Deck 6: Political Economy

Question 1

The possibility of multiple-peaked preferences cannot be ruled out.

A) True
B) False
C) Uncertain

Answer 1

True

Question 2

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 U.S.

Answer 2

found when marginal benefits equal marginal costs.

Question 3

In a representative democracy,there are

A) elected politicians.
B) public employees.
C) special interests.
D) all of these answer options are correct.

Answer 3

all of these answer options are correct.

Question 4

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) cannot achieve his or her most-preferred outcome.

Question 5

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) all of these answer options are correct.

Question 6

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 these answer options are correct.

Question 7

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

A) True
B) False
C) Uncertain

Question 8

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

A) True
B) False
C) Uncertain

Question 9

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 10

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 11

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

A) Canada
B) Switzerland
C) United States
D) none of these answer options are correct.

Question 12

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) all of these answer options are correct.

Question 13

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 14

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 these answer options are correct.

Question 15

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.

Question 16

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 17

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

A) True
B) False
C) Uncertain

Question 18

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 these.
E) none of these answer options are correct.

Question 19

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 these answer options are correct.

Question 20

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

Question 21

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

A) True
B) False
C) Uncertain

Question 22

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 23

Special interest groups are a determent to the political process.

A) True
B) False
C) Uncertain

Question 24

Consider the following net benefits (measured in billions of dollars)that will result from the passage of two legislative bills,X and Y:

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

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

A) True
B) False
C) Uncertain

Question 27

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 28

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

A) True
B) False
C) Uncertain

Question 29

Government is inherently bad.

A) True
B) False
C) Uncertain

Question 30

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

Question 31

Elected officials never care about the wishes of the voting public and govern using their own value system.

A) True
B) False
C) Uncertain

Question 32

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?