries.
C)   Deregulation of the industry.
D)   Government subsidies for firms in the industry.E) All of the above
F) A) and C)

Question 13

Information problems create inefficient outcomes in:

Accepted Answer

A)   the private sector but not the public sector.
B)   the public sector but not the private sector.
C)   neither the private nor the public sector.
D)   both the private and the public sectors.E) A) and B)
F) All of the above

Question 14

The U.S.Federal Reserve,the Bank of Japan,the Bank of England,and the European Central Bank are all in charge of what for the countries they represent?

Accepted Answer

A)   Debt management.
B)   Unfunded liabilities.
C)   Monetary policy.
D)   Fiscal policy.E) B) and D)
F) All of the above C

Question 15

(Consider This) Voter failure describes the situation where:

Accepted Answer

A)   an insufficient number of voters turn out to express their preferences.
B)   voter preferences cannot be adequately captured because of a voting paradox.
C)   voters support policies that would reduce productive and allocative efficiency.
D)   government officials make poor decisions that contradict voter preferences.E) None of the above
F) All of the above

Question 16

Public choice theorists contend that:

Accepted Answer

A)   government can efficiently correct instances of market system failure.
B)   the existence of cost-benefit analysis has brought about the efficient use of resources in the public sector.
C)   public bureaucracies are inherently more efficient than private enterprises.
D)   public bureaucracies are inherently less efficient than private enterprises.E) A) and B)
F) B) and C)

Question 17

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) B) and C)
F) A) and B)

Question 18

Suppose that Steve and Susie each perceives $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) None of the above
F) A) and D)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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) C) and D)

Exam 5: Governments Role and Government Failure

"Vote for my special local project and I will vote for yours." This political technique:

Correct AnswerverifiedB

Which of the following would best explain why regulatory capture is a problem?

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 AnswerverifiedD

Which one of the following topics would be of the most interest to a public choice economist?

Correct AnswerverifiedShow Answer

"Earmarks" refer to:

Correct AnswerverifiedShow Answer

Logrolling can either increase or diminish economic efficiency.

Correct AnswerverifiedShow Answer

Economists widely support deregulation of industries that tend toward monopoly or generate substantial negative externalities.

Correct AnswerverifiedShow Answer

Which of the following is an activity of government that is not an activity of private firms?

Correct AnswerverifiedShow Answer

In a market economy,the government's power to coerce can:

Correct AnswerverifiedShow Answer

Regulatory capture is said to have occurred when which of the following is true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is considered a potential solution to some regulatory capture?

Correct AnswerverifiedShow Answer

Information problems create inefficient outcomes in:

Correct AnswerverifiedShow Answer

The U.S.Federal Reserve,the Bank of Japan,the Bank of England,and the European Central Bank are all in charge of what for the countries they represent?

Correct AnswerverifiedC

(Consider This) Voter failure describes the situation where:

Correct AnswerverifiedShow Answer

Public choice theorists contend that:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that Steve and Susie each perceives $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

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified
D

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
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified