Question 1

All of the following are consequences of a government's having to deal with a "debt crisis," except

Accepted Answer

A)   very restricted ability to borrow money.
B)   being forced to drastically raise taxes.
C)   being forced to make drastic cuts in spending.
D)   being forced to make huge increases in government spending.E) All of the above
F) B) and D)

Question 2

"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) B) and D) C

Question 3

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) C) and D)
F) B) and D)

Question 4

The median-voter model implies that a political office seeker will

Accepted Answer

A)   adopt more extreme views when seeking his or her party's nomination than when running against the other party's opponent.
B)   adopt less extreme views when seeking his or her party's nomination than when running against the other party's opponent.
C)   favor extensive government spending because demand curves for public goods are added vertically rather than horizontally.
D)   favor the private resolution of externality problems rather than governmental intervention.E) A) and B)
F) None of the above

Question 5

The politicization of monetary and fiscal policies tends to enhance their effectiveness in stabilizing the economy.

Accepted Answer

A) True 
 B)False

Question 6

The problem of limited and bundled choices explains why many voters cannot fully express their political preferences.

Accepted Answer

A) True 
 B)False

Question 7

Unfunded liabilities are one consequence of the preference for "clear benefits, hidden costs" by politicians.

Accepted Answer

A) True 
 B)False

Question 8

Because of the force of law and bureaucratic structure, government accountability is less of a problem than in the private sector.

Accepted Answer

A) True 
 B)False

Question 9

One implication of the median-voter model is that at any point in time, most voters will

Accepted Answer

A)   be happy with the amount of government involvement in the economy.
B)   find government involvement in the economy to be too much.
C)   find government involvement in the economy to be too little.
D)   be unhappy with the amount of government involvement in the economy.E) All of the above
F) None of the above

Question 10

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

Question 11

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 12

When fiscal and monetary policies become highly politicized, these policies tend to

Accepted Answer

A)   become more effective at stabilizing the economy.
B)   lose any effect at all on the economy.
C)   become destabilizing, instead of promoting stability.
D)   lead to rising budget surpluses.E) All of the above
F) C) and D)

Question 13

Assume that Matt, Joe, and Teresa are the only citizens in a community. A proposed public good has a total cost of $1,000. All three citizens will share an equal portion of this cost in taxes. The benefit of the public good is $500 for Matt, $280 for Joe, and $260 for Teresa. In a majority vote, this proposal will most likely be

Accepted Answer

A)   accepted, two in favor and one against.
B)   defeated, two against and one in favor.
C)   accepted, three in favor and none against.
D)   defeated, none in favor and three against.E) B) and C)
F) None of the above B

Question 14

Many state and local governments in the U.S. have balanced-budget laws in order to prevent politicians from

Accepted Answer

A)   creating a "small government" economy.
B)   succumbing to voters' strong preference for budget deficits.
C)   facing a principal-agent problem.
D)   collecting too much taxes.E) A) and C)
F) None of the above

Question 15

Political corruption occurs in the following instances, except when

Accepted Answer

A)   government officials use their powers for personal gain.
B)   people pay a government official to do what she should be doing.
C)   people pay a bureaucrat to do something that he should not be doing.
D)   businesses pay property taxes and license fees.E) B) and C)
F) A) and C) D

Question 16

(Consider This)  From an economist's perspective, when is government too big?

Accepted Answer

A)   Government is always too big.
B)   when government activity exceeds 10 percent of gross domestic product
C)   when the marginal costs from additional government spending exceed marginal benefits
D)   when the marginal benefits from additional government spending exceed marginal costsE) B) and D)
F) A) and B)

Question 17

How does government's power to coerce behavior tend to reduce private-sector risk?

Accepted Answer

A)   by enforcing contracts and discouraging illegal behavior that threatens private property
B)   by guaranteeing that the government will financially cover any losses by private-sector firms
C)   by strictly regulating the allocation of most property resources in the economy
D)   The coercive power of government only increases private-sector risk.E) B) and C)
F) A) and C)

Question 18

Deregulation can solve the problem of regulatory capture and increase economic efficiency

Accepted Answer

A)   if the deregulated industry quickly evolves into a monopoly.
B)   if the deregulated industry becomes more competitive.
C)   when the regulations covering the industry are tightened.
D)   when the industry ends up generating substantial external costs.E) B) and C)
F) A) and B)

Question 19

(Last Word)  From 2006-2010, the federal government paid $600 million in retirement benefits to deceased federal employees, with the checks being illegally cashed by relatives. This example illustrates

Accepted Answer

A)   the benefits-received principle.
B)   logrolling.
C)   bureaucratic inefficiency.
D)   the problem of limited and bundled choices.E) A) and C)
F) B) and C)

Question 20

Which of the following countries had the least corruption, as reported in the Global Corruption Barometer survey in 2013?

