Special interest group K receives a 1/100?? slice of the economic pie. Its net benefit from either an economic growth policy or a transfer policy is $200,000. In order for group K to be indifferent between the two policies,the economic growth policy would have to make the size of the economic pie (Real GDP)grow by _________________. This type of analysis is used to show that special interest groups tend to press government for ______________ instead of ________________.

Question

Quizplus · Accepted Answer

To make group K indifferent between the two policies, the economic growth policy would have to increase the size of the economic pie (Real GDP) by 100 times, which is $100 x $200,000 = $20,000,000. This analysis shows that special interest groups tend to press government for transfer policies (which directly benefit them) instead of policies that promote economic growth (which benefit the overall economy).

Special Interest Group K Receives a 1/100?? Slice of the Economic