Econ Test

If students who earn an A in a class were asked to transfer some of their points to low-performing students, which of the following would be most likely to occur?

Neither high nor low-performing students would work as hard to earn additional points

Which of the following is the best example of a public good?

national defense

Which of the following would be most likely to reduce budget deficits and special interest federal spending?

three-fourths approval of both Houses of Congress for increases in federal spending or borrowing

Which of the following is an example of a government agency introducing competition to its operations in order to lower costs and improve efficiency?

A government office s printing department comes in under-budget for the year.

Why is there little incentive for legislators to fight for an overall reduction in government spending?

If a legislator is able to achieve overall spending cuts, most of the benefits will accrue to voters in other districts.

Prior to 1960, what was the prevailing attitude toward federal budgets?

Most people thought that federal budgets should be in balance, so any deficits or surpluses were relatively small, except during wars.

If a project is approved by a majority of voters, does this mean that the project is economically productive?

No, when the costs imposed on the minority are considered, total costs may exceed the benefits.

Why are lobbying and other activities designed to acquire favors from the government often described as plunder ?

Stealing

Which of the following is the best indication that a project is economically productive?

The total benefits exceed total costs.

When government enterprises are funded or subsidized by taxes,

it will be difficult to determine whether consumers value the good or service more than its cost.

When managing budgets, a government agency will have the incentive to

spend all of its allotted budget so that it can make a case for a larger budget next year.

Why is the market process more likely to approve productive, and reject unproductive, projects than the political process?

In the market, projects will continue to be undertaken only if they generate revenues that are sufficient to cover their costs.

Which of the following strategies is most likely to restrain excessive spending by the federal government?

a Constitutional rule requiring three-fourths approval of both Houses of Congress for spending proposals

Which of the following will increase the national debt?

a budget deficit

Support for issues favored by well-organized special-interest groups provides vote-seeking politicians with

an easily-identifiable source of campaign workers and political contributions.

Governments encourage lobbying and favor seeking when they

are heavily involved in the granting of subsidies and tax breaks that favor some segments of the population at the expense of others.

When government officials use taxes, subsidies, mandates, and regulations to manage the economy, this is called

central planning.

Which of the following would help protect taxpayers and consumers from the disproportionate influence of special-interest groups?

constitutional restrictions that prohibit federal spending on programs designed to benefit subgroups of the population at the expense of the general taxpayer

Which of the following will improve the efficiency of government and help protect individuals from exploitation by their government?

increased voter turnout for elections

When the share of resources allocated by political decision-making becomes larger and larger,

individuals will get to keep more of what they earn and the economy will grow rapidly.

The cost of products supplied by the government

is imposed on residents regardless of whether it is financed by current taxes, government debt, or printing additional money.

Government is most likely to align the self-interests of voters, politicians, and bureaucrats with economic progress, when

it is limited in scope and remains neutral among the various subgroups of citizens.

If the Federal Reserve is going to establish an environment for economic growth and prosperity, it should focus on

keeping inflation low and the general price level relatively stable.

Agricultural subsidies and other special-interest spending programs generally benefit

large scale operations, whose owners have incomes well above the national average.

The distinctive feature of the American political process and the key to economic progress is

limited and decentralized government, protection of people and their property from aggressors, and provision of a limited set of public goods.

When each legislator fights for expenditures that benefit their constituents at the expense of voters in other districts,

logrolling and the special interest effect will lead to spending on counterproductive projects.

When government is performing the protective function well,

people will have confidence that the wealth they create will not be taken from them.

Once the criterion for receipt of an income transfer is established,

people will modify their behavior in order to qualify for the transfer, decreasing their net gain from the transfer.

When a firm or an enterprise obtains more funds from government and less from consumers, the enterprise will

spend more time trying to influence politicians and less time trying to meet the preferences of consumers.

The federal government undermines the competitive process among decentralized governments when it

subsidizes, mandates, and regulates the services provided by local governments.

The amount of resources directed toward lobbying, favor seeking from the government, and spending on political campaigns will be directly related to

the ease at which the political process can be used to gain at the expense of others.

The protective function of government seeks the harmonious interaction of its citizens through

the evenhanded enforcement of contracts and the protection of people and their property against the aggressive acts of others.

The more complex the system of levying and collecting a tax

the greater the administrative, enforcement, and compliance cost of the tax.

The directors and managers of government-operated firms will be primarily driven by

the pursuit of acquiring larger budgets.

When goods are produced through government enterprises, their opportunity cost is

the reduction in private sector output that could have been produced with the resources utilized by the government enterprises.