Assuming that the part of the government’s budget used for military expenditures reduces the amount available for consumption expenditures and that the benefits to military expenditures take longer to accrue than consumption expenditures, _____ decision-makers will _____. a. democratic; be biased against military spending b. democratic; be biased in favor of military spending c. autocratic; […]
If rent seeking was, on average, a losing proposition, _____. a. rent seekers would exit rent seeking until losses from rent seeking equaled zero b. rent seeking would stop because it was no longer profitable c. rent seekers would increase competition for scarce benefits d. rent seeker would exit rent seeking until there is a […]
If tax rates were 100 percent, tax revenues would be _____. a. maximized b. minimized c. indeterminate d. the same if they were 50 percent ANSWER b
The managers of government bureaucracies have an incentive to _____ a. maximize the size of their budgets b. minimize the size of their staff c. maximize the profits from their bureaus d. minimize rent-seeking ANSWER a
To understand how decisions about military expenditures are made, it is probably most important to understand _____. a. geography b. economic warfare c. the political process d. strategic alliances ANSWER c
Which of the following is not a source of rents? a. Tariffs b. Logrolling c. Price supports d. Entry barriers ANSWER b
If the backward-bending supply curve for labor has relevance for public finance, it is because _____. a. at really high wage rates there will be insufficient labor to meet aggregate demand b. there is a trade-off between leisure and labor c. income taxes do no raise sufficient revenue to pay for public goods because individuals […]
Military expenditures in democratic nations may be _____. a. too low because politicians have long time horizons b. too low because politicians have short time horizons c. too high because politicians have long time horizons d. too high because politicians have short time horizons ANSWER b
The head of a stable dictatorship is likely to have _____ the president of the United States. a. the same time horizon as b. a shorter time horizon than c. a longer time horizon than d. a shorter tenure than ANSWER c
The Laffer Curve demonstrates that _____. a. at some level of tax rates, tax revenues decline b. there is no relationship between tax rates and tax revenue c. there is no relationship between tax rates and labor supply d. at some level of tax rates, labor supply declines ANSWER a
