Deck 24: The Federal System of Government

Question 1

Many small governments provide more utility to individuals than one large government in most cases because _____.

A)individuals have heterogeneous preferences and can move to an area that suits their taste for government
B)individuals have homogeneous preferences and can move to an area that suits their taste for government
C)the optimal sharing group for nearly all public goods is the local level
D)individuals generally have a preference for local government

Answer 1

A

Question 2

If there are negative externalities that spill across governmental borders,this provides a justification for _____.

A)private action
B)larger governments
C)smaller governments
D)intergovernmental competition

Answer 2

B

Question 3

Different public goods can have different sized sharing groups,so efficiency would dictate _____.

A)that only one national government is necessary
B)that public goods be provided by the federal government and the states deal with externalities
C)one world government for most pure public goods
D)different public goods supplied at different levels of government

Answer 3

D

Question 4

Special interests are most likely to be effective at _____.

A)the federal level
B)the state level
C)and the county level
D)at the city level

Question 5

Connecting public roads in one city to public roads in another is an example of a _____ problem where larger governments can help smaller governments.

A)negative externalities
B)economies of scale
C)prisoners' dilemma
D)coordination problem

Question 6

Because individuals can move from one government jurisdiction to another,_____.

A)governments tend to cooperate with one another
B)governments tend to look alike
C)governments tend to merge into larger governments
D)governments tend to give constituents what they want

Question 7

Multiple levels of government are desirable because _____.

A)different governmental activities are best undertaken by governments of different sizes
B)many governmental activities can only be financed if taxed at multiple levels of government
C)multiple levels of government provide sufficient bureaucracy to deal with the complex problems faced by today's governments
D)government could not be financed adequately without local governments doing the majority of the work ensuring compliance with the tax system

Question 8

When people "vote with their feet" they _____.

A)move to the governmental jurisdiction with the lowest taxes
B)move to the governmental jurisdiction that have the bundle of government goods and services closest to their preferred level
C)move to the governmental jurisdiction with the best schools
D)move to democracies from dictatorships

Question 9

"Laboratories of democracy" refers to the fact that having many governments at different levels _____.

A)allows for experimentation
B)allows for replication of successful policies
C)allows for the optimal provision of scientific knowledge
D)a and b

Question 10

One desirable aspect of having multiple levels of government is that numerous small governments _____.

A)leads to a prisoners' dilemma
B)allows for the possibility of intergovernmental competition
C)affect the optimal size of the sharing group
D)demonstrate how effective the federal government is at what it does

Question 11

Special districts are often set up among small governments to deal with _____.

A)externalities internalized within a governments borders
B)externalities that spill across borders
C)free-riding problems concerning public goods
D)unhealthy competition among local governments

Question 12

As a percentage of total expenditures,spending on highways has _____ since 1970.Spending on interest payments has _____ over the same time span.

A)increased;increased
B)decreased;decreased
C)increased;decreased
D)decreased;increased

Question 13

The largest level of government as measured by total spending is _____.

A)federal government
B)state governments
C)county governments
D)city governments

Question 14

The International Space Station is a joint project of the United States,Russia,Japan,Canada and the European Union.This suggests that _____.

A)if the space station is a public good then the optimal size of the sharing group is larger than one country
B)each country would have been unable to raise the money to pay for the space station on their own
C)there are significant negative externalities involved that should be spread over more individuals
D)Australians do not value space exploration

Question 15

Generally speaking,the Tiebout model is _____.

A)the idea that intergovernmental competition reveals consumer preferences for public goods
B)the idea that the lack of mobility can be offset by intergovernmental comparison
C)the idea that intergovernmental competition is Pareto superior
D)the idea that mobility is not necessary to intergovernmental competition

Question 16

Competition can be beneficial in the public sector because _____.

A)it leads to governments going out of business
B)comparison gives some clue as to whether a government is operating efficiently
C)it eliminates a prisoners' dilemma problem
D)a and c

Question 17

One reason larger governments might be preferable to smaller ones is _____.

A)diminishing marginal utility
B)intergovernmental competition
C)economies of scale
D)the flypaper effect

Question 18

If citizens are not very mobile among governments _____.

