Public Choice Theory Predicts That Government

question 32

Multiple Choice

Public choice theory predicts that government

• A)acts to promote the redistribution of wealth and income.
• B)acts to maximize the amount of campaign contributions.
• C)acts to eliminate waste and promote an efficient allocation of resources.
• D)makes choices that result in efficient provision of public goods.
• E)makes choices that result in inefficient overprovision of public goods.

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Definitions:

Absolute Change

The difference between the final value and the initial value of a quantity, without regard to the direction of change.

Price Level

A summary average of current prices for the full spectrum of goods and services in the economy.

Consumer Price Index

An index of the variation in prices paid by typical consumers for retail goods and other items.

GDP Deflator

A measure of the price level of all domestically produced goods and services in an economy, used to adjust nominal GDP to real GDP.