Problem 1
Select all of the following that are true. To an economist, a coercive government can be useful in order to: a. Reallocate resources in order to improve efficiency. b. Fight negative externalitics. c. Ensure low gasoline prices. d. Provide a low-risk cconomic environment for individuals and firms.
Problem 2
To an economist, a government program is too big if an analysis of that program finds that \(\mathrm{MB}\)______ MC. a. Is greater than. b. Is less than. c. Is equal to. d. Is less than twice as large as. e. Is more than twice as large as.
Problem 3
Tammy Hall is the mayor of a large U.S. city. She has just established the Office of Window Safety. Because windows sometimes break and spray glass shards, every window in the city will now have to pass an annual safcty inspection. Property owners must pay the S5-per-window cost-and by the way, Tammy has made her nephew the new head of the Office of Window Safety. This new policy is an example of: a. Political corruption. b. Earmarks. c. Rent seeking. d. Adverse selection.
Problem 4
A few hundred U.S. sugar makers lobby the U.S. government each year to make sure that the government taxes imported sugar at a high rate. They do so because the policy drives up the domestic price of sugar and increases their profits. It is estimated that the policy bencfits U.S. sugar producers by about \(\$ 1\) billion per year while costing U.S. consumers upwards of \(S 2\) billion per year. Which of the following concepts apply to the U.S. sugar tax? Select one or more of the choices shown. a. Political corruption. b. Rent-seeking behavior. c. The collective-action problem. d. The special-interest effect.
Problem 5
______________________occur when politicians commit to making a series of future expenditures without simultaneously committing to collect enough tax revenues to pay for those expenditures. a. Budget deficits. b. Debt crises. c. Loan guarantces. d. Unfunded liabilities.
