Question 1

When politicians support policies such as imposing punitive tariffs on imports, which are popular among voters but which also reduce economic efficiency, we refer to this as:

Accepted Answer

A)   Regulatory capture
B)   Voter failure
C)   Limited and bundled choice
D)   Paradox of votingE) C) and D)
F) None of the above B

Question 2

Government's ability to force people to do things involuntarily is:

Accepted Answer

A)   Unconstitutional in the U.S. and other market economies
B)   Always going to lead to lower economic efficiency
C)   Beneficial if it is used to improve economic efficiency
D)   Always beneficial in reducing the deadweight loss in the economyE) All of the above
F) B) and C)

Question 3

In order to achieve economic efficiency in market economies like the U.S., the government must be stripped of its power to coerce.

Accepted Answer

A) True 
 B)False

Question 4

Refer to the graph above. Suppose that its shows the S and D graphs in a market where usage of the product generates a lot of external benefits. In this case, the government should use its coercive power to make:

Accepted Answer

A)   The supply curve shift to the left
B)   The supply curve shift to the right
C)   The demand curve shift to the left
D)   The demand curve shift to the rightE) A) and C)
F) All of the above

Question 5

The major problem with paired-choice majority voting is that the outcome:

Accepted Answer

A)   Is constant
B)   Is subject to bribery and abuse
C)   May depend on the order of the voting
D)   Results in clear preferences among the choicesE) B) and D)
F) None of the above

Question 6

Chronic budget deficits can lead to all of the following, except:

Accepted Answer

A)   Over-allocation of resources to the government sector, away from the private sector
B)   "Smaller government" in the economy
C)   Investors losing faith in the government's ability to repay its debts
D)   Government being forced to make drastic cuts in its spendingE) B) and C)
F) A) and D)

Question 7

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

Accepted Answer

A) True 
 B)False  True

Question 8

In the U.S., society makes decisions on the direction of government policies and the provision and financing of public goods through a process that relies heavily on:

Accepted Answer

A)   Unanimous voting
B)   General voting
C)   Universal voting
D)   Majority votingE) A) and B)
F) None of the above

Question 9

Government can raise economic efficiency through all of the following policies, except:

Accepted Answer

A)   Outlawing various forms of commercial deception
B)   Imposing pollution taxes on polluting firms
C)   Using tax money to subsidize goods with external benefits
D)   Fixing the prices of various resources and productsE) B) and D)
F) A) and D)

Question 10

Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community. A proposed public good has a total cost of $1000. 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) B) and C)
F) A) and C)

Question 11

In a market economy, private parties are more willing to do transactions when they know that the government is able to:

Accepted Answer

A)   Investigate and arrest people at random
B)   Force people to do or not do things involuntarily
C)   Discriminate against one group or another in society
D)   Revoke private agreements and contractsE) A) and B)
F) A) and C)

Question 12

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 directorsE) A) and D)
F) A) and C)

Question 13

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)   Impact of budget deficits on the public debt
D)   Voting and electionsE) A) and C)
F) B) and D)

Question 14

One primary reason why regulatory capture may occur in an industry is that:

Accepted Answer

A)   The government designates unelected officials to head the various regulatory agencies of different industries
B)   There is a lot of bribery and corruption going on in all major industries that the government seeks to regulate
C)   The industry's leaders are the ones who pushed for the government to impose supervision and regulation over the industry
D)   People who are qualified to supervise and regulate the industry often come from the industry itselfE) A) and B)
F) A) and C) D

Question 15

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 pricesE) C) and D)
F) A) and B)

Question 16

Refer to the graph above. Suppose that its shows the S and D graphs in a market where the product has all the characteristics of a public good. In this case, the government should use its coercive power to make:

Accepted Answer

A)   The supply curve shift to the left
B)   The supply curve shift to the right
C)   The demand curve shift to the left
D)   The demand curve shift to the rightE) A) and D)
F) A) and B)

Question 17

The public (or national)  debt refers to the:

Accepted Answer

A)   Same thing as a budget deficit
B)   Deadweight loss in a market
C)   Accumulation of all past budget deficits
D)   Sum of all the debts of households and businessesE) B) and C)
F) B) and D)

Question 18

Pork-barrel politics is a very good illustration of the "clear benefits, hidden costs" perspective of politicians.

