Micro 1

Front 1

In 2006, the combined expenditures of federal,, state and local governments in the United States were approximately 34 percent of gross domestic product (GDP). Approximately what percentage of GDP were government expenditures in 1930?

Back 1

9 percent

Front 2

Direct income transfers account for approximately what percentage of total government spending?

Back 2

40 %

Front 3

Economic Theory indicates that the behavior of

Back 3

voters, government employees, and public officials is best understood by applying the same basic principle we use to predict the behavior of people in the private sector--that incentives matter.

Front 4

The branch of economics that applies the principles and methodology of economics to the operation of the political process is known as

Back 4

public choice analysis.

Front 5

Public choice analysis suggests that voters will tend to support political candidates who offer

Back 5

the voter the most personal benefits at the least personal cost.

Front 6

Gertrude is the owner of a small business, and she is 35 years old. She doesn't smoke cigarettes, and she often spends her weekends with her family camping at the local Greentree State Park. According to public choice theory, which of the following four politicians for public office would Gertrude be most likely to vote for in the upcoming election?

Back 6

Politician C proposes increasing the excise tax on cigarettes and using the money to improve camping facilities at Greentree State park.

Front 7

Despite being a college graduate, Jack Adams cannot name any of his representatives in Congress and he has no idea which issues are being debated and voted on this week in Congress. According to public choice analysis Jack is

Back 7

making a rational personal choice because knowing these things gives him little personal benefit.

Front 8

Public choice theory indicates competitive forces provide a politician with a strong incentive to offer voters a bundle of political goods that she believes

Back 8

will increase her chances of winning elections.

Front 9

Payments that users (consumers) are required to make if they want to receive certain services provided by the government are called

Back 9

user charges

Front 10

In which of the following situations is the political process most likely to result in both the acceptance of efficient (productive) programs and the rejection of inefficient (counterproductive) political activities?

Back 10

The people who benefit from a government program pay the costs of the program roughly in proportion to the benefits that each receives.

Front 11

When politicians support policies that benefit small interest groups, such as farmers, at the expense of unorganized, widely dispersed groups, for example, taxpayers or consumers, this is a reflection of the

Back 11

special-interest effect.

Front 12

Under democratic representative government, spending on a government program will likely be larger than the amount consistent with economic efficiency when

Back 12

benefits of the program are highly concentrated, while the costs are widely dispersed among voters.

Front 13

Which of the following refers to legislators trading votes on legislation?

Back 13

logrolling

Front 14

Legislation that contains a number of projects benefiting local interests at the expense of the general taxpayer is called

Back 14

pork-barrel laegislation.

Front 15

Government decisions tend to be biased toward actions that have

Back 15

future costs that are difficult to identify and current benefits that are esily observable.

Front 16

Dairy farmers hold an annual Capitol Hill ice cream social that provides free ice cream for congressional staffers during which time representatives from the industry discuss issues with, and provide information to, congressional staff. This is an example of

Back 16

rent seeking

Front 17

Public choice theory suggests that politicians will be most likely to favor redistribution of income from

Back 17

unorganized taxpayers to well--organized interest groups.

Front 18

Most income transfer programs in the United States

Back 18

allocate income to concentrated interest groups, such as the elderly, large farmers, and business interests.

Front 19

When goods are produced privately, but the cost of their puchase is paid for by the taxpayer or some other third party,

Back 19

consumers have little incentive to serach out and patronize low-cost suppliers.

Front 20

Which of the following is true about the market and public sectors?

Back 20

Competitive behavior is present in both sectors.

Front 21

Payments to individuals or institutions that are not linked to the current supply of a good or servie by the recipient

Back 21

transfer payments

Front 22

Competitive behavior is present in both

Back 22

the market and public scetors

Front 23

Public-sector organization can break the

Back 23

individual consumption-payment link

Front 24

scarcity imposes

Back 24

the aggregate consumption-payment link in both sectors

Front 25

Private-sector action is based on

Back 25

mutual agreement; public sector action is based on majority rule

Front 26

When collective decisions are made legislatively, voters must choose among candidates

Back 26

who represent a bundle of positions on issues

Front 27

____ & ____ are distributed differently in the governments and markets

Back 27

income and power

Front 28

The study of decision making as it affects the formation and operation of collective organizations, like governments. In general, the principles and methodology of economics are applied to political science topics

Back 28

public-choice analysis

Front 29

Because it is highly unlikely that an individual vote will decide the outcome of an election, a rational individual has little or no incentive to search for and acquire the information needed to cast an informed vote

Back 29

rational ignorance effect

Front 30

What are some of the incentives confronted by the voter?

