Question 1

To reduce politicization of policy making,many countries have given control of ________ to politically independent central banks.

Accepted Answer

A)   fiscal policy
B)   monetary policy
C)   unfunded liabilities
D)   budget deficitsE) A) and C)
F) C) and D)

Question 2

Monetary policy attempts to change the level of spending by altering interest rates.

Accepted Answer

A) True 
 B)False

Question 3

Answer the question on the basis of the following table that shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size.All figures are in millions of dollars. 
Refer to the table.The marginal cost and marginal benefit of stadium B (relative to A) are:

Accepted Answer

A)   $20 million and $50 million,respectively.
B)   $100 million and $200 million,respectively.
C)   $30 million and $50 million,respectively.
D)   $20 million and $60 million,respectively.E) B) and D)
F) A) and B)

Question 4

Individual accountability within the government bureaucracy:

Accepted Answer

A)   tends to be greater than in private firms,making government more efficient than private firms.
B)   is not a problem because government bureaucrats are not affected by the self-interest that affects private sector individuals.
C)   is easy to monitor because of the small size and scope of government.
D)   tends to be lacking because of civil service protections and the complexity of government.E) A) and B)
F) A) and C)

Question 5

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

Question 6

The government's ability to force people to do things can increase economic efficiency.

Accepted Answer

A) True 
 B)False

Question 7

The unlawful misdirection of governmental resources for personal gain is known as:

Accepted Answer

A)   political corruption.
B)   logrolling.
C)   adverse selection.
D)   the special-interest effect.E) B) and C)
F) A) and B)

Question 8

The many layers of the federal government in Canada:

Accepted Answer

A)   lead to economic inefficiencies because of difficulty aggregating and conveying information.
B)   enhance government's ability make effective decisions quickly.
C)   better allow the invisible hand to direct government resources to their best uses.
D)   improve accountability of government officials,thus leading to more efficient policies.E) All of the above
F) C) and D)

Question 9

Answer the question on the basis of this table showing the marginal benefit that a particular public project will provide to each of the three members of a community.No vote trading is allowed. 
If the tax cost of this proposed project is $300 per person,a majority vote will:

Accepted Answer

A)   defeat this project and resources will be underallocated to it.
B)   pass this project and resources will be allocated efficiently.
C)   pass this project and resources will be underallocated to it.
D)   defeat this project and resources will be overallocated to it.E) B) and C)
F) A) and D)

Question 10

Suppose that in a series of paired-choice votes a new park is preferred to a new recreation center and a new recreation center is preferred to street widening.Also suppose that street widening is preferred to a new park.This set of votes is an example of the:

Accepted Answer

A)   principal-agent problem.
B)   benefits-received principle.
C)   median-voter model.
D)   paradox of voting.E) A) and D)
F) All of the above

Question 11

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

Question 12

Which of the following is a key difference between the economic activities of government and those of private firms?

Accepted Answer

A)   Private firms face the constraint of scarcity;government does not.
B)   Government focuses primarily on equity;private firms focus only on efficiency.
C)   Private economic activities create externalities;government activities do not.
D)   Government has the legal right to force people to do things;private firms do not.E) A) and D)
F) A) and B)

Question 13

(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) A) and C)
F) B) and D)

Question 14

Government changes in interest rates to regulate the economy are part of:

Accepted Answer

A)   monetary policy.
B)   fiscal policy.
C)   debt policy.
D)   liability policy.E) C) and D)
F) A) and B)

Question 15

The median-voter model implies that:

Accepted Answer

A)   political voting will be as economically efficient as "dollar voting" in competitive markets.
B)   all voters have about the same preferences for various public goods and services.
C)   many people will be dissatisfied with the size of government in the economy.
D)   with majority voting there can never be a consistent ordering of public good preferences.E) A) and D)
F) A) and C)

Question 16

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

Question 17

According to the paradox of voting:

Accepted Answer

A)   public goods that cost more than the total benefits they confer may get produced under majority voting.
B)   trading of votes may either add to or subtract from economic efficiency.
C)   the median voter decides what public goods all voters should have.
D)   majority voting fails under some circumstances to make consistent choices that reflect the community's underlying preferences.E) A) and B)
F) A) and D)

Question 18

Government fiscal policy involves changing which of the following?

