Question 1

(Consider This) According to a 2015 study, health and safety violations are more prevalent in public companies because

Accepted Answer

The answer of (Consider This) According to a 2015 study,...

Question 2

(Consider This) From an economist's perspective,

Accepted Answer

From an economist's perspective, the most important aspect of government spending is that it occurs up to the point where marginal benefit (MB) is equal to marginal cost (MC). This means that the benefits derived from government spending are maximized while minimizing the costs to society. The size of government is not the deciding factor as long as spending is at this optimal level. Therefore, choice D is the best option.

Question 3

Deregulation

Accepted Answer

Deregulation can eliminate regulatory capture, which occurs when regulators prioritize the interests of the industry they regulate over those of the general public. By increasing competition, deregulation can also improve outcomes in industries where regulation has stifled innovation and prevented new entrants from competing with established businesses. However, deregulation may not be appropriate in industries generating substantial negative externalities, such as pollution, where the costs of the negative externality are not borne by the industry but by society as a whole. Additionally, there may be certain industries, such as those responsible for human safety, financial regulation, and environmental protection, where deregulation could have serious negative consequences. Finally, while deregulation can lead to greater economic efficiency in some cases, it may not always be the best approach if it results in negative consequences for consumers or the environment.

Question 4

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

Accepted Answer

Political corruption involves the abuse of power by government officials for personal gain or the gain of their network. It includes unlawful activities such as bribery, embezzlement, and nepotism. The misdirection of governmental resources for personal gain falls under the umbrella of political corruption. The other options, logrolling, adverse selection, and the special-interest effect, do not specifically refer to the misuse of governmental resources for personal benefit.

Question 5

Political corruption occurs whenever

Accepted Answer

Political corruption occurs when government officials use their position for personal gain, such as using government resources for personal gain or accepting bribes. This is the most clear and straightforward example of political corruption. While the other answer choices can also be examples of political corruption, they are not as direct or clear.

Question 6

(Consider This) Subsidies for mohair production illustrate

Accepted Answer

Subsidies for mohair production illustrate how special-interest groups can secure concentrated benefits (subsidies) for themselves while the costs are spread out over a large number of taxpayers, making the costs less noticeable and less likely to be opposed.

Question 7

Under what circumstances would government loan guarantees be socially beneficial?

Accepted Answer

Government loan guarantees are socially beneficial when they promote the production of goods that are otherwise underproduced by the private sector, addressing market failures and ensuring the provision of socially valuable goods.

Question 8

(Consider This) A 2015 study of hospitals, power plants, and water utilities found that

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The answer of (Consider This) A 2015 study of hospitals,...

Question 9

Government loan guarantees tend to have the effect of

Accepted Answer

Government loan guarantees essentially shift the burden of risk away from lenders and onto taxpayers. If the borrower defaults on the loan, the government steps in to cover the losses, which is essentially socializing the losses. However, if the borrower is able to repay the loan, the lender gets to keep the gains, which is privatizing the gains. Therefore, option A is the best choice as it accurately describes the impact of government loan guarantees.

Question 10

Which of the following will tend to socialize losses and privatize gains?

Accepted Answer

Government guarantees to private investors that they will get their money back even if the company fails can socialize losses because the government is essentially providing insurance against failure. This can encourage private investors to take greater risks because they are not fully bearing the consequences of their actions, and if the investment fails, the government will bear some or all of the losses. On the other hand, if the investment is successful, the gains will be privatized and go to the investors.

Question 11

The government's ability to force people to do things can increase economic efficiency.

Accepted Answer

In certain situations, the government's power to enforce rules and regulations can lead to increased economic efficiency by discouraging harmful behaviors, promoting competition, and incentivizing positive actions such as conservation or investment in important infrastructure. However, excessive government intervention can also stifle innovation and limit individual freedoms. The effectiveness of government action in promoting economic efficiency depends on a variety of factors, including the specific policy goals, the level of public support and compliance, and the overall economic and political context.

Question 12

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

Accepted Answer

The information given does not necessarily imply corruption, logrolling, or a principal-agent problem. It's possible the Road Runner Club donated to Senator Sly because he already supported the addition of jogging paths, indicating a shared interest rather than a corrupt exchange.

Question 13

Government's ability to enforce laws and contracts increases private-sector economic risks.

Accepted Answer

Government's ability to enforce laws and contracts actually decreases private-sector economic risks by providing stability, predictability, and a level playing field for businesses to operate in. Without enforceable laws and contracts, businesses may face greater uncertainty and potential losses.

Question 14

(Consider This) The collective action problem refers to

Accepted Answer

The collective action problem refers to the difficulty in organizing and motivating large groups to achieve desired outcomes. It can be challenging to get everyone to cooperate and work towards a common goal when there are individual incentives or disincentives at play. This can lead to suboptimal outcomes and is a common issue in many areas of society, including politics, economics, and social movements.

Question 15

(Consider This) Smaller groups are sometimes able to achieve political victories against larger groups. This is referred to as the

Accepted Answer

The collective action problem refers to the difficulty in getting a large group of individuals to work together towards a common goal, usually due to coordination and free-rider issues. However, smaller groups may be able to overcome these obstacles and achieve their desired political outcome, even against larger groups. Therefore, the collective action problem best describes the scenario presented in the question. The other options are not relevant to the concept of small groups achieving political victories.

Question 16

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

Accepted Answer

Economists consider government too big when the incremental costs from additional government spending exceed incremental benefits. This means that the government is inefficiently allocating resources and creating a burden on taxpayers without providing adequate benefits. There is no fixed threshold at which government becomes too large, as it depends on the specific circumstances of each country and economy. Therefore, options A and B, which provide fixed percentage thresholds, are not appropriate for evaluating government size. Option D is also incorrect, as it suggests that government should continue to grow as long as the marginal benefits outweigh the marginal costs, which is not necessarily true.

Question 17

(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

Accepted Answer

The corporate tax relief bill with numerous provisions for tax breaks to specific groups and industries is a prime example of the special-interest effect, which refers to how the political power of interest groups can influence policy decisions in their favor. This bill highlights how certain industries actively lobby for and receive favorable treatment from policymakers, which can ultimately benefit them financially.

Question 18

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

Accepted Answer

This example illustrates bureaucratic inefficiency, as the federal government was paying retirement benefits to deceased federal employees due to a lack of proper record keeping and oversight. The fact that the checks were being illegally cashed by relatives also highlights the need for better internal controls and fraud prevention measures within government agencies.

Question 19

(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

Accepted Answer

This is an example of pork barrel politics, where elected officials secure funds for specific projects in their districts or states, often as a way to appease constituents or gain political support. The examples given, like a sanctuary for white squirrels and an antique bicycle museum, likely do not have overarching national significance, but rather appeal to specific local interests.

Question 20

What is the main problem with government guarantees that socialize losses and privatize gains?

Accepted Answer

Government guarantees that socialize losses and privatize gains create a moral hazard problem, where private investors are incentivized to take on overly risky investments because any losses will be covered by the government. This can lead to financial instability and taxpayer-funded bailouts. On the other hand, gains from these investments are privatized, meaning that investors keep the profits for themselves, which can lead to inequality and unfairness.

Quiz 5: Governments Role and Government Failure