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Public Policy > Midterm #1 > Flashcards

Midterm #1 Flashcards

1
Q

What is a non example of Non-rival consumption?

a. Public Parks
b. Lighthouse
c. Emergency Services
d. Housing

A

Housing

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2
Q

According to Charies Wheelan, What is the main example of raising Private costs?

a. If you have a hummer, raise the gas tax, emission tax, or weight tax
B. If you have a jet plane impose and raise emission taxes
C. increase social costs to increase private costs
D. none of the above

A

a. If you have a hummer, raise the gas tax, emission tax, or weight tax

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3
Q

What are the ways Gov. can address imperfect info

a. Gov can correct & publicize accurate warnings based on large quantity data
b. Government can prohibit dangerous products and work
c. Government can mandate behavior
d. All of the above

A

d. All of the above

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4
Q

In peter H Lindet reading a misleading tactic to slander welfare states is the high taxes reduce work fallacy

a.true
b.false

A

a. true

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5
Q

The govenment can serve as a natural monopoply

a.true
b.false

A

a. true

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6
Q

Which of the following is not a market failure?

a. externalities
b.incomplete markets
c. imperfect information
d. none of the above
e.macroeconomic crises
f.monopolies

A

d. none of the above

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7
Q

How many market failures are there?

A

6

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8
Q

What are the types of market failures?

A
  1. Externalities
  2. Monopolies
  3. Imperfect information
  4. Public goods
  5. Macroeconomic crisis
  6. incomplete markets
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9
Q

Standardization is not an important metric to consider when examining trends

a. true
b. false

A

b. false
it is important

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10
Q

In the U.S. most gov. spending happens at the state or federal level?

A

State

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11
Q

According to Cassidy, public goods are supplied in sufficient quantity

A

False

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12
Q

According to Cassidy what are critical properties of public goods

a. can vary from state to state
b. It is impossible to exclude individuals from using it (non excludable)
c. It costs nothing for additional people to use (non-rivalrous)
d. All of the above
e. B & C

A

e. B and C

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13
Q

Who is John Maynard Keynes?

A

An influential economist that rejected the classical liberal viewpoint

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14
Q

Classical Liberalism believes that the free market and capitalism are necessary for a functioning Democracy

A

True

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15
Q

The U.S. government has been exponentially increasing since the 1980s

A

False

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16
Q

According to Lindert, Bigger government undermine economic growth

A

False

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17
Q

According to hacker, the free market caused economic growth

A

False

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18
Q

Which of the following is an advantage of user fees?

a.Transaction costs
b. Underconsumption
c. Benefits those who pay
d. None of the above

A

c. Benefits those who pay

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18
Q

Perfect info between Buyers and Sellers is necessary for Market Efficiency

A

True

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19
Q

Why are governments both Big and Small?

a.Population aging
b. Transnational organization (an example of this is the United Nations)
c. Democracy
d. All of the above

A

d. All of the above

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20
Q

There are five types of market failures?

A

False

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21
Q

According to classical Liberalism, Government should be as large as possible in order to regulate the free market

A

False

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22
Q

Public policies dont always foster property

A

True

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23
Q

The free market movement advocated financial deregulation and tax cuts

A

True

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24
Q

Milton Friedman’s view about government are most consistent with

A

Liberalism

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25
Q

The US healthcare system is an example of a monopoly

A

True

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26
Q

The progressive set out to rescue capitalism, not replace it

A

True

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27
Q

What is a public good? something that is

A

Non excludable and Non rivalrous

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28
Q

When used incorrectly, taxation and other forms of governmental regulation:

A

Disrupt the free market

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29
Q

Social Cost = Private costs + External cost (what does this equation calculate )

A

Externalities

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30
Q

The US has a smaller government than most rich countries

A

True

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31
Q

According to Milton Freidman, There are only two ways to coordinate activity of a large population. What are they

A

Voluntary cooperation of individual people - the free market

and

Central direction- essentially coercion

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32
Q

The government should be the sole provider of goods/services

A

False (will give government too much power)

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33
Q

Because the gov has intervened to provide public goods and counter negative Extremadura, our lives are better protected

A

true

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34
Q

In the 1970s The mixed economy was attacked by who

A

Republican party

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35
Q

Just because the gov. perform tasks less will it cools/should doesnt mean that we should be better off without it

A

True

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36
Q

Classical Liberalism

A

Belief in individualism; emphasis on freedom & democracy, free markets; core
principles; government as rule maker & umpire