Accepted Answer

A) True 
 B)False

Question 19

In assessing the efficiency of government policy, economic analysis would focus on:

Accepted Answer

A)   The size of government: big versus small
B)   Marginal benefits versus costs of government policy and action
C)   Presence or absence of the "invisible hand"
D)   Revenues and profitability of the government agenciesE) C) and D)
F) B) and C)

Question 20

The 2010 health-care reform law commonly known as Obamacare required large companies to provide costly health insurance to their full-time workers. In response, some large companies started preferring to employ part-time workers rather than full-time employees. This is an example of:

Accepted Answer

A)   Unintended consequences
B)   The principal-agent problem
C)   Special-interest effect
D)   Limited and bundled choiceE) B) and D)
F) C) and D)

Exam 5: Governments Role and Government Failure

When politicians support policies such as imposing punitive tariffs on imports, which are popular among voters but which also reduce economic efficiency, we refer to this as:

Correct Answer
verified
B

Government's ability to force people to do things involuntarily is:

Correct Answer
verified

In order to achieve economic efficiency in market economies like the U.S., the government must be stripped of its power to coerce.

Correct Answer
verified

Refer to the graph above. Suppose that its shows the S and D graphs in a market where usage of the product generates a lot of external benefits. In this case, the government should use its coercive power to make:

Correct Answer
verified

The major problem with paired-choice majority voting is that the outcome:

Correct Answer
verified

Chronic budget deficits can lead to all of the following, except:

Correct Answer
verified

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

Correct Answer
verified
True

In the U.S., society makes decisions on the direction of government policies and the provision and financing of public goods through a process that relies heavily on:

Correct Answer
verified

Government can raise economic efficiency through all of the following policies, except:

Correct Answer
verified

Correct Answer
verified

In a market economy, private parties are more willing to do transactions when they know that the government is able to:

Correct Answer
verified

The principal-agent problem refers to the problem of:

Correct Answer
verified

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

Correct Answer
verified

One primary reason why regulatory capture may occur in an industry is that:

Correct Answer
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D

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

Correct Answer
verified

Refer to the graph above. Suppose that its shows the S and D graphs in a market where the product has all the characteristics of a public good. In this case, the government should use its coercive power to make:

Correct Answer
verified

The public (or national) debt refers to the:

Correct Answer
verified

Pork-barrel politics is a very good illustration of the "clear benefits, hidden costs" perspective of politicians.

Correct Answer
verified

In assessing the efficiency of government policy, economic analysis would focus on:

Correct Answer
verified

The 2010 health-care reform law commonly known as Obamacare required large companies to provide costly health insurance to their full-time workers. In response, some large companies started preferring to employ part-time workers rather than full-time employees. This is an example of:

Correct Answer
verified

Exam 5: Governments Role and Government Failure

When politicians support policies such as imposing punitive tariffs on imports, which are popular among voters but which also reduce economic efficiency, we refer to this as:

Correct AnswerverifiedB

Government's ability to force people to do things involuntarily is:

Correct AnswerverifiedShow Answer

In order to achieve economic efficiency in market economies like the U.S., the government must be stripped of its power to coerce.

Correct AnswerverifiedShow Answer

Refer to the graph above. Suppose that its shows the S and D graphs in a market where usage of the product generates a lot of external benefits. In this case, the government should use its coercive power to make:

Correct AnswerverifiedShow Answer

The major problem with paired-choice majority voting is that the outcome:

Correct AnswerverifiedShow Answer

Chronic budget deficits can lead to all of the following, except:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedTrue

In the U.S., society makes decisions on the direction of government policies and the provision and financing of public goods through a process that relies heavily on:

Correct AnswerverifiedShow Answer

Government can raise economic efficiency through all of the following policies, except:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a market economy, private parties are more willing to do transactions when they know that the government is able to:

Correct AnswerverifiedShow Answer

The principal-agent problem refers to the problem of:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

One primary reason why regulatory capture may occur in an industry is that:

Correct AnswerverifiedD

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

Correct AnswerverifiedShow Answer

Refer to the graph above. Suppose that its shows the S and D graphs in a market where the product has all the characteristics of a public good. In this case, the government should use its coercive power to make:

Correct AnswerverifiedShow Answer

The public (or national) debt refers to the:

Correct AnswerverifiedShow Answer

Pork-barrel politics is a very good illustration of the "clear benefits, hidden costs" perspective of politicians.

Correct AnswerverifiedShow Answer

In assessing the efficiency of government policy, economic analysis would focus on:

Correct AnswerverifiedShow Answer

The 2010 health-care reform law commonly known as Obamacare required large companies to provide costly health insurance to their full-time workers. In response, some large companies started preferring to employ part-time workers rather than full-time employees. This is an example of:

Correct AnswerverifiedShow Answer

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B

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True

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D

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