Which of the following statements best describes why we cannot be assured that bureaucrats who believe in the mission of their bureaus will always act in the public interest? a. Logrolling among members of Congress ties the hands of the bureaucracy, preventing them from acting in the public interest. b. Bureaucrats do not personally benefit […]
When costs are uncertain, the type of procurement contract that will cover the uncertain costs plus an agreed-upon rate of return is _____. a. fixed fee b. cost plus fixed fee c. cost plus percentage fee d. cost plus incentive fee ANSWER c
A person who practices poisonous snake charming and does not reveal this to her health insurance company before purchasing insurance is an example of A) moral hazard. B) adverse selection. C) signaling. D) screening. ANSWER B
When costs are uncertain, a government might use a _____ contract, where the government pays the cost of the project plus an additional amount. a. fixed fee b. cost plus fixed fee c. cost plus percentage fee d. cost plus incentive fee ANSWER b
An increase in consumer incomes will lead to A) a rightward shift of the demand curve for plasma TVs. B) a movement upward along the demand curve for plasma TVs. C) a rightward shift of the supply curve for plasma TVs. D) no change of the demand curve for plasma TVs. ANSWER A
In the 1980s, marginal tax rates on high income taxpayers fell from 70 to 28 percent. Tax revenues coming from the top 1 percent of income earners _____. a. fell as a percentage of income b. fell in total, but not as a percentage of income taxes paid by all taxpayers c. fell compared to […]
If controlling the level of military expenditures is the most important goal, the most appropriate type of procurement contract would be _____. a. fixed fee b. cost plus fixed fee c. cost plus percentage fee d. cost plus incentive fee ANSWER a
Which of the following statements best summarizes why bureaucrats tend to be budget maximizers? a. The larger the budget, the more assured bureaucrats can be of having sufficient resources to complete a task. b. The larger the budget, the more power and prestige the bureaucrat wields. c. The larger the budget, the larger the workload […]
The percentage of additional income that will have to be paid in tax is an individual’s _____. a. marginal tax rate b. average tax rate c. proportional tax rate d. flat tax rate ANSWER a
Adverse selection can occur when A) all persons involved in a transaction have full information. B) one person has information not available to others. C) post-agreement incentives result in workers shirking. D) nobody has any information about a particular product. ANSWER B
