Explain why public choices might lead to the overprovision rather than the underprovision of a public good
What will be an ideal response?
Rational ignorance of voters, combined with lobbying by public goods contractors and bureaucrats, causes the political equilibrium to provide public goods at a higher level than is economically efficient. In this case, it is in the self-interest of the politicians to provide more than the efficient quantity of the public good because they reap benefits from the lobbyists and bureaucrats while suffering little or no loss from voters.
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M1 is a definition of money largely confined to which function(s) of money?
A) unit of account B) store of value C) medium of exchange D) B and C.
A situation where a consumer's willingness to use an item depends on how many others use it is
A) a positive-sum game. B) a network effect. C) price-leadership. D) a vertical merger.
Assume the economy is in recession, the MPC is 0.80, and an increase of $200 billion in spending is needed in order to reach full employment. The target can be reached if government spending is increased by:
a. $20 billion. b. $200 billion. c. $80 billion. d. $40 billion.
Double counting in the resource cost-income approach to GDP refers to
a. corporate income being taxed twice b. the amount of income taxes paid to states that is taxable by the federal government c. calculating GDP twice using the income and expenditures methods d. adding the value of exports to GDP and subtracting the value of imports e. counting the total value of a final output in addition to the value of the inputs used to make it