Back 30

"What can you do for ME and for MY GOALS?" & "How much will it cost ME?"

Front 31

What are some of the incentives confronted by the politican?

Back 31

Many of them genuinely care about the "public interest" and the quality of the government, but they need to be elected to achieve their objectives, whatever they may be.
In other words, votes are the necessary objective of politicians, but money helps them get those votes.

Front 32

What are some of the incentives confronted by the government bureaucrat?

Back 32

they usually want to see thier own agencys goals furthered. (requiring larger budgets or greater authority to regulate, or both)

Front 33

When voters pay in proportion to benefits received, all voters will gain if the

Back 33

government action is productivem

Front 34

When voters pay in proportion to benefits received, all voters will lose if the

Back 34

government action is unproductive

Front 35

When the benefits and costs derived by individual voters are closely related, the voting process will enact

Back 35

efficient projects while rejecting inefficient ones.

Front 36

When voters pay in proportion to the benfits they recieve, there will tend to be

Back 36

harmony between good politics and sound economics

Front 37

An issue that generates substantial individual benefits to a small minority while imposing a small individual cost on many other citizens. In total the net cost to the majority might either exceed or fall short of the net benefits to the group

Back 37

Special-interest issue

Front 38

a package of spending projects benefiting local areas financed through the federal government. The costs of the projects typically exceed the benefits in total, but the projects are intensely desired by the residents of a particular district who get the benefits without having to pay much of the costs

Back 38

Pork-barrel legislation

Front 39

The direction of budgeted funds to specific projects, programs, locations. The technique is costly but provides major benefits to business firms and other concentrated constituent groups, and to the districts where the spending takes place. The benefits are often targeted to those willing to make substantial campaign contributions.

Back 39

Earmarking

Front 40

Public-choice analyisis indicates that majority voting and representing democracy

Back 40

work poorly when concentrated interests can benefit at the expense of the general public.

Front 41

In the case oof special interest issues, there is a conflict between

Back 41

good politics--getting elected--and the efficients use of resources

Front 42

The misallocation of resources that results because public-sector action is biased (1) in favor of proposals yielding clearly defined current benefits in exchange for difficult-to-identify future costs and (2) agaisnt proposals with clearly identifiable current costs that yeiled less concrete and less obvious future benefits

Back 42

shortsightedness effect

Front 43

actions by individuals and groups designed to restructure public policy in a manner that will either directly or indirectly redistribute moer income to themselves or the projects they promote

Back 43

rent seeking

Front 44

to get elected or reelected politicians have a strong incentive

Back 44

to provide transfers to important interest groups to secure their support

Front 45

What is the first major reason why government transfer activity will reduce the size of the economic pie?

Back 45

Income redistribution weakens the like between productive activity and reward

Front 46

What is the SECOND major reason why government transfer activity will reduce the size of the economic pie?

Back 46

as public policy redistributes a larger share of income, more resources will flow into wasteful rent-seeking activities

Front 47

What is the THIRD major reason why government transfer activity will reduce the size of the economic pie?

Back 47

Higher taxes to finance income redistribution and an expansion in rent-seeking will induce taxpayers to focus less on income-producing activities and mroe on actions to protect their income.

Front 48

government actions will often lead to economic inefficiency as the result of

Back 48

1. the special interest effect
2. the shortsightedness effect
3. rent-seeking
4. weak incentives to keep costs low within government enterprises and agencies.

Front 49

Which of the following is most likely to be an implicit cost of production?

Back 49

interest income foregone on funds invested in the firm by the owners.

Front 50

The law of diminishing returns

Back 50

explains why marginal cost eventually increases as output expands.