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37
Q

what are the 5 misleading tactics according to Peter Lindert

A
  1. Theoretical models instead of facts
    2.Guilty by defiition
    3.Who’s in the sample
  2. Riding the cycle
    5.High taxes reduce work fallacy
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38
Q

Free riders

A

People who benefit from the group but give little in return

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39
Q

Laisser-faire

A

Idea that government should play a small role as possible in economic affairs

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40
Q

Bureaucracy

A

A system of managing government through departments run by appointed officials

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41
Q

Bureaucrat

A

Government official

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42
Q

Non rivalrous goods

A

even when one person uses the good there can use it as well

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43
Q

nonexludable

A

The supplier cannot prevent consumption by people who do not pay for it

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44
Q

excudable good

A

a good for which it is easy to prevent consumption by those who do not pay

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45
Q

Rivalrous good

A

Its use by one individual makes it less available for use by others

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46
Q

Public goods

A

Goods that are neither excludable nor rival consumption

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47
Q

Light house

A

non rivalrous and non excludable

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48
Q

Spillovers or externalities

A

Occur when individual’s market transaction affects other members of the economy

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49
Q

Hidden information

A

Civil servants (agents) might also have access to information that is not available to the public or other branches of government (principals) and not be willing to share it if it goes against goals

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50
Q

Averse selection

A

The problem of incomplete information - of choosing alternatives without fully knowing the details of available options

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51
Q

Polarization

A

The presence of increasingly conflicting and divided viewpoints between the Democratic and Republican parties

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52
Q

Democratic backsliding

A

A decline in quality of democracy including the extent of participation, the rule of law, and vertical and horizontal accountability

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53
Q

Basic norm essential to society

A

Mutual toleration and forbearance

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54
Q

Multal toleration

A

as long as our rivals play by constitutional rules we accept that they have an equal right to exist, compete for power, and govern

55
Q

forbeaarance

A

patient self-control; restraint and tolerance

56
Q

Partisan

A

Devoted to or biased in support of a party/group/or cause

57
Q

Economic dynamism

A

The prosperity for entrepreneurial activity and the existence of business systems that can support it, in a given business environment

58
Q

Harm principle

A

The actions of an individual should only be limited to prevent harm to other individuals

59
Q

Neighborhood effect

A

Neighborhood effects are community influences on individual social or economic outcomes

60
Q

What critical thing do you have to do when trying to compare governmental growth and spending?

A

GDP and GPO

61
Q

What does Friedman have to say about belief in individuals?

A

A country is comprised and made up of individuals, not a superior entity

62
Q

What did Friedman believe was the key political freedom and democracy?

A

Free markets and capitalism
- believed that markets are more dynamic and therefore lead to greater growth

63
Q

What’s another name for free markets?

A

Laissez Faire

64
Q

What types of views and programs would a Classical Liberal be opposed to?

A

Keyesianism, FDR’s “New Deal”, LBJ’s Great Society

65
Q

According to Friedman, what are the Core Principles of Classical Liberalism?

A
  1. Scope of government must be limited (“If you put the federal government in charge of the Sahara desert, there would be a shortage of sand in 5 years”)
  2. Government power must be dispersed
66
Q

What are the dimensions that contribute to the size of government?

A

-Spending/Expenditures ($7.2 trillion)
-Employment
-Taxation/Revenue ($6.6 trillion)

67
Q

What is fiscal policy vs monetary policy?

A
  1. Spend more and tax less (fiscal policy)
  2. Reduce interest rates (monetary policy)
68
Q

What is a typical classical liberal view that Keynesians tend to reject in terms of the economy and government intervention?

A

That we can wait for the economy to return to growing on its own
- We can’t wait for the market to take care of itself; need government intervention

69
Q

What is the thought process behind austerity?
Austerity will lead to no deficit

A

-taxing more than spending in order to create a surplus

70
Q

What do Hacker and Pierson argue about the “activist” state?

A

It has been central to economic success
-Government (not the free market) is what caused early growth in the U.S (expansion of railroads, federal highway system)
-Viewed early business successes as plain luck and consequences of good timing and government

71
Q

What major area do Hacker and Pierson feel people don’t understand the scope of government involvement in?

A

Science and Innovation
-pharmaceuticals develop on the backs of government research
-people are unaware how involved the activist state really is in the economy

71
Q

What is the main reason why the state has to intervene rather than letting the market run its course?

A

Market failures

72
Q

When markets work well they lead to ________________.