Accepted Answer

A)   Interest rates.
B)   Taxes and government spending.
C)   Regulations on business.
D)   The amount of money in circulation.E) B) and D)
F) B) and C)

Question 19

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

Question 20

Suppose lawyers seek legislation to limit the use of computer software that enables people to use their personal computers to self-prepare their own wills,trusts,and other legal documents.This is an example of:

Accepted Answer

A)   logrolling.
B)   the principal-agent problem.
C)   rent-seeking behavior.
D)   limited and bundled choices.E) None of the above
F) B) and C)

Exam 5: Governments Role and Government Failure

To reduce politicization of policy making,many countries have given control of ________ to politically independent central banks.

Correct Answer
verified

Individual accountability within the government bureaucracy:

Correct Answer
verified

Government officials tend to make:

Correct Answer
verified

Government changes in interest rates to regulate the economy are part of:

Correct Answer
verified

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

Correct Answer
verified

The many layers of the federal government in Canada:

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

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 Answer
verified

Which of the following is a key difference between the economic activities of government and those of private firms?

Correct Answer
verified

The median-voter model implies that:

Correct Answer
verified

Suppose that in a series of paired-choice votes a new park is preferred to a new recreation center and a new recreation center is preferred to street widening.Also suppose that street widening is preferred to a new park.This set of votes is an example of the:

Correct Answer
verified

Monetary policy attempts to change the level of spending by altering interest rates.

Correct Answer
verified

The government's ability to force people to do things can increase economic efficiency.

Correct Answer
verified

(Consider This) Voter failure describes the situation where:

Correct Answer
verified

According to the paradox of voting:

Correct Answer
verified

Government fiscal policy involves changing which of the following?

Correct Answer
verified

The unlawful misdirection of governmental resources for personal gain is known as:

Correct Answer
verified

Correct Answer
verified

Answer the question on the basis of this table showing the marginal benefit that a particular public project will provide to each of the three members of a community.No vote trading is allowed. If the tax cost of this proposed project is $300 per person,a majority vote will:

Correct Answer
verified

Suppose lawyers seek legislation to limit the use of computer software that enables people to use their personal computers to self-prepare their own wills,trusts,and other legal documents.This is an example of:

Correct Answer
verified

Exam 5: Governments Role and Government Failure

To reduce politicization of policy making,many countries have given control of ________ to politically independent central banks.

Correct AnswerverifiedShow Answer

Individual accountability within the government bureaucracy:

Correct AnswerverifiedShow Answer

Government officials tend to make:

Correct AnswerverifiedShow Answer

Government changes in interest rates to regulate the economy are part of:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The many layers of the federal government in Canada:

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

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

Which of the following is a key difference between the economic activities of government and those of private firms?

Correct AnswerverifiedShow Answer

The median-voter model implies that:

Correct AnswerverifiedShow Answer

Suppose that in a series of paired-choice votes a new park is preferred to a new recreation center and a new recreation center is preferred to street widening.Also suppose that street widening is preferred to a new park.This set of votes is an example of the:

Correct AnswerverifiedShow Answer

Monetary policy attempts to change the level of spending by altering interest rates.

Correct AnswerverifiedShow Answer

The government's ability to force people to do things can increase economic efficiency.

Correct AnswerverifiedShow Answer

(Consider This) Voter failure describes the situation where:

Correct AnswerverifiedShow Answer

According to the paradox of voting:

Correct AnswerverifiedShow Answer

Government fiscal policy involves changing which of the following?

Correct AnswerverifiedShow Answer

The unlawful misdirection of governmental resources for personal gain is known as:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Answer the question on the basis of this table showing the marginal benefit that a particular public project will provide to each of the three members of a community.No vote trading is allowed. If the tax cost of this proposed project is $300 per person,a majority vote will:

Correct AnswerverifiedShow Answer

Suppose lawyers seek legislation to limit the use of computer software that enables people to use their personal computers to self-prepare their own wills,trusts,and other legal documents.This is an example of:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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