Name:_______________________

Economics 410 Final

Prof. Bryan Caplan

Fall, 2010

Instructions:

· You have 75 minutes to complete this exam.

· Write all answers directly on the exam.

· You may use any books, notes, or other materials that you wish, but avoid spending too much time on any one question.

· Partial credit may be awarded on all questions.

· The maximum possible number of points is 100.

· You should have 4 pages, counting this one.

Part 1: True, False, and Explain

(10 points each - 2 for the right answer, and 8 for the explanation)

State whether each of the following six propositions is true or false. In 2-3 sentences (and clearly-labeled diagrams, when helpful), explain why.

1. T, F, and Explain: There would be no positive or negative externalities in a world with only one person.

2. Mean income exceeds median income in all countries.

T, F, and Explain: If the SIVH and the median voter model are both true, every democratic country would completely equalize its citizens’ incomes.

3. T, F, and Explain: Sears and Funk (“Self-Interest in Americans’ Political Opinions”) find little evidence for self-interested voting by women or the elderly, but strong evidence for self-interested voting by government employees.

4. Suppose government officials know more about the cost-effectiveness of their programs than the public, and the punishment for dishonesty is small (pD<B).

T, F, and Explain: Wittman argues that this will lead to inefficiently small government.

5. T, F, and Explain: Caplan (The Myth of the Rational Voter) agrees that “disparate turnout” is “a grave social evil.”

6. After World War II, the United States imposed new constitutions on defeated Germany and Japan.

T, F, and Explain: These constitutional changes were more likely to compensate for voter irrationality than constitutional changes that endogenously arose out of German and Japanese democracy.

Part 2: Short Answer

(20 points each)

In 4-6 sentences, answer both of the following questions.

1. What does Donald Wittman’s defense of democracy imply about federalism and federal grants? Should he support one, both, neither, or what?

2. “If Caplan were right about democracy, dictatorships would have higher growth and higher quality of life than democracies. They don’t.” How would Caplan respond? Who’s right?