Farm groups spend considerable amounts of money to maintain and enlarge political support for farm subsidies. This illustrates:
A. coalitions.
B. rent-seeking activity.
C. the special-interest effect.
D. the voting paradox.
Answer: B
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Suppose the supply of apartments in Minneapolis is perfectly elastic. The effect of a $100 per month tax on all apartments is that
A) landlords pay none of the tax and there is a surplus of apartments. B) landlords pay all of the tax and suffer all of the deadweight loss. C) landlords pay all of the tax and no changes take place in the quantity of apartments supplied. D) renters pay all of the tax. E) the government collects no tax revenue because the supply is perfectly elastic.
One of the challenges for development economists working in health care is to figure out a way to:
A. force doctors to practice good medicine. B. give incentives to families to make better health care choices. C. decrease the frequency of preventative medicine, such as immunizing children. D. All of these statements are true.
If the world price of a good is lower than its domestic equilibrium price, the country will:
a. import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically. b. export a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically. c. import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied by foreign producers. d. export a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied domestically. e. import a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied by foreign producers.
If income increases by $10,000 . government purchases are fixed at $1,000 . investment spending is fixed at $2,000 . net exports are fixed at $500, and the marginal propensity to consume is 0.70, by how much does aggregate expenditure increase?
a. $700 b. $2,000 c. $7,000 d. $1,000 e. $1,400