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1259915727 9781259915727
2. Which of the following is an activity of government that is not an activity of private firms?
5. How does government's power to coerce behavior tend to reduce private-sector risk?
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.
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AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and list some of the difficulties associated with managing and directing the government.
Test Bank: I
Topic: Governments Economic Role
7. The government of Southland wants to improve resource allocation in the country. Which of the following actions by the Southland government is most likely to accomplish this?
10. The many layers of the federal government in the United States
11. In what way, if any, does the invisible hand affect government resource allocation?
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.
A. the goals of the corporate managers (the principals) may not match the goals of the corporate owners (the agents).
B. the goals of the corporate managers (the agents) may not match the goals of the corporate owners (the principals).
C. the federal government (the agent) taxes both corporate profits and the dividends paid to stockholders (the principals).
D. it is costly for the corporate owners (the principals) to obtain a corporate charter from government (the agent).
A. agents; principals
B. stockholders; bondholders
C. agents; employees
D. principals; agents
A. agents; principals
B. logrollers; principals
C. agents; employees
D. principals; agents
17. As it relates to owners and managers, the principal-agent problem results from the
18. As it relates to the political process, the principal-agent problem results from the
19. "Vote for my special local project and I will vote for yours." This political technique
20. Factors that impede the attainment of economic efficiency in the public sector are called
A. market failures.
B. externalities.
C. government failures.
D. voting irregularities.
21. The idea of government failure includes all of the following except
A. special-interest effect.
B. bureaucratic inefficiency.
C. pressure by special-interest groups.
D. extensive positive externalities from public and quasi-public goods.
22. Suppose American winemakers convince the federal government to issue a directive to serve only domestically produced wine at government functions. This would be an example of
A. moral hazard.
B. the principal-agent problem.
C. logrolling.
D. rent-seeking behavior.
24. The pursuit through government of a "transfer of wealth" at someone else's expense refers to
A. logrolling.
B. rent-seeking behavior.
C. the paradox of voting.
D. the median-voter model.
25. Economists call the pursuit of a transfer of wealth through government at someone else's expense
A. favor programs entailing immediate and clear-cut costs and vaguely defined or deferred benefits.
B. follow policies leading to an optimal allocation of resources between public and private sectors.
C. favor programs entailing immediate and clear-cut benefits and vaguely defined or deferred costs.
D. objectively weigh the costs and benefits of various government programs and vote accordingly.
27. Public choice economists contend public bureaucracies are inefficient primarily because
A. the value of public goods is more easily measured than is the value of private goods.
B. of the absence of competitive market pressures.
C. public sector workers are more security-conscious than are private sector workers.
D. relatively low pay in government attracts workers of lesser quality.
29. Professional sports teams will sometimes seek public subsidies for stadium financing projects that produce large benefits for a relatively small number of fans and impose small costs on a relatively large number of people. Sometimes these
efforts to secure public funding are successful even though the decision is not efficient. This is an example of
A. log-rolling.
B. pork-barrel politics.
C. the special-interest effect.
D. market failure.
30. Suppose the U.S. House of Representatives is debating a bill to fund construction and maintenance for the nation’s highway system. Representative Sandy Shady adds a provision to the bill that would fund a new public art museum in her
district. The authorization of expenditure for the museum would be an example of
A. an earmark.
B. an unfunded liability.
C. a collective action problem.
D. a principal-agent problem.
A. Voters consider a ballot measure that would increase taxes to better fund schools.
B. Students at a university lobby the administration to improve dorms and reduce class sizes without increasing tuition.
C. Consumers try to get flying cars produced by telling automakers they are willing to pay for them.
D. Senators vote for what their constituents want so they can get reelected.
32. The political tendency to favor spending priorities with immediate benefits but deferred costs results in
A. pork-barrel politics
B. earmarks
C. logrolling
D. all of these
A. result from the political bias toward immediate benefits and deferred costs.
B. result in more efficient policies in an attempt to satisfy these liabilities.
C. are caused primarily by market failures.
D. only occur in democratically elected governments.
A. Medicare.
B. national defense.
C. Social Security.
D. unemployment insurance.
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36. Chronic budget deficits can be attributed to
