Define incrementalism and give two reasons why incrementalism might be efficient
What will be an ideal response?
Incrementalism is the theory that an agency's budget in one year will tend to be its last year's budget plus some additional increment. Incrementalism might be efficient given an understanding of the special interest theory of government and they fact that it is often difficult to measure the benefits of federal programs. Special interest theory suggests that politicians will maximize political support by giving all special