Finance and Development

1. What are the two key reasons the government fails?

•  Lack of competition and inability to say no to interest groups
  

• High taxes and too much spending
  

• Bureaucratic red tape and corruption
  

• Lack of accountability and perverse incentives

  
  

2. What is the role of special interest groups?

• To lobby the government for policies that benefit their group
  

• To advocate for policies that benefit society as a whole
  

• To oversee government spending and reduce waste
  

• To fact check politicians and hold them accountable

  
  

3. Why does the government have a hard time saying no to special interest groups?

• They rely on their donations for reelection campaigns
  

• The groups help spread their message to voters
  

• There are too many competing interests to satisfy
  

• The bureaucracy is too large to enact major changes

  
  

4. What solution for the problem of government failure?

• More transparency and oversight of spending
  

• Competition in providing government services
  

• Reduce the role and size of government
  

• Strict campaign finance reform and lobbying bans

  
  

Bureaucracy is an example of which kind of perverse incentive?

• Information asymmetry
  

• Moral hazard
  

• Adverse selection
  

• Expanding budgets

  
  

7. What is the economic concept discussed that implies politicians will tend to favor special interests?

• Public choice theory
  

• Collective action problem
  

• Nash equilibrium
  

• Tragedy of the commons

  
  

8. What two metrics are used to evaluate success in government vs the private sector?

• Cost and efficiency
  

• Popularity and influence
  

• Regulation and oversight
  

• Tax revenue and job creation

  
  

How does competition help reduce costs?

• By allowing consumers to choose alternatives
  

• Through innovation and economies of scale
  

• By increasing transparency and accountability
  

• All of the above

  
  

10. What factor argue reduces accountability in government?

• Lobbying and donations
  

• Lack of competition
  

• Complex regulations
  

• Single supplier of services

  
  

12. What is example of private competitive alternative to the US postal service?

• UPS and FedEx
  

• Toll roads
  

• Charter schools
  

• Ridesharing