Download Top of Form Political Economy 1. The main indicator of economic

Political Economy
1. The main indicator of economic growth is:
a) inflation
b) total GDP
c) change in real per capita GDP
d) the performance of stock market
e) cost of a “market” basket
2. A general rise in prices, indicating that the currency is worth less than it used to be, is
called:
a) inflation
b) interest
c) profit
d) revenue
e) PPP
3. Rent seeking hurts the economy because:
a) it drives the cost of housing up, exacerbating homelessness and the number of
people seeking government help
b) it drives the cost of housing down, decreasing the profit margins of real estate
companies
c) it transfers money into pockets of the dominant coalition’s supporters rather
than into the most efficient economic uses of the money
d) it increases inflation
e) breeds corruption
4. A reason for the failure of import substitution industrialization in Ghana is:
a) owners of factories often took advantage of the lack of competition to charge
high prices for shoddy goods
b) the imports that substituted for local goods were not of good quality
c) imports flooded the market and hurt national industries
d) no countries were willing to sell their goods in Ghana
e) investment capital was not stimulated
5. The relationship between interest rates and unemployment in the short run is:
a) when interest rates go up, economic activity declines and unemployment rises
b) when interest rates go down, economic activity declines and unemployment rises
c) when interest rates go up, economic activity increases and unemployment increases
d) when interest rates go down, economic activity increases and unemployment
increases
e) none of the above is found in a pattern
6. Two factors that improve unemployment, inflation and economic growth
simultaneously are:
a) education and technological innovation
b) import substitution and nationalization
c) regressive taxation and education
d) nationalization and education
e) consumer spending and trade restraint
7. Two things that governments can do to create greater equality are:
a) regressive taxation and subsidies for the poor
b) progressive taxation and subsidies for the poor
c) increasing interest rates and progressive taxation
d) increasing interest rates and subsidies for the poor
e) shrink from making more public policies
8. A central bank is set up to:
a) handle government transactions and establish revenue targets
b) handle government transactions and control interest rates
c) handle government transactions and collect taxes
d) trade government assets and print currency
e) redistribute wealth
9. The region with the lowest level of government corruption is:
a) East Asia
b) Southern Europe
c) Scandinavia
d) Western Europe
e) South America
10. The objectives of creating a “just” and “effective” political system are squarely
normative in nature and suffer when we strive to create empirical definitions for both
terms.
A) True
B) False
11. A policy will meet the test of fairness (justice) if it consistently manifests equality.
A) True
B) False
12. Due process at its best provides a guarantee of procedural justice. It cannot assure
one of substantive justice.
A) True
B) False
13. Justice in a broad sense may require that, to be just to most of the people, the state
must be less just to some people.
A) True
B) False
14. “Overriding social needs” often curb rights and impact on the delivery of justice.
Such considerations should always be understood as necessary and inevitable.
A) True
B) False
15. Your text suggests that costs are easy to calculate but benefits are not.
A) True
B) False
16. Policy evaluation, to be effective, must account for ALL costs and benefits –
Not just the intended costs and benefits.
A) True
B) False
17. States engage in both authority-based policy-making and “market”- based policy
making in an effort to get the public to make the choices and engage in the behaviors
that the state finds productive.
A) True
B) False
18. The two main problems with authority-based policy-making are (1) the state does
not allocate optimally and (2) there is little incentive to use resources efficiently. Add to
this that it can be abrasive to classic ideological liberals.
A) True
B) False
19. Market-based policy-making is appealing to classic liberals and is a very effective
way to produce public goods and to minimize externalities that could impact on an
individual’s decisions.
A) True
B) False
20. Policy-making generally is a pretty straight-forward business. Simply assess what
resources you have available and make a decision about your priorities.
A) True
B) False