Answer the following statements true (T) or false (F)
1. As long as government officials have to be elected, they are always held accounted for their policy decisions and choices.
2. Economic analysis would focus on the size of the government, in order to assess whether or not it fosters economic efficiency.
3. It is generally believed that, because of the election process, the incentives and pressures for internal efficiency are stronger in the public sector than in the private sector.
4. Critics of government contend that the market system creates incentives and pressures for internal efficiency which are absent in the public sector.
5. "Good economics" is about marginal costs and marginal benefits of specific projects; "good politics" is more about clear benefits and hidden costs.
1. FALSE
2. FALSE
3. FALSE
4. TRUE
5. TRUE
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Refer to Table 4-4. The table above lists the highest prices three consumers, Curly, Moe, and Larry, are willing to pay for a bottle of champagne. If the price of the champagne falls from $24 to $14
A) consumer surplus will increase from $80 to $95. B) consumer surplus increases from $32 to $53. C) Larry and Moe will receive more consumer surplus than Curly. D) Curly will buy four bottles; Moe will buy two bottles, and Larry will buy one bottle.
The sum of consumer surplus and producer surplus is equal to
A) total profit. B) zero. C) the economic surplus. D) the deadweight loss.
For quantity exchanged to decrease, but the price to rise, there must have been a(n)
a. increase in demand. b. decrease in demand. c. increase in supply d. decrease in supply.
A decrease in a broad index of commodity prices suggests to the Fed that
a. money is plentiful, and the Fed should conduct restrictive policy. b. money is plentiful, and the Fed should conduct expansionary policy. c. deflation is a potential future danger, and the Fed should conduct expansionary policy. d. future prices will likely increase, and the Fed should conduct expansionary policy.