Special Interest Group K Receives a 1/100?? Slice of the Economic

question 53

Multiple Choice

Special interest group K receives a 1/100?? slice of the economic pie. Its net benefit from either an economic growth policy or a transfer policy is $200,000. In order for group K to be indifferent between the two policies,the economic growth policy would have to make the size of the economic pie (Real GDP) grow by _________________. This type of analysis is used to show that special interest groups tend to press government for ______________ instead of ________________.

• A) $20,000,000; economic growth; transfers
• B) $2,000,000; transfers; economic growth
• C) $20,000,000; transfers; economic growth.
• D) $20,000,000; transfers; economic growth..
• E) none of the above

---

Definitions:

Moral Hazard

A situation where one party is more likely to take risks because they know the negative consequences will be borne by another party.

Asymmetric Information

A situation where one party in a transaction has more or better information than the other, leading to an imbalance of power and potentially inefficient market outcomes.

Asymmetric Information

A situation in which one party in a transaction has more or superior information compared to the other party.

Huntington's Disease

A genetic neurological disorder causing the progressive breakdown of nerve cells in the brain, leading to deterioration in physical and mental abilities.