Accepted Answer

A)   Mexico
B)   Italy
C)   India
D)   South AfricaE) A) and C)
F) None of the above

Exam 5: Governments Role and Government Failure

All of the following are consequences of a government's having to deal with a "debt crisis," except

Correct Answer
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"Earmarks" refer to

Correct Answer
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C

Government officials tend to make

Correct Answer
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The median-voter model implies that a political office seeker will

Correct Answer
verified

The politicization of monetary and fiscal policies tends to enhance their effectiveness in stabilizing the economy.

Correct Answer
verified

The problem of limited and bundled choices explains why many voters cannot fully express their political preferences.

Correct Answer
verified

Unfunded liabilities are one consequence of the preference for "clear benefits, hidden costs" by politicians.

Correct Answer
verified

Because of the force of law and bureaucratic structure, government accountability is less of a problem than in the private sector.

Correct Answer
verified

One implication of the median-voter model is that at any point in time, most voters will

Correct Answer
verified

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

Correct Answer
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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

When fiscal and monetary policies become highly politicized, these policies tend to

Correct Answer
verified

Correct Answer
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B

Many state and local governments in the U.S. have balanced-budget laws in order to prevent politicians from

Correct Answer
verified

Political corruption occurs in the following instances, except when

Correct Answer
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D

(Consider This) From an economist's perspective, when is government too big?

Correct Answer
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How does government's power to coerce behavior tend to reduce private-sector risk?

Correct Answer
verified

Deregulation can solve the problem of regulatory capture and increase economic efficiency

Correct Answer
verified

(Last Word) From 2006-2010, the federal government paid $600 million in retirement benefits to deceased federal employees, with the checks being illegally cashed by relatives. This example illustrates

Correct Answer
verified

Which of the following countries had the least corruption, as reported in the Global Corruption Barometer survey in 2013?

Correct Answer
verified

Exam 5: Governments Role and Government Failure

All of the following are consequences of a government's having to deal with a "debt crisis," except

Correct AnswerverifiedShow Answer

"Earmarks" refer to

Correct AnswerverifiedC

Government officials tend to make

Correct AnswerverifiedShow Answer

The median-voter model implies that a political office seeker will

Correct AnswerverifiedShow Answer

The politicization of monetary and fiscal policies tends to enhance their effectiveness in stabilizing the economy.

Correct AnswerverifiedShow Answer

The problem of limited and bundled choices explains why many voters cannot fully express their political preferences.

Correct AnswerverifiedShow Answer

Unfunded liabilities are one consequence of the preference for "clear benefits, hidden costs" by politicians.

Correct AnswerverifiedShow Answer

Because of the force of law and bureaucratic structure, government accountability is less of a problem than in the private sector.

Correct AnswerverifiedShow Answer

One implication of the median-voter model is that at any point in time, most voters will

Correct AnswerverifiedShow Answer

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

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

When fiscal and monetary policies become highly politicized, these policies tend to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedB

Many state and local governments in the U.S. have balanced-budget laws in order to prevent politicians from

Correct AnswerverifiedShow Answer

Political corruption occurs in the following instances, except when

Correct AnswerverifiedD

(Consider This) From an economist's perspective, when is government too big?

Correct AnswerverifiedShow Answer

How does government's power to coerce behavior tend to reduce private-sector risk?

Correct AnswerverifiedShow Answer

Deregulation can solve the problem of regulatory capture and increase economic efficiency

Correct AnswerverifiedShow Answer

(Last Word) From 2006-2010, the federal government paid $600 million in retirement benefits to deceased federal employees, with the checks being illegally cashed by relatives. This example illustrates

Correct AnswerverifiedShow Answer

Which of the following countries had the least corruption, as reported in the Global Corruption Barometer survey in 2013?

Correct AnswerverifiedShow Answer

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C

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B

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D

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