A

Lots of economic growth and dynamism in capitalism

73
Q

What big idea does Cassidy describe in “How Markets Fail?

A

Pigou’s Concept of Social Cost
-“There are thing I can do in the market that effects the public”
-Prime example is global warming

74
Q

What is the Coase Theorem that both Wheelan and Cassidy discuss?

A

Private actors can efficiently handle disputes and compensate for losses as long as
1. Property rights are defined (i.e. law is clear)
2. Transaction costs are low (e.g. few affected parties)

75
Q

How do Public Goods act as a market failure?

A

Some goods will not be supplied by the market or will be supplied in insufficient quantity
- Ex: lighthouses, national defense

76
Q

What issue can arise from public goods being non-excludable?

A

Free-riding (people consuming without paying)

77
Q

What are the classifications of goods?

A

Private good (rivalrous, excludable)
“Free Good” (rivalrous, non-excludable)
“Toll Good” (non-rivalrous, excludable)
“Pure Public Good” (non-rivalrous, non-excludable)

78
Q

How does Cassidy refer to an externality?

A

“Negative spillover”

79
Q

What example do Cassidy and Pierson use to explain externalities?

A

Global Warming

80
Q

What does Cassidy believe is a positive externality?

A

Innovative New Technology and Social Media

81
Q

What is present when you only have a single firm?

A

A monopoly
- When there is monopolistic competition firms can charge outlandish prices for low quality

82
Q

What kind of monopoly might the government act as?

A

A natural monopoly
- Ex: creating electricity after grid, water after pipes

83
Q

What might happen in response to natural monopolies?

A

Since markets are dynamic allowing for new and more efficient private competition to emerge (ex. Netflix vs. Cable television)

84
Q

Information is most like what kind of good?

A

a public good as it is non-rivalrous or excludable

85
Q

What are some examples of how information is not readily available?

A
  • consumers buying faulty or dangerous products because it isn’t efficient (or possible) for individuals to monitor safety (e.g. FDA)
  • employees don’t know workplace dangers
  • the Market for Lemons (Cassidy)
  • Insurance markets routinely falling short (Hacker and Pierson)
86
Q

How is health insurance a classic problem of imperfect information? (Based on reading by Cassidy, and HP view on Obamacare)

A

Adverse selection (individuals use private information to sort in/out of market)

87
Q

What is a classic example of an incomplete market?

A

insurance

88
Q

What are some examples of macroeconomic crises?

A

Recessions and depressions

89
Q

What are the three types of government failures?

A
  1. Rent-seeking
  2. Moral hazards
  3. Bureaucratization
90
Q

What is rent-seeking?

A

When political interests use government to secure an economic advantage.

91
Q

What are some examples of “rent”?

A

Subsidies or favorable taxation/regulation (ex. farmers with agriculture)
- many rents are submerged and non-transparent

92
Q

How does government mandated licensing affect firms? (According to Wheelan in regards to Manicurists)

A

Government mandated licensing rules prevent entry or new firms and limit supply, which artificially keep profits high

93
Q

What is major example of a rent that is inefficient, raises costs for consumers, and reduces productivity?

A

Sports Stadiums

94
Q

What happens when individuals/firms are protected against loss?

A
  • Act with less caution
  • Make bad outcomes more likely
  • Ex: requiring air bags in cars leads to reckless driving
95
Q

How does Weber view bureaucracy?

A

As the most efficient and rationalized form of organization
- “The decisive reason for the advance of bureaucratic organization has always been its purely technical superiority over any form of organization.”

96
Q

Bureaucracies __________ bureaucratic officials

A

revere

97
Q

How are bureaucratic officials defined?

A

By rank, fixed career lines, and seniority (i.e., military uniforms, titles, pay scales)

98
Q

What did Weber say were consequences of bureaucratization?

A
  • Concentration of power (“The concentration of power of the central bureaucracy in a single pair of hands is inevitable”)
  • Durability (Bureaucracy is “hardest to destroy…practically indestructible)
  • Increasing subjective indispensability
99
Q

What does rent-seeking fuel?

A

Growing size and regulation

100
Q

What country do the readings describe as fitting the steps towards authoritarianism?

A

Venezuela

101
Q

Who is August Comte and what is August Comte’s Positivism?

