Chapter 6: Online Quizzes

Current tax rates are insufficient to finance the benefits promised by both the Social Security and Medicare programs. Are these unfunded promises surprising according to economic theory? a.Yes, political representatives have a strong incentive to levy taxes that are sufficient to cover the cost of all programs they favor. b.No, the unfunded promises reflect the shortsighted nature of the political process. c.Yes, political representatives generally favor balancing the government budget because this is best for the economy. d.No, even though debt financing often makes sense, politicians are reluctant to use it because it will damage their chances of being reelected.

b.No, the unfunded promises reflect the shortsighted nature of the political process.

Public choice theory suggests politicians will be most likely to favor redistribution of income from a.the rich to the poor. b.unorganized taxpayers to well-organized interest groups. c.middle-income taxpayers to both the rich and the poor. d.well-organized businesses and labor groups to consumers.

b.unorganized taxpayers to well-organized interest groups.

When voters pay taxes in proportion to the benefits they receive from government projects, a.efficient projects will tend to be opposed by a majority of voters. b.efficient projects will often be favored by a majority of voters. c.projects that are efficient will tend to be favored by an overwhelming majority of voters. d.democratic political decision making can be expected to work poorly.

c.projects that are efficient will tend to be favored by an overwhelming majority of voters.

The rational-ignorance effect is a result of a.externalities that lead to an excess supply of information. b.the limited incentive of the news media to cover political campaigns. c.the expectation of individual voters that their vote will not be decisive. d.the lack of a college education on the part of most voters in the United States.

c.the expectation of individual voters that their vote will not be decisive.

Which of the following explains why managers of government agencies have little incentive to achieve operational efficiency? a.Public-sector managers need not fear bankruptcy when operational efficiency is not achieved. b.Public-sector managers seldom receive personal benefits if they find ways to improve the efficiency of their operations. c.Public-sector agencies typically do not face competition. d.All of the above explain why government agencies have little incentive to be efficient.

d.All of the above explain why government agencies have little incentive to be efficient.

Special-interest programs are highly attractive to vote-seeking politicians because a.these programs are highly efficient, and therefore, they tend to enhance the general welfare of the populace. b.members of special interest groups favoring these programs are less likely to vote than the taxpayers who pay for them. c.low-income recipients are the primary beneficiaries of special-interest programs. d.members of special interest groups favoring these programs feel strongly about them while most other voters are rationally uninformed about them.

d.members of special interest groups favoring these programs feel strongly about them while most other voters are rationally uninformed about them.