The process by which a legislator votes in favor of the legislation of other lawmakers in order to gain support for her own legislation is known as:
a. pork barrel legislation.
b. logrolling.
c. the median vote model.
d. none of the above
Question 2Suppose purchasing power parity exists in the car stereo market in the United States and Australia. If a car stereo costs 230 in the United States and the exchange rate is 1 = AUD1.67, the same car stereo may be purchased in Australia for approximately:
a. AUD 138.
b. AUD 230.
c. AUD 2,300.
d. AUD 384.
e. AUD 108.
Question 3If your aunt in Italy lends you 5,000 to complete your American education, this will be entered on the U.S. balance of payments account as a:
a. debit (-).
b. credit (+).
c. non-entry, since it will affect Italy's payments but not those of the United States.
d. devaluation, since the net value of the American capital stock will be reduced by the amount of your debt.
Question 4Which of the following would be considered special interest group?
a. National Rifle Association
b. Greenpeace
c. the U.S. sugar industry
d. all of the above
Question 5If a bushel of corn sells for 2 in the United States and for 4,000 COP (Colombian peso) in Colombia, and if 1 dollar is worth 2,200 COP, then:
a. the corn is 400 COP more expensive in Colombia.
b. the corn is 400 COP cheaper in Colombia.
c. the price of a bushel of corn equals 2 in both the United States and Colombia.
d. the price of corn is 4,000 COP lower in Colombia than in the United States.
e. the price of corn is 0.20 lower in the United States than in Colombia.
Question 6Suppose a video craze in the United States makes a particular Japanese-produced video game very popular. This would tend to:
a. affect the U.S. balance of payments but not the balance of trade.
b. reduce any existing balance of trade deficit in the United States.
c. increase the balance of trade deficit of the United States.
d. increase the balance of trade surplus of the United States.
Question 7A special interest issue is best described as:
a. one in which both sides utilize paid lobbyists to represent them.
b. one which one party strongly supports and the other party strongly opposes.
c. one in which a large number will each suffer small costs and a small number will each receive large benefits.
d. one decided in a special session of the legislature.
Question 8Assume that a Chrysler automobile sells for 15,000 in the United States and that the exchange rate is 1 = 1.3 . For purchasing power parity to hold, the same car should sell in Germany for:
a. 15,000.
b. 11,538.
c. 19,500.
d. 1,538.
e. 15,500.
Question 9What would be the statistical discrepancy for a current account balance of -85 billion and a capital account balance of 80 billion?
a. -165 billion
b. -5 billion
c. 5 billion
d. 165 billion
Question 10The view that those whose preferences represent the middle position on an issue will tend to determine the outcome of an election is called:
a. rent seeking.
b. the median voter model.
c. the special interest effect.
d. the cyclical majority problem.
Question 11Deviations from purchasing power parity will be increasingly higher as international trade tariffs become more restrictive. The main reason for this phenomenon is that:
a. arbitrage activities become less profitable.
b. governments prefer purchasing power parity not to hold.
c. the interest rate parity fails to hold.
d. goods become more differentiated across countries.
e. individuals develop hatred toward closed economies.
Question 12Whenever there is a surplus in the current account, the capital account:
a. will be negative.
b. will be positive.
c. will be zero.
d. could be negative, positive, or zero.
Question 13A special interest issue is one that:
a. provides large private benefits and large social benefits.
b. provides small private benefits and large social benefits.
c. provides large benefits to each of a small number of people and small costs to each of a large number of people.
d. provides small benefits to each of a small number of people and large costs to each of a large number of people.
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