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?