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Microeconomics Ch.18: Public Economy

True/False 20 questions Business & Economics > Microeconomics by Sean Valentine
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True/False (20)

Question 1
Becoming an informed voter takes time and energy even when registering and voting are made easy.
Correct Answer
True
True. Learning about candidates and issues has a cost no matter how convenient the polling place is, which is one reason rational ignorance persists even after voting reforms. Category: Voters and Elections
Question 2
Australia is one of several countries that legally require eligible citizens to vote.
Correct Answer
True
True. Australia, Belgium and a number of other countries have compulsory voting. Such a law can require people to show up, but it cannot require them to cast an informed vote. Category: Voters and Elections
Question 3
Research finds that people who are less connected to their communities, such as recent arrivals to a neighborhood, vote at higher rates than long-time residents.
Correct Answer
False
False. People who are more connected to society vote more often, including long-time residents, married people, employed people and those who know their neighbors. Category: Voters and Elections
Question 4
Under Buckley v. Valeo, governments may forbid candidates and groups from spending more than a set limit on political campaigns.
Correct Answer
False
False. Buckley v. Valeo tied campaign spending to free speech. Governments may offer public financing in exchange for voluntary spending limits, but they cannot forbid spending above those limits. Category: Voters and Elections
Question 5
Special interest groups often contribute to the campaigns of legislators who serve on the committees that handle the issues those groups care about.
Correct Answer
True
True. Committee members shape the details of bills, so contributing to their campaigns is one way lobbyists try to gain influence, along with studying bills and suggesting wording. Category: Special Interests
Question 6
When a policy's costs fall heavily on a few firms and its benefits are spread thinly across millions of people, the millions of beneficiaries usually find it easier to organize than the firms do.
Correct Answer
False
False. The few firms each have a large stake and can coordinate cheaply, so they organize more easily. Millions of people who each gain a small amount face high coordination costs and little personal incentive. Category: Special Interests
Question 7
Special interest groups are typically large compared with the nation and loosely organized around many different issues.
Correct Answer
False
False. Special interest groups are small relative to the nation, well organized and focused on a specific issue, which is what makes them effective. Category: Special Interests
Question 8
Logrolling tends to encourage pork-barrel spending.
Correct Answer
True
True. When legislators trade votes, a coalition can agree to include a project for each member's district in one package, so many local projects pass that might fail on their own. Category: Pork and Logrolling
Question 9
Spreading military base and weapons spending across many congressional districts tends to reduce support for defense spending in Congress.
Correct Answer
False
False. Spreading that spending across many districts gives more members of Congress a local reason to support defense budgets, so it tends to build support. Category: Pork and Logrolling
Question 10
Longer-serving members of Congress generally have less power to direct pork-barrel projects to their home states than newly elected members do.
Correct Answer
False
False. Members who have served longer generally gain seniority and influence, giving them more power to steer projects home. With no term limits, some members build that power over decades. Category: Pork and Logrolling
Question 11
Democratic political systems tend to be biased against policies that give clear benefits to an identifiable group while spreading costs across many people who are hard to identify.
Correct Answer
False
False. Democracies tend to be biased toward such policies, because the winners know who they are and reward politicians, while the scattered losers often do not realize they are paying. Category: Identifiable Winners
Question 12
A tax break for a specific industry can give clear benefits to an identifiable group while the people who pay for it may not realize they bear any cost.
Correct Answer
True
True. The industry knows exactly what it gains, but the cost is spread across many taxpayers in small amounts that are easy to miss. Category: Identifiable Winners
Question 13
Long-standing U.S. limits on sugar imports, which benefit a small group of producers at the expense of many consumers, are an example that the median voter theory has trouble explaining.
Correct Answer
True
True. Sugar consumers far outnumber sugar producers, so a policy that keeps sugar prices high is not what the median voter would choose, yet U.S. limits on sugar imports have lasted for generations. The policy persists because a small, organized group of producers outweighs a large, unorganized group of consumers, which the median voter theory does not predict. Category: Majority Rule
Question 14
A democracy gives every citizen an equal say, which may reduce the chance that a small, wealthy group oppresses everyone else.
Correct Answer
True
True. Equal voting power is one of democracy's main protections against rule by a narrow elite, even though democratic decisions can still be flawed. Category: Majority Rule
Question 15
When preferences form a cycle, whoever controls the order in which options are voted on can influence which option wins.
Correct Answer
True
True. In a voting cycle every option loses to some other option, so the final result depends on which pairs are voted on first. Category: Voting Cycles
Question 16
Government agencies funded by tax dollars face stronger pressure to cut costs than private firms because agencies can go bankrupt more easily.
Correct Answer
False
False. Agencies do not face competition or a real threat of bankruptcy, so they generally face weaker pressure than private firms, which can lose customers and go out of business. Category: Markets and Government
Question 17
Markets can produce outcomes that society does not want, such as pollution and monopoly.
Correct Answer
True
True. Markets are flexible tools for allocating scarce resources, but they can also produce pollution, imperfect competition, poverty and other unwanted results. Category: Markets and Government
Question 18
A firm in a competitive market that keeps making products customers do not want can continue indefinitely without suffering losses.
Correct Answer
False
False. Markets tend to correct such mistakes: a firm producing unwanted goods suffers losses and may be forced to exit, a pressure government agencies largely lack. Category: Markets and Government
Question 19
The model of special interest politics predicts that a tariff can be enacted even when its total cost to consumers is larger than its total benefit to the protected group.
Correct Answer
True
True. What matters politically is how concentrated each side's stake is, not only the totals. A small, organized group with a large stake per member can beat a large group whose members each lose a little. Category: Identifiable Winners
Question 20
Total spending on U.S. election campaigns is more than 10 percent of the entire U.S. economy.
Correct Answer
False
False. Campaign spending, though large in dollars, is a very small fraction of the overall economy, well under 1 percent of the value of everything the nation produces. Category: Voters and Elections

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