A)there is no intergovernmental competition
B)intergovernmental competition is ineffective
C)intergovernmental competition is effective because individuals can compare their government with nearby governments
D)the urban sprawl will be lessened

Question 19

Citizens have a strong incentive to monitor local government because _____.

A)as citizens it is their duty to do so
B)the level of government services directly affects their utility because they consume them every day
C)it is easy to observe the level and quality of nearby governments
D)the cost and quality of local government services are reflected in housing prices

Question 20

What is viewed in the private sector as competition in the public sector is treated as _____.

A)duplication
B)destruction
C)fighting
D)economic warfare

Question 21

The largest amount of state and local spending is spent on highways and other roads.

Question 22

General grants come with strings attached.

Question 23

Since 1942,the number of school districts in the United States has declined by almost _____ districts.

A)25,000
B)50,000
C)75,000
D)100,000

Question 24

If a community spends more than the amount a categorical grant requires,the effect is _____.

A)the same as a general grant
B)better than a general grant
C)worse than a general grant
D)impossible to determine given the available information

Question 25

The existence of heterogeneous preferences for government is an economic argument for a federal system of government.

Question 26

If swimming pools are public goods,then state governments to provide them.

Question 27

A justification for general grants is _____.

A)the equalization of revenues between government units with different income levels
B)higher level governments might have a greater ability to raise revenue
C)progressive taxation cannot be done on the local level
D)a and b

Question 28

Which of the following does not lessen intergovernmental competition?

A)direct intergovernmental grants
B)direct regulations
C)the decline in school districts
D)decline in local tax receipts

Question 29

The federal government of the United States was established as a federation of the governments of the original thirteen states.

Question 30

The flypaper effect is _____.

A)that government grants get shifted around to other uses
B)that government grants get spent on what they were intended to be spent on
C)that government grants are used to lower tax rates
D)that government grants are not used by local governments

Question 31

In theory,when a local government receives a grant to finance a certain type of expenditure,it should spend more if the grant _____.

A)is a matching grant rather than a categorical grant
B)is a categorical grant rather than a matching grant
C)is a general grant rather than a matching grant
D)is a categorical grant rather than a matching grant

Question 32

The deductibility of state and local taxes at the federal level _____.

A)biases states against raising property taxes
B)increase the amount of federal taxes paid
C)reduces the marginal cost of paying state and local taxes
D)raises the costs of paying state and local taxes

Question 33

Intergovernmental revenue transfers can effectively cartelize local governments.

Question 34

Intergovernmental competition obscures citizen preferences for public sector output.

Question 35

Even with a limited number of governments,everyone's government demand can be met.

Question 36

Because of record-keeping and monetary costs,a general grant is always preferable to a categorical grant.

Question 37

Local governments receive around _____ of their total revenue from intergovernmental transfers.

A)fifteen percent
B)twenty-five percent
C)thirty-five percent
D)forty-five percent

Question 38

Special districts _____ the number of governments and generally _____ intergovernmental competition.

A)increase;increase
B)decrease;decrease
C)increase;decrease
D)decrease;increase

Question 39

The total number of governments in the United States has increased since 1972

Question 40

Local governments wanting to keep their tax base from eroding away should choose _____.

A)income taxes
B)sales taxes
C)property taxes
D)excise taxes

Question 41

Explain the difference between general grants and categorical grants.Under what circumstance will they have the same impact? In that case,will one have an advantage over the other?

Question 42

Not all state and local taxes are deductible at the federal level.

Question 43

What are the benefits of intergovernmental competition? Do those benefits disappear if the mobility of individuals in the society is limited? Why or why not?

Question 44

Draw a picture of intergovernmental competition using an example with three types of individuals (different preferences for government services)and three communities with their own local governments and one bundle of government output demanded.How many levels of government output will be produced?

Question 45

Consolidation or cooperation frequently occurs in the public sector.Give some reasons why local governments consolidating or cooperating through special districts might be problematic.

Question 46

Tax increases used to fund a new school will always lower housing values in a community.

Question 47

List five theoretical economic reasons why federalism might be desirable.