19 Suppose the US House of Representatives is debating a bil

19. Suppose the U.S. House of Representatives is debating a bill to fund construction and maintenance for the nation’s highway system. Representative Sandy Shady adds a provision to the bill that would fund a new public art museum in her district. The authorization of expenditure for the museum would be an example of

a. an earmark.

b. an unfunded liability.

c. a collective action problem.

d. a principal-agent problem.

20. Which of the following is the best example of rent-seeking behavior?

a. Voters consider a ballot measure that would increase taxes to better fund schools.

b. Students at a university lobby the administration to improve dorms and reduce class sizes without increasing tuition.

c. Consumers try to get flying cars produced by telling automakers they are willing to pay for them.

d. Senators vote for what their constituents want so they can get reelected.

23. Government fiscal policy involves changing which of the following?

a. interest rates

b. taxes and government spending

c. regulations on business

d. the amount of money in circulation

Solution

Museum comes under category in which all the citizens will benefit from it but its difficult to run or build it from individual pocket Hence in this caseOption C is correct

AMongst given option above Students who are trying to reduce class size and no increase in tution while lobbying the administration is a classical case of rent seeking behaviour which gets more out of what they deserve

Hence answer is option B

Answer for 23

Government Fiscal policy changes Tax rate and Spending hence Option B is correct