A
  • One of the founders of sociology; sought a “social physics”
  • Human thought evolves from religious, to metaphysical, to scientific
102
Q

Friedman

A

Focused on US citizens being truly free having less government control

103
Q

What are the two main principles of liberalism

A

Limited government
Free markets

104
Q

Notable Liberals

A

Milton Friedman, Adam smith, David Ricardo, JohnStraut Mill, Frederich Hayek

105
Q

Keynesianism

A

Government must spend money to stimulate the economy according to Keynes as a response to the great depression. He basically believed that because in the long run we are dead, it is better for government to step in and restimulate the economy instead of the classical liberal approach that wants the government to return to form by itself

106
Q

New Deal was etablished by:

A

Franklin Delano Roosevelt

this created a lot of modern social programs that lifted the nation out of the great depression

107
Q

Great Society was established by:

A

Lyndon Baines Johnson

main goal was the total elimination of poverty and racial injustice

108
Q

Collectivism

A

System in which distribution of goods and services are controlled by the government

109
Q

Efficiency

A

Friedman: markets are more efficient, allowing for more growth

110
Q

GDP

A

Gross Domestic Product

measures of the total economic output

111
Q

How is GDP per capita mesured

A

GDP/Population

112
Q

Capitalism

A

an economic system where businesses and individuals operate for profit in a competitive market, driven by private ownership and the pursuit of self-interest.

113
Q

Core principles of classical Liberalism

A
  1. The scope of gov. Should be limited.

2.the Power should be dispersed

114
Q

Government ONLY as Rule Maker and Umpire

A

Property rights members agree on the general conditions that will govern relations among them

115
Q

Monetary Policy

A

Monetary policy refers to the actions taken by a country’s central bank to control and manage the money supply, interest rates, and financial conditions in order to achieve specific economic goals, such as price stability, full employment, and sustainable economic growth.

116
Q

Neoliberalism:

A

unclear, shifting definition but broadly means a preference for deregulation, liberalization, privatization, or fiscal austerity

117
Q

The US is in what place in terms of total government spending as percent of its GDP compares to other rich democracies

A

17th

118
Q

Where is a majority of the U.S government spending going?

A

Federal Government Budget is healthcare, pensions (esp OASI), military and Interest on National Debt

119
Q

Deficit:

A

Spending - Revenue

120
Q

Debt:

A

Accumulated Deficit

121
Q

The (5) Punchlines on Government Size-

A
  1. U.S. Govt. Size Increased 19th Century till late 1980s, But Plateaued/Declined Since
  2. All Rich Democracies Followed Similar Path – Increasing from 19th Century Through 20th Century, and Peaking Late 1980s and Declining Since

3.U.S. has a Smaller Govt. Than Most Rich Democracies

4.Much of Government in US Is At State/Local Not Federal Level

5.National Debt Has Gotten Bigger, But Mostly Due to Insufficient Tax Revenue & Wars

122
Q

Pareto Efficient/Optimal

A

When resources cannot be reallocated to make one individual better off without making at least one individual worse off.

123
Q

Pigou’s Concept of Social Cost

A

Social costs are the sum of private costs borne by the economic actor and the external costs imposed on others by an activity

124
Q

Coase Theorem

A

Private actors can efficiently handle disputes and compensate for losses, so long as:

1.Property Rights Are Defined (i.e. Law is Clear

2.Transaction Costs Are Low (e.g. Few Affected Parties)

125
Q

Rivalrous and Non Rivalrous

A

Rivalrous
Excludable – Private goods
Non Excudable- Free Good

Non Rivalrous
Excludable- Toll Good
Non Excudable- Pure public good

126
Q

Perfect Competition

A

all companies sell identical products, market share does not influence price, companies are able to enter or exit without barriers, buyers have perfect or full information, and companies cannot determine prices

127
Q

Oligopoly

A

Few firms

128
Q

Natural Monopoly

A

a single company can produce and offer to sell a product or service at a lower cost than its competitors can, resulting in practically no competition in the market. (ex: telephone lines)

129
Q

How can the government behave monopolistically?

A

The antitrust laws prohibit conduct by a single firm that unreasonably restrains competition by creating or maintaining monopoly power

130
Q

What is a classic problem of imperfect info?

A

Health insurance

131
Q

According to Levitsky and Ziblatt, what is the most common instance that enables a rich country to become an authoritarian society? (Hint: Think about 1920s Germany)

A

Extreme polarization

132
Q

What is Gray’s main concern?

A

National Environmental Policy Act and California Environmental Quality Act

133
Q

Klein talks about the

A

Everything Bagel Problem- has good intentions, but it is too much across all jurisdictions and federal levels

134
Q

Moral Hazard

A

if you know the government will bail you out you’re less averse to unreasonable risk

Public Policy (3 decks)

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