Question : 21) What logrolling? A) a situation where a policymaker votes to : 1388008

21) What is logrolling?

A) a situation where a policymaker votes to approve a bill in exchange for favorable votes from his colleagues on other bills

B) a situation where policymakers transfer resources from those voters who are unlikely to have a huge impact on the political outcome to those who contribute to political campaigns

C) a situation where a policymaker accepts bribes to prevent proposed legislation from coming to a vote

D) a situation where a policymaker gets the government to fund a non-essential project benefiting her family members

22) Logrolling may result in

A) legislation that yields economy-wide benefits, the funding for which is borne primarily by a few of the smallest states.

B) a majority of Congress supporting legislation that benefits the economic interests of a few, while harming the economic interests of a much larger group.

C) members of Congress selling their votes on proposed legislation to the highest bidder.

D) creating limited incentives for policymakers to consider the immediate consequences of their proposed legislation.

23) What is meant by the term “rational ignorance”?

A) It refers to the absence of a negative incentive, for example, a fine for not voting, which results in a low voter turnout.

B) It refers to a situation where one policymaker deliberately approves a bill he does not support in exchange for a future favorable vote for his own cause.

C) It means the lack an economic incentive for voters to become informed about a pending legislation.

D) It refers to the fact that policymakers and their constituents have different ideas of what it means to behave rationally and each party deliberately ignores the other’s view.

24) Rational ignorance

A) explains why consumers ignore sunk costs when they vote.

B) explains the Arrow impossibility theorem.

C) refers to attempts by special interests to use government action to make themselves better off at the expense of others.

D) helps to explain why rent seeking by special interest groups occurs.

25) One important difference between the political process and the market process is that

A) the political process results in collective actions in which not everyone is required to participate, while in the market process individuals are obliged to participate.

B) the political process results in collective actions in which everyone is obliged to participate, while in the market process individuals are free to participate or not.

C) the political process results in collective actions that maximize economic surplus, while the market process may lead to efficiency losses.

D) the political process results in collective actions in which everyone is made better off, while the market process results in actions that favor some groups only.

26) What is regulatory capture?

A) It is a situation in which a policy maker seeks to improve his election prospects by aligning himself with a powerful special interest group which will finance his political campaign.

B) It is the exchange of political support between a regulatory agency and the regulated firm resulting in both parties capturing economic rents.

C) It is a situation in which a firm being regulated successfully influences the regulatory agency’s actions to benefit the interests of the firm, rather than the public interest.

D) It is a situation in which a regulatory agency uses its authority to force actions that are not favored by the regulated firms but are in the public’s interest.

27) Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product. Which of the following is the best example of regulatory capture?

A) The Food and Drug Administration (FDA) has increased the time and expense pharmaceutical firms incur to receive approval to market a new drug.

B) A federal government agency hires more employees than it requires to regulate an industry because it does not seek to minimize costs or maximize the agency’s profits.

C) The head of an agency is required to testify before Congress because Congress controls the size of the agency’s budget. Congress “captures” the agency because of its budget authority.

D) Firms that were regulated by the Interstate Commerce Commission (ICC) attempted for many years to influence the ICC’s actions. 

28) Both presidents Kennedy and Reagan proposed significant cuts in income taxes because

A) at the time of their proposals the federal government was experiencing budget surpluses; that is, tax revenue exceeded government expenditures.

B) they wanted to offset their proposals to increase other taxes.

C) state governments had increased their taxes and they believed the tax cuts they proposed would result in most citizens paying about the same total state and federal taxes.

D) they believed that the tax cuts would enhance economic efficiency.

29) Both presidents Kennedy and Reagan proposed significant cuts in income taxes. Opponents of these tax cut proposals argued that

A) the tax cuts would benefit high-income taxpayers.

B) cutting state sales taxes, rather than federal income taxes, would result in greater economic efficiency.

C) while the tax cuts would result in greater economic efficiency, there was too much opposition to the tax cuts in Congress. As it turned out, Congress ultimately approved both tax cut proposals.

D) it would be better to cut taxes on corporate profits.

30) Economists James Buchanan and Gordon Tullock are well-known for developing

A) the impossibility theorem.

B) the voting paradox.

C) the public choice model.

D) the concept of government failure.