question

The many layers of the federal government in the United States:

answer

lead to economic inefficiencies because of difficulty aggregating and conveying information.

question

(Consider This) The collective action problem refers to:

answer

difficulty in organizing and motivating large groups to achieve desired outcomes.

question

Government fiscal policy involves changing which of the following?

answer

Taxes and government spending.

question

As it relates to owners and managers, the principal-agent problem results from the:

answer

separation of corporate ownership and control.

question

Public choice economists:

answer

use the tools of economics to analyze decision making, politics, and elections in the public sector.

question

Public choice theorists contend that:

answer

public bureaucracies are inherently less efficient than private enterprises.

question

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. Professor: a)Adam, b)Bennett, c)Clay Ideal Textbook: a)C/F, b)M/B, c)O/S Analytical level of the textbook: a)Very difficult, b)moderately difficult, c)relatively easy

answer

selecting the M/B book.

question

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:

answer

a large pizza.

question

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:

answer

concept of limited and bundled choices.

question

A situation in which society may not be able to rank its preferences consistently through paired-choice majority voting refers to:

answer

the paradox of voting.

question

The U.S. federal government's largest unfunded liability is:

answer

Social Security.

question

Monetary stimulus is only helpful to an economy:

answer

that is in recession.

question

Regulatory capture often occurs because of which of the following?

answer

Nearly everyone with expertise works in the regulated industry.

question

"Pork-barrel" legislation that contains funding for hundreds of earmarks throughout numerous states often reflects:

answer

logrolling

question

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:

answer

nothing; the Road Runner Club may have donated to Senator Sly because he already supported the jogging paths.

question

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:

answer

public choice theory.

question

Public choice theory focuses on the economics of:

answer

government decision making, politics, and elections.

question

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

answer

Deregulation of the industry.

question

Deregulation:

answer

eliminates regulatory capture and can improve outcomes by increasing competition.

question

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

answer

is called "logrolling."

question

(Consider This) Government passes a law requiring all domestic clothing factories to pay workers at least $20 per hour. As a result, domestic clothing companies move their operations overseas, leaving domestic workers unemployed. This situation illustrates the problem of:

answer

unintended consequences.

question

Individual accountability within the government bureaucracy:

answer

tends to be lacking because of civil service protections and the complexity of government.

question

Suppose that friends Jennifer, Stephanie, and Megan cannot agree on how much to spend for a bouquet of flowers to send to a person that allowed them to use their 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:

answer

an expensive bouquet.

question

The field of economics that analyzes government decision making, politics, and elections is called:

answer

public choice theory.

question

Public choice economists contend public bureaucracies are inefficient primarily because:

answer

of the absence of competitive market pressures.

question

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

answer

Pharmaceuticals

question

(Last Word) In their effort to provide disaster relief after Hurricane Katrina, the Federal Emergency Management Agency (FEMA) made payouts on as many as 900,000 claims with invalid Social Security numbers or false names and addresses. This example illustrates:

answer

bureaucratic inefficiency.

question

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

answer

Rules and enforcement in an industry are heavily influenced by the industry being regulated.

question

According to some economists, the private sector is more efficient than the public sector mainly because:

answer

the private sector has a clear test of performance: profit and loss.

question

In corporations, owners are _______ and managers are ________.

answer

principals; agents

question

Public choice economists hold that politicians will:

answer

favor programs entailing immediate and clear-cut benefits and vaguely defined or deferred costs.

question

Which of the following is a source of government failure?

answer

The enormous size and scope of government.

question

Public choice theorists point out that the political process:

answer

differs from the marketplace in that voters and congressional representatives often face limited and bundled choices.

question

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

answer

Rent-seeking behavior.

question

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

answer

political corruption.

question

Under what circumstances would government loan guarantees be socially beneficial?

answer

When the guarantees promote production of goods otherwise underproduced by the private sector.

Chapter 5 – Goverment’s role and Goverment Failure – Flashcards

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