Deck 6: Political Economy

Question 1

Which of the following is an example of a special-interest group?

A)Democratic party
B)Bureau of Alcohol,Tobacco,and Firearms
C)National Rifle Association
D)Association of State Legislators
E)all of the above

Answer 1

National Rifle Association

Question 2

Logrolling is

A)a system used often at lumberjack contests.
B)a system that will always lead to worthy projects getting funded.
C)a system that involves the trading of votes.
D)a system that generally involves double-peaked preferences.

Answer 2

a system that involves the trading of votes.

Question 3

Voter fraud

A)can have a detrimental effect on the political process.
B)is easily detected.
C)is defined as trading votes to pass certain political agenda items.
D)is more likely to occur in dictatorial political frameworks.

Answer 3

can have a detrimental effect on the political process.

Question 4

When each individual has consistent preferences,but those of the community are not consistent,it is known as

A)agenda manipulation.
B)majority rule.
C)voting paradox.
D)logrolling.

Question 5

In a representative democracy,there are

A)elected politicians.
B)public employees.
C)special interests.
D)all of the above.

Question 6

In 2007 which country had the highest ratio of government expenditures to GDP?

A)Canada
B)Switzerland
C)United States
D)none of the above

Question 7

Rent seeking involves

A)finding reasonable rent rates.
B)price floors.
C)price ceilings.
D)citizen groups lobbying elected officials to manipulate government policy.

Question 8

A person prefers large and small levels of national defense to medium-sized levels of national defense.This person

A)is violating the law of transitivity.
B)has single-peaked preferences.
C)has multiple-peaked preferences.
D)can not achieve his or her most-preferred outcome.

Question 9

The possibility of multiple-peaked preferences can not be ruled out.

Question 10

With multiple-peaked preferences,

A)a unique political equilibrium does not exist.
B)all individuals have a point that is most preferred.
C)the law of transitivity is violated.
D)all of the above.

Question 11

Political parties

A)have a large influence on setting the political agenda of candidates.
B)are only concerned with market efficiency.
C)have primaries that influence the party platform.
D)a and b.
E)a and c.

Question 12

Lindahl prices

A)result in efficient levels of public goods provision.
B)require honest revelation of preferences.
C)result in different prices for the same amount of output.
D)cause all of the above.
E)cause none of the above.

Question 13

Special interest groups are established on the basis of

A)sources of labor.
B)size of income.
C)sources of income.
D)region.
E)all of the above.

Question 14

Majority rule voting

A)requires a simple majority greater than half the voters.
B)requires that rules of order be established.
C)does not occur in democracies.
D)can only be applied to single issues.

Question 15

Applying economic principles to the analysis of political decision making is political economy.

Question 16

It is stated that,in democracy,every vote counts.To be a contentious voter in a democracy,one should

A)spend some time learning about the issues.
B)find out about the positions of the candidates.
C)be sure to vote.
D)do all of the above.

Question 17

Government bureaucrats want larger budgets

A)because salaries are sometimes tied to budget size.
B)to fulfill an "empire building" tendency.
C)because it may be necessary to ensure marginal benefits of output equal marginal costs.
D)because of all of the above.

Question 18

The Economic Stimulus Act of 2008 offered

A)zero pay-as-you go offsets.
B)varying pay-as-you go offsets.
C)formula driven pay-as-you go offsets.
D)none of the above.

Question 19

A deadweight loss is never

A)found when people are still living.
B)found when marginal benefits equal marginal costs.
C)found in open economies.
D)allowed in the US.

Question 20

Government growth has been caused by

A)citizens who want larger government.
B)lots of public lands available in the West.
C)increases in privatization.
D)inflation.

Question 21

The median voter must have preferences that reflect those of all people in the community.

Question 22

Suppose that you have two people in an economy,Ms.Hundley and Mr.McKenna,who want to produce a public good S.Suppose we calculate the Lindahl equilibrium using the method in your textbook.In this case,the demand curve for Ms.Hundley is S=P^1/2.The demand curve for Mr.McKenna is S=8/P.If the marginal social cost of the project is 10,what is the Lindahl equilibrium quantity of S? What are the Lindahl prices?

Question 23

In Figure 6.4 in your textbook,there is an illustration of Niskanen's model of bureaucracy.Suppose housing costs are measured by the function C = Q².Suppose further that value is measured by V = Q^1/2.What is the actual level of output in this case?

Question 24

What should be the priority of politicians? Should they be mainly concerned with conveying and voting the wishes of the people that they represent? Should they be mainly concerned with standing for positions that they feel strongly about? Should they be mainly concerned with securing reelection?

Question 25

Suppose there were three candidates running for office: Dewey,Cheatum,and Howe.Suppose a majority of voters preferred Cheatum to Dewey.Does this mean that a majority of voters preferred Howe to Dewey?

Question 26

Consider Figure 6.5 in your textbook.If the equation for the demand curve were P = 10 - Q and MC constant at 4,
(a)Find the competitive level of output and price.
(b)Find the marginal revenue and derive the rent seeking cartel's of output and price.
(c)How much rent is being raised?

Question 27

Consider the following net benefits (measured in billions of dollars)that will result from the passage of two legislative bills,X and Y:
(a)Identify the logrolling opportunity present in this situation.
(b)Identify the potential gains to voters.
(c)Explain why logrolling is efficiency enhancing.

Question 28

The Marxist view would say that there is an overproduction of goods by the private sector.

Question 29

Under certain assumptions,the actions of elected officials mimic the wishes of the median voter.

Question 30

In William Niskanen's model of bureaucracy,the efficient level of government output is greater than the actual level of output.

Question 31

In the presidential election of 2008 ,record numbers of people vote in national,state,and local elections.This phenomenon was even more pronounced among young voters.What are possible explanations for this?

Question 32

Most economists - both liberals and conservatives - believe a balanced budget amendment is an ill-conceived idea.

Question 33

Special interest groups are a determent to the political process.

Question 34

Special interest groups are not always perceived to add a positive to society.Discuss why this is so.

Question 35

Governments grow because low income individuals can not use the political process to redistribute income towards themselves.

Question 36

Arrow's impossibility theorem is not relevant to modern analysis of political economy.

Question 37

Government is inherently bad.