A. unfunded liabilities.
B. voters wanting government programs but not wanting to pay taxes.
C. inappropriate monetary policy.
D. state budget laws.
37. Which of the following impacts would economists expect to result from chronic budget deficits?
A. greater economic efficiency resulting from the abundance of public goods produced
B. permanently high levels of output and continued economic growth
C. greater political control over monetary policy
D. government control of an inefficiently large share of the economy's resources
38. The estimated value of the U.S. government's unfunded liability to Social Security is
A. $4.6 trillion.
B. $4.8 trillion.
C. $15.6 trillion.
D. $20.5 trillion.
39. Government changes in interest rates to regulate the economy are part of
A. monetary policy.
B. fiscal policy.
C. debt policy.
D. liability policy.
A. interest rates
B. taxes and government spending
C. regulations on business
D. the amount of money in circulation
41. To curb the problem of voters wanting immediate benefits and deferred costs, many state governments in the United States have
42. A government using fiscal policy in an attempt to stimulate the economy would do which of the following?
A. raise taxes
B. raise interest rates
C. lower interest rates
D. raise government spending
43. To reduce politicization of policy making, many countries have given control of to politically independent central banks.
A. fiscal policy
B. monetary policy
C. unfunded liabilities
D. budget deficits
44. 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?
A. debt management
B. unfunded liabilities
C. monetary policy
D. fiscal policy
46. When a nation is in a debt crisis, the government's level of debt is so high that
47. Economists (particularly public choice theorists) point out that the political process
A. differs from the marketplace in that voters and congressional representatives often face limited and bundled choices.
B. is less prone to failure than is the marketplace.
C. is a much fairer way to allocate society's scarce resources than is the impersonal marketplace, which is dominated by high-income consumers.
D. involves logrolling, which is always inefficient.
48. 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
A. paradox of voting.
B. regulatory capture effect.
C. benefits-received principle.
D. concept of limited and bundled choices.
49. 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
A. logrolling.
B. the principal-agent problem.
C. rent-seeking behavior.
D. limited and bundled choices.
50. In a sporting goods store, you can buy the equipment you want and forgo the rest. But in an election you "buy" the entire range of the candidate's positions, including some you may not agree with. This difference
51. According to some economists, the private sector is more efficient than the public sector mainly because
A. the private sector has a clear test of performance: profit and loss.
B. wages, salaries, and fringe benefits are higher in the private sector.
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C. worker turnover is higher in the public sector.
D. of extensive negative externalities in the public sector.
53. Narrow, specifically designated expenditures that are included in more comprehensive legislation are known as
A. earmarks.
B. logrolls.
C. benefits-received allocations.
D. progressive expenditures.
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.
55. Regulatory capture is said to have occurred when which of the following is true?
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.
56. Which of the following would be the best example of regulatory capture?
58. Which of the following is considered a potential solution to some regulatory capture?
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59. Proponents of deregulation point to all of the following industries as examples of successful deregulation except for
A. airlines.
B. pharmaceuticals.
C. railroads.
D. interstate trucking.
60. Which of the following would best explain why regulatory capture is a problem?
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.
61. Deregulation
63. Under what circumstances would government loan guarantees be socially beneficial?
64. Which of the following will tend to socialize losses and privatize gains?
65. What is the main problem with government guarantees that socialize losses and privatize gains?
A. They encourage overly risky investments by insulating private investors from any losses.
B. The investments that do occur never generate production of goods underproduced by the private sector.
C. They discourage private investment in worthwhile projects.
D. They tend to benefit foreign companies at the expense of domestic firms.
66. The unlawful misdirection of governmental resources for personal gain is known as
A. political corruption.
B. logrolling.
C. adverse selection.
D. the special-interest effect.
67. The Road Runner Club contributes money to Senator Sly's reelection campaign fund, and Senator Sly helps pass legislation to add more jogging paths across the state. From this we can definitively conclude
70. (Consider This) From an economist's perspective, when is government too big?
A. why special-interest effects are often characterized by concentrated benefits and diffuse costs.
B. why special-interest effects are often characterized by concentrated costs and diffuse benefits.
C. that larger groups carry greater political weight than smaller groups.
D. the moral hazard problem.
72. (Consider This) Smaller groups are sometimes able to achieve political victories against larger groups. This is referred to as the
74. (Consider This) A 2015 study of hospitals, power plants, and water utilities found that
A. public companies violated health and safety laws more than private companies.
B. government employees are systematically less competent than those in the private sector.
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C. private companies violated health and safety laws more than public companies.
D. there was no significant difference in the number of health and safety violations between public and private companies.
75. (Consider This) According to a 2015 study, health and safety violations are more prevalent in public companies because
76. (Last Word) In 2011, Congress funded a sanctuary for white squirrels, a giant roadside coffee pot, and an antique bicycle museum. These are examples of
77. (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
78. (Last Word) In 2004, Congress passed a corporate tax relief bill with 276 provisions for tax breaks to groups such as restaurant owners, Hollywood producers, and NASCAR track owners. This is an example of the
A. special-interest effect.
B. benefits-received principle.
C. paradox of voting.
D. principal-agent problem.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and list some of the difficulties associated with managing and directing the government.
Test Bank: I
Topic: Governments Economic Role
80. Government's ability to enforce laws and contracts increases private-sector economic risks.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and list some of the difficulties associated with managing and directing the government.
Test Bank: I
Topic: Governments Economic Role
81. The invisible hand guides government's economic activity just as it does with private economic activity.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and list some of the difficulties associated with managing and directing the government.
Test Bank: I
Topic: Governments Economic Role
82. Because of the force of law and bureaucratic structure, government accountability is less of a problem than in the private sector.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and list some of the difficulties associated with managing and directing the government.
Test Bank: I
Topic: Governments Economic Role
83. The size and scope of government inhibit the flow of information to decision makers, leading to inefficient outcomes.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and list some of the difficulties associated with managing and directing the government.
Test Bank: I
Topic: Governments Economic Role
84. The pursuit through government of a transfer of wealth at society's expense is called "rent seeking."
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
85. The principal-agent problem is a problem for the private sector but does not apply to political decision making.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
87. A debt crisis refers to how much government spending exceeds tax revenues in a given year.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
90. Monetary policy attempts to change the level of spending by altering interest rates.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
91. The problem of limited and bundled choices explains why many voters cannot fully express their political preferences.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
92. Regulatory capture occurs when government exerts excessive control over an industry.
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FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
93. The Securities and Exchange Commission's supervision of Wall Street financial firms is a possible example of regulatory capture.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
94. Economists widely support deregulation of industries that tend toward monopoly or generate substantial negative externalities.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
95. Deregulation is seen as a solution to regulatory capture because it eliminates the regulatory agency that can or has been captured.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
96. Government loan guarantees tend to socialize gains and privatize losses.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
97. Government guarantees that socialize losses and privatize gains tend to encourage risky and imprudent investment.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: I
Topic: Government Failure
A. public finance.
B. public choice theory.
C. collective economics.
D. political economy.
100. Which one of the following topics would be of the most interest to a public choice economist?
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101. An economic analysis of the relationship between proposed legislation affecting major employers in each state and the voting patterns of senators and representatives in Congress on that legislation would fit within the subcategory of
economics called
104. Because majority voting fails to incorporate the strength of the preferences of individual voters, it
105. Suppose that Katie and Kelly each expects to receive $500 worth of marginal benefits from a proposed new recreation center, whereas Kerry expects to receive only $100 worth. If the proposed tax levied on each for the center would be
$400, a majority vote will
106. Suppose that Steve and Susie each perceive $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
107.
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 $600 per person, a majority vote will
108.
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
109.
Answer the question on the basis of this table showing the marginal benefit 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 $600 per person, a majority vote will
111. The trading of votes by elected officials to secure favorable outcomes is called
112. Senator A agrees to vote for Senator K's state project in exchange for Senator K voting for Senator A's state project. This is an example of
A. logrolling.
B. the paradox of voting.
C. the principal-agent problem.
D. the median voter model.
113. A situation in which society may not be able to rank its preferences consistently through paired-choice majority voting refers to
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A. logrolling.
B. the paradox of voting.
C. the median-voter model.
D. the special-interest effect.
114. The principle that under some circumstances majority voting fails to make consistent choices reflecting the community's underlying preference is best demonstrated by the
A. paradox of voting.
B. concept of logrolling.
C. median-voter model.
D. Coase theorem.
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.
116. 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
A. principal-agent problem.
B. benefits-received principle.
C. median-voter model.
D. paradox of voting.
Refer to the table. In a choice between the highway and the lighthouse,
Refer to the table. The inconsistency illustrated by the table is that, while a majority of voters prefer the
A. highway to the lighthouse and the submarine to the highway, they also prefer the lighthouse to the submarine.
B. lighthouse to the highway and the lighthouse to the submarine, they also prefer the submarine to the highway.
C. highway to the lighthouse and the submarine to the lighthouse, they also prefer the submarine to the highway.
D. lighthouse to the submarine and the highway to the submarine, they also prefer the highway to the lighthouse.
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A. political logrolling.
B. the median-voter model.
C. the paradox of voting.
D. the principal-agent problem theorem.
A. the outcome would depend on which item was listed first on the ballot.
B. a majority of voters would favor public safety.
C. no voter decision is possible.
D. a majority of voters would favor parks.
Refer to the table. The outcomes of the three possible sets of paired-choice majority votes illustrate the
A. paradox of voting.
B. inefficiency of logrolling.
C. principal-agent problem.
D. the benefits of majority rule.
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AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: I
Topic: Public Choice Theory and Voting Paradoxes
125. The median-voter model implies that a political office seeker will
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.
126.
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.
Suppose a five-person city council must decide via majority voting which of these stadiums to build. Also suppose that each of the stadium sizes has the support of one council member. According to the median-voter model, the council will
ultimately vote in favor of stadium
A. A.
B. B.
C. C.
D. D.
127.
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.
128.
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.
129.
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.
Applying the median-voter model and assuming that there are equal numbers of voters supporting each stadium, we would expect
130. 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
A. a medium pizza.
B. a large pizza.
C. a super-large pizza.
D. two medium pizzas.
131. Some people argue that the three main television networks all have similar programming. If true, this observation might best be explained by the
A. paradox of voting.
B. median-voter model.
C. law of diminishing marginal utility.
D. ability-to-pay principle.
132. Suppose that friends Jennifer, Stephanie, and Megan cannot agree on how much to spend for a bouquet of flowers to send to a person who allowed them to use her beach house for the weekend. Jennifer wants to buy a moderately priced
bouquet, Stephanie wants to buy an expensive bouquet, and Megan wants to buy a very expensive bouquet. Assuming no paradox of voting, majority voting will result in the decision to buy
A. an inexpensive bouquet.
B. a very expensive bouquet.
C. a moderately priced bouquet.
D. an expensive bouquet.
133.
Suppose a college economics department decides to use a single economics text for all sections of principles of economics. Also assume that the three individual members of the textbook selection committee have the following preferences.
Assuming all other textbook qualities except analytical level are the same, paired-choice majority voting will result in the committee
134. "Pork-barrel" legislation that contains funding for hundreds of earmarks throughout numerous states often reflects
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A. the paradox of voting.
B. logrolling.
C. the benefits-received principle.
D. adverse selection.
136. (Consider This) Suppose voters pass laws that restrict immigration, which results in lower national output and higher prices for consumer goods. This would be an example of
A. Voters support adding stoplights that would increase congestion and travel costs without increasing safety or convenience.
B. Government officials ignore voter calls for regulations that would reduce negative externalities and enhance efficiency.
C. Voters wanting greater highway safety are unable to express their preferences on how to achieve it because the voting system doesn't allow it.
D. Voters wanting more government services are divided on what services they most prefer, leaving government officials to determine what is best.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: I
Topic: Public Choice Theory and Voting Paradoxes
139. Even if a majority of the population wants a law and the law is passed, the outcome may still be economically inefficient.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: I
Topic: Public Choice Theory and Voting Paradoxes
140. The paradox of voting is that under majority voting rules, the median voter decides the election outcome.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: I
Topic: Public Choice Theory and Voting Paradoxes
141. Majority voting assures that government will provide a public good if it yields total benefits in excess of total costs.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: I
Topic: Public Choice Theory and Voting Paradoxes
143. One major role that the government plays in the market economy of the U.S. is
144. One key difference between government activities and private transactions is that
A. government can enforce involuntary transactions, whereas private transactions are mostly voluntary.
B. government can produce only services, whereas private producers can produce both goods and services.
C. government does not run any production operations, whereas private firms have the main purpose of running production operations.
D. government does not earn revenues from its activities, whereas private firms aim to earn revenues and profits.
145. The ability to impose fines, revoke licenses, and put people into jail allows the government to
147. In a market economy, the government's ability to coerce is beneficial in the following cases, except in
148. Government in a market system can increase economic efficiency by collecting taxes in order to subsidize the production of
149. Government can use its ability to coerce toward improving economic efficiency by
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150. Making blackmail, extortion, and other forms of private coercion illegal is one way that government
151. Government can raise economic efficiency through all of the following policies, except
152. In a market economy, private parties are more willing to do transactions when they know that the government is able to
153. Government's ability to reduce private-sector economic risks through laws and regulations would encourage all of the following, except
154.
Refer to the provided graph. Suppose that it shows the S and D graphs in a market where production entails a significant amount of pollution. In this case, the government should use its coercive power to make
155.
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Refer to the provided graph. Suppose that it 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
156.
Refer to the provided graph. Suppose that it 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
157. The difficulties in managing government in a market economy include the following, except
158. Government laws and policies need to be uniformly enforced. But this leads to all of the following problems, except
A. inflexibility.
B. massive paperwork.
C. excessively detailed rules.
D. haphazard application.
159. The problem of effectively aggregating and conveying information from bottom layers to top layers in massive government bureaucracies makes it hard for the high-level officials to
160. Even in democratic governments, we tend to have a problem with accountability due to the following reasons, except
161. In assessing the efficiency of government policy, economic analysis would focus on
A. large losses suffered by publicly owned water, gas, and electric companies.
B. large number of bankruptcies that have occurred recently among local governments.
C. economically inefficient outcomes caused by voting problems or incentive structures in government.
D. inability of government agencies to provide adequate police protection in low-income neighborhoods.
164. The situation where politicians make decisions that will raise their chances of reelection, even if those decisions are detrimental to the general public, is referred to as the
165. In the corporate world of business, the principal-agent problem arises between
A. It is a program or policy that is adopted during a special session of Congress or a state legislature.
B. It is a policy issue in which both the supporters and opponents employ paid lobbyists to represent their interests.
C. It is a program or policy which one political party strongly supports and other political parties strongly oppose.
D. It is a program or policy in which a large number of people will suffer small costs, while a small number will receive large gains.
168. The situation where "the few who yell the loudest get heard" is referred to as the
A. special-interest effect.
B. principal-agent problem.
C. moral hazard problem.
D. adverse selection effect.
A. minorities always bear the costs of programs voted for by the majority.
B. businesses often find it difficult when they have to deal with a labor union.
C. it is hard for the government to discern the true preferences of everyone in society.
D. special-interest groups could have the costs of their narrowly focused programs be paid for by the general taxpayers.
174. Lobbying actions that seek government legislation to provide tax breaks to specific organizations or industries would be an example of
176. Politicians who have to go through elections tend to focus on the short-term net benefits of projects because of
A. voters' tendency to more easily see short-term benefits rather than long-term ones.
B. the special-interest effect of specific groups among the electorate.
C. the ability of government to coerce people to do things involuntarily.
D. pork-barrel politics and the principal-agent problem.
A. total amount of debt that the government has incurred over the years.
B. difference between the nation's amount of exports and its total amount of imports.
C. gap between government spending and its lower tax revenues.
D. decrease in the amount of government spending from one year to the next.
179. To make up for a shortfall in its annual budget, the government must borrow money by
A. many government programs are popular with voters, but hardly any voter likes paying taxes.
B. the nation simply cannot produce everything that it consumes, so it has to rely on other nations.
C. some resources are not available from within, so they have to be bought from other nations.
D. businesses do not want to have "big government" around too much.
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AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
184. Chronic budget deficits can lead to all of the following, except
A. overallocation 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 spending.
185. Many state and local governments in the U.S. have balanced-budget laws in order to prevent politicians from
186. All of the following are consequences of a government's having to deal with a "debt crisis," except
187. In the U.S., the Federal government runs a chronic budget deficit, whereas many state and local governments do not, because
A. many state and local governments have balanced-budget laws that make deficits illegal, while the Federal government does not.
B. voters in Federal elections tend to favor budget deficits, while voters in state and local elections do not.
C. many state and local governments face stricter accounting standards than the Federal government does.
D. elections at the state and local levels tend to occur more frequently than at the Federal level.
A. from when new products are launched to the point when they become obsolete.
B. between the purchases of new capital equipment and the point when they become junk.
C. from the origination of a business loan to the retirement or full repayment of the loan.
D. during which the economy's overall output and employment alternately expands and contracts.
189. Governments try to smooth business cycles by using the following policies, except
A. tax policies.
B. interest rate policies.
C. wage rate policies.
D. government-spending policies.
190. Monetary policy refers to the government's attempt at smoothing business cycles through the use of changes in
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A. tax rates.
B. interest rates.
C. wage rates.
D. government spending.
191. Fiscal policy refers to the government's attempt at stabilizing the economy through the use of changes in
192. During a period when output and employment are falling, the government will try to
193. When fiscal and monetary policies become highly politicized, these policies tend to
194. To prevent monetary policy from becoming highly politicized, many countries have
195. The concept of limited and bundled choice, as used in public choice theory, refers to the fact that
A. politicians may not be objective in evaluating economic policy programs due to their individual biases.
B. because of the importance of television and other modern communication media, the best and brightest candidates may not be the ones elected by voters.
C. in an election, each voter must select a candidate who has various preferences (in a wide array of issues) that do not exactly match the preferences of the voter.
D. the most economically efficient public policy programs may not be selected because political leaders do not know enough about economics.
196. In presidential elections, voters often find that they do not agree with any single candidate on all the issues that matter to them (the voters). This is known as the
A. principal-agent problem.
B. limited and bundled choice problem.
C. rent-seeking behavior problem.
D. lack of accountability problem.
197. Some economists contend that government agencies are generally less efficient than private businesses due to the following reasons, except
A. government bureaucracies do not face the profit motive, which is a major incentive that guides private firms
B. government bureaucrats tend to deal with failing programs by putting more resources into the programs, rather than eliminating the program.
C. incompetent workers gravitate toward government, while motivated workers gravitate toward the private sector.
D. bureaucrats, along with the special-interest groups they serve, often gain enough political clout to keep their agencies going regardless of performance.
198. A 2015 study of hospitals, power plants, and water utilities found that government-owned and operated companies were more likely than private companies to violate health and safety laws. Possible explanations for this include the following,
except
A. Government-owned companies may have difficulty getting taxpayers and politicians to approve the funding needed to improve their facilities.
B. The health and safety laws appear to be applied much more leniently against government-owned companies than against private companies.
C. Government-owned companies tend to be run by less qualified and less competent managers than the private companies.
D. Government-owned companies are under less pressure to comply with the laws, because fines for violations are often delayed or even avoided.
199. "Regulatory capture" refers to the situation where a government agency charged with supervising and regulating a particular industry is
200. One primary reason why regulatory capture may occur in an industry is that
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 their industry.
D. people who are qualified to supervise and regulate the industry often come from the industry itself.
201. Deregulation can solve the problem of regulatory capture and increase economic efficiency
202. Loan guarantees provided by the government for specific private-sector investments tend to
203. When the government provides loan guarantees and in effect "socializes losses and privatizes gains" of a project or firm, it can lead to a
204. The provision of loan guarantees can improve economic efficiency when
205. In which of the following cases has political corruption definitely occurred?
206. Which of the following countries had the least corruption, as reported in the Global Corruption Barometer survey in 2013?
A. Mexico
B. Italy
C. India
D. South Africa
208. What is a likely explanation for why the budget of a government agency might increase beyond its optimal size?
209. Based on our study of market failure and government failure, the main conclusion that one should arrive at is that
A. the market system is highly vulnerable to imperfections, and therefore the socialist system is a much better system to adopt.
B. the government has much imperfection and creates a lot of inefficiencies; therefore, it is best to adopt a pure market system.
C. it is best to always compare perfect markets against an idealized benevolent government that efficiently responds to the wants of society.
D. we must carefully compare the benefits of government intervention in our markets against the costs of such intervention.
FALSE
AACSB: Analytical Thinking
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and list some of the difficulties associated with managing and directing the government.
Test Bank: II
Topic: Governments Economic Role
211. In order to achieve economic efficiency in market economies like the U.S., the government must be stripped of its power to coerce.
FALSE
AACSB: Analytical Thinking
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and list some of the difficulties associated with managing and directing the government.
Test Bank: II
Topic: Governments Economic Role
212. If the government implements regulations and policies in the economy, it tends to replace the function of the invisible hand.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and list some of the difficulties associated with managing and directing the government.
Test Bank: II
Topic: Governments Economic Role
213. In making sure that laws are uniformly enforced and applied, one consequence is that government creates inflexibility.
TRUE
AACSB: Knowledge Application
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Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and list some of the difficulties associated with managing and directing the government.
Test Bank: II
Topic: Governments Economic Role
214. As long as government officials have to be elected, they are always held accountable for their policy decisions and choices.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and list some of the difficulties associated with managing and directing the government.
Test Bank: II
Topic: Governments Economic Role
215. Economic analysis would focus on the size of the government, in order to assess whether or not it fosters economic efficiency.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and list some of the difficulties associated with managing and directing the government.
Test Bank: II
Topic: Governments Economic Role
216. It is generally believed that, because of the election process, the incentives and pressures for internal efficiency are stronger in the public sector than in the private sector.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
217. Critics of government contend that the market system creates incentives and pressures for internal efficiency that are absent in the public sector.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
218. "Good economics" is about marginal costs and marginal benefits of specific projects; "good politics" is more about clear benefits and hidden costs.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
219. The "principal-agent problem" often arises in public choice when politicians pursue the best interests of their constituents.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
220. In thinking about the "principal-agent problem" in a democratic government, we assign the role of "principal" to the government.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
221. The special-interest effect in government is the reason why firms in some industries are willing to pay huge amounts of money to lobbyists.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
222. When the special-interest effect is the major reason for the passage of a government policy or project, then economic efficiency will always improve.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
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223. The "pork" in pork-barrel politics refers to government projects that politicians try to secure in favor of the common good for the whole nation.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
224. Nobody gains from pork-barrel politics other than the politicians.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
225. Pork-barrel politics is a good illustration of the "clear benefits, hidden costs" perspective of politicians.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
226. Unfunded liabilities are one consequence of the preference for "clear benefits, hidden costs" by politicians.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
227. Unfunded liabilities occur when the government considers long-term benefits and costs of projects, and approves only those with positive long-term net benefits.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
228. A budget deficit will require the government to issue bonds to fill in the gap in the budget.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
230. If the government runs a smaller budget deficit, then the public debt will decrease.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
231. Only politicians, not the voters, are to blame for the problem of chronic budget deficits that many nations face.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
232. Voters' preference for having government programs serve them is inherently in conflict with their preference to pay no taxes.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
233. Monetary and fiscal policies are tools that the government can use to try to stabilize the economy.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
234. The politicization of monetary and fiscal policies tends to enhance their effectiveness in stabilizing the economy.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
235. Because of the so-called "bundled choice" problem, voters often vote for candidates that they are not entirely happy with.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
236. The collective action problem is the reason why there are no lobbyists representing the interest of general taxpayers or consumers in Washington, DC.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
237. The collective action problem makes it hard for voters to counter the influence of special-interest groups.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
238. Unintended consequences can result from the government's desire to enforce laws uniformly.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
239. Regulatory capture in government happens because the people who are most qualified to supervise and regulate an industry oftentimes are or have been the leaders of the industry.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
241. Loan guarantees provided by government will reduce the willingness of investors to take on the risk in a project.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
242. "Informal payments" or "under-the table fees" are a common form of corruption.
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TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
243. The U.S. is among the countries that have very low levels of political corruption, as reported in the Global Corruption Barometer of 2013.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failure and explain why it happens.
Test Bank: II
Topic: Government Failure
245. Problems with collective decision making and policy making in government are subjects that are studied in an area of economics called public
A. finance.
B. choice.
C. policy.
D. interest.
246. Even in a democratic government, elected officials may end up pursuing policies that go against the preferences of the people due to the following reasons, except
247. Majority voting fails to incorporate the strength of the preferences of individual voters and therefore
248. 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
249. 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
251. Assume that Abby, Ben, and Clara 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 $400 each to Abby,
Ben, and Clara. In a majority vote, this proposal will most likely be
252. Assume that Abby, Ben, and Clara 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 $400 each to Abby,
Ben, and Clara. Based on economic analysis, the public good should
253. Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community. A proposed public good has a total cost of $1,000. 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. In a majority vote, this proposal will most likely be
254. Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community. A proposed public good has a total cost of $1,000. 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?
255. Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community. A proposed public good has a total cost of $1,000. 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. In a majority vote, this proposal will most likely be
258. The trading of votes to secure favorable outcomes on decisions that would otherwise be defeated is called
A. median-voter trading.
B. the special-interest effect.
C. political logrolling.
D. the paradox of voting.
259. Inefficiencies associated with majority voting may get resolved through
260. Which of the following would be an avenue for resolving the inefficiencies associated with majority voting?
A. political logrolling
B. progressive taxation
C. proportional taxation
D. the paradox of voting
261. Which would be an avenue for resolving the inefficiencies associated with majority voting?
262. A situation in which society may not be able to rank its preferences consistently through paired-choice majority voting is
263. The major problem with paired-choice majority voting is that the outcome
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 choices.
Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. In a paired-choice vote between a stadium and a park,
Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. In a paired-choice vote between a jail and a stadium,
Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. In a paired-choice vote between a park and a jail,
Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. This situation illustrates the voting inconsistency where a majority of voters prefer the
A. stadium over the park, the park over the jail, and the jail over the stadium.
B. park and jail over the stadium, and the jail over the park.
C. stadium over the jail, the jail over the park, and the park over the stadium.
D. stadium and jail over the park, and the park over the jail.
268. The sometimes inconsistent results coming from a series of paired-choice voting is due to
269. Voters are making a choice to spend money on three projects: a dam, a school, or a road. In the choice between the dam and the school, the majority favors the school. In a choice between a dam and a road, the majority favors a dam. In a
choice between a road and a school, the majority favors a road. These rankings indicate that majority voting may
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270. 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
A. regulatory capture.
B. voter failure.
C. limited and bundled choice.
D. paradox of voting.
271. It is observed that the person representing the middle position on an issue will most likely determine the outcome of an election. This view is most closely associated with the
272. When voters have different opinions about an issue, the position that is most likely to be adopted is that of the
A. lobbyist.
B. logroller.
C. rent seeker.
D. median voter.
274. The reason why, under majority voting and consistent voter preferences, the median voter’s choice will tend to predominate is because
A. the median voter has the strongest preferences compared to the other voters.
B. most voters strongly prefer the median view.
C. extreme voters on either side of the median would prefer the median over the opposite extreme.
D. voters’ preferences are bell-shaped, with most of them falling on the median.
275. One implication of the median-voter model is that at any point in time, most voters will
276. As voters "vote with their feet" and move to political districts where the median voter's preference is closer to their own, the median voter's preference will
A. strengthen.
B. weaken.
C. shift.
D. stagnate.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
5-38
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
278. Majority voting on whether or not a public good should be produced could lead to a result where a public good whose costs are bigger than the benefits would end up getting approved by the voters.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
279. If a public good provides social benefits that are greater than its costs, then the majority of voters would always vote in favor of producing the good.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
280. Special-interest groups result from people with strong preferences on a particular issue banding together to let policymakers know their preferences and could thereby lead to efficient outcomes.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
281. Political logrolling, or vote trading, can turn a potentially inefficient voting outcome into an efficient one.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
282. If choice A wins over choice B in a majority vote, while choice B wins over choice C in a majority vote, then we can conclude that choice A would win over choice C.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
284. The appeal to government for special benefits at taxpayers' or someone else's expense is called the paradox of voting.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
285. Even if individual voters have clear preferences, and they stay consistent in their preferences, we could still end up with the paradox of voting.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
286. One consequence of the paradox of voting is that whoever sets the agenda of a vote could practically predetermine the results of the vote.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
287. In the median-voter model, the median voter refers to the voter who makes her choice at the midpoint of the voting period.
5-39
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
FALSE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
288. In the median-voter model, half the voters have stronger or more positive preferences than the median voter, while half of the voters have weaker or more negative preferences.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
289. One prediction of the median-voter model is that during elections, candidates will tend to become "centrists."
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
290. One implication of the median-voter model, as applied to a vote regarding how much government involvement to have in the economy, is that most voters would find the resulting government involvement either too large or too small.
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
TRUE
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majority voting.
Test Bank: II
Topic: Public Choice Theory and Voting Paradoxes
5-40
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.