Session 14 Quiz

Public choice theorists point out that the political process:

differs from the marketplace in that voters and congressional representatives often face limited and bundled choices.

Government loan guarantees tend to have the effect of:

socializing losses and privatizing gains.

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

Government guarantees to private investors that they will get their money back even if the company fails.

Public choice theory focuses on the economics of:

government decision making, politics, and elections.

"Vote for my special local project and I will vote for yours." This political technique:

is called "logrolling."

A special-interest issue is one whose passage yields:

large economic gains to a small number of people and small economic losses to a large number of people.

Government changes in interest rates to regulate the economy are part of:

monetary policy.

The field of economics that analyzes government decision making, politics, and elections is called:

public choice theory.

In a market economy, the government's power to coerce can:

reduce private-sector risk and increase economic efficiency.

In a sporting goods store, you can buy the equipment you want and forgo the rest. But in an election you "buy" the entire range of the candidate's positions, including some you may not agree with. This difference:

reflects limited and bundled choices in the public sector.

Individual accountability within the government bureaucracy:

tends to be lacking because of civil service protections and the complexity of government.

As it relates to corporations, the principal-agent problem is that:

the goals of the corporate managers (the agents) may not match the goals of the corporate owners (the principals).

The information contained in the table illustrates:

the paradox of voting.

Because majority voting fails to incorporate the strength of the preferences of individual voters, it:

under some circumstances produces economically inefficient outcomes.

(Consider This) Voter failure describes the situation where:

voters support policies that would reduce productive and allocative efficiency.