Microecon LSM Chapter 5

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Terms in this set (...)

The following are problems associated with directing and managing government:
The massive size and scope of government, inflexibility of government agencies, the need for bureaucracy.
Which of the following is an example of a way the government coerces individuals to do things?
Putting someone in jail who does not pay his/her taxes.
Which of the following is NOT a benefit of government being able to force people to do things?
Identifying inefficient government policies.
In the case of a public good,
Producers fail to produce enough of the good because it is impossible to charge many of the beneficiaries for the product.
A ____ externality results in overproduction of a product where all the costs of production are not borne by the producer
Negative
When the government reduces private sector risk,
More businesses form
Government economic policies are not like Adam Smith's "invisible hand" because
Government economic policies can result in mis-allocated resources.
The massive size and scope of the government
Hinders both the identification and the correction of inefficient government policy.
Government bureaucracy is necessary because
The limited number of elected officials cannot manage all the government's affairs.
Which of the following are reasons for the detailed rules and regulations in the government?
To make sure that laws are uniformly applied, To make sure that laws are uniformly enforced
Which of the following is not an example of inefficient intervention in the private market?
Requiring children to wear helmets when riding a bicycle.
A government agency that is supposed to supervise a particular industry is said to have suffered ____ (two words) if its regulations and enforcement activities come to be heavily influenced by the industry it is supposed to be regulating.
Regulatory capture
Government loan guarantees
Can provide an incentive for firms to invest recklessly.
Unlawful misdirection of governmental resources or actions that occur when government officials abuse their entrusted powers for political gain is better known as
Political corruption
Many critics argue that many government investments looks like prime examples of _____ (two words).
Rent seeking
Private institutions
Are imperfect and the government's economic function is mainly to correct that system's shortcomings.
Government loan guarantees:
Are meant to increase the production of goods with positive externalities, privatize gains, socialize losses.
True or False:
Government funding does not allow inefficient firms to persist in operation even after competition would have eliminated them.
Which of the following describes government failure?
Government failure occurs because government officials put the interests of a minority above the interests of the majority, Government failure can happen despite government officials knowing the preferences of what voters prefer, Government failure is caused by shortcomings in the public sector.
Chronic budget deficits can
Result in an underallocation of resources to the private sector/Result in an overallocation of resources to the public sector, both resulting in economic inefficiency.
A _____ can provide politicians with political cover for increasing the size of the deficit.
recession
_____ (two words) politics is a means of securing a government project that yields benefits mainly to a single political district.
Pork barrel
Fiscal policy attempts to
Use changes in taxation and spending levels to offset the business cycle.
_____-agent problems are conflicts that arise when tasks are delegated by one group of people to another group of people.
Principal
A certain project has an expected cost more than its expected benefit, but it is popular and the benefits are immediate, while the costs are paid out over time. Therefore politicians may choose to
Approve it because they will face re-election before the costs are apparent.
A ____ _____ occurs when a government's tax revenues are less than its spending during a particular year.
budget deficit
A voter may vote for a candidate with whom they disagree about an issue because
The candidate's stand on other issues more closely aligns with the voter's preferences than do other candidate's stands.
Which of the following is not rent-seeking behavior?
Increases on income taxes.
An ____ _____ occurs when the government commits to making a series of future expenditures without simultaneously committing to collect enough tax revenues to pay for those expenditures.
unfunded liability
Which of the following are the basic forms of political corruption?
A government official demands a bribe to do something she is not legally entitled to do; A government official must be bribed to do what he should be doing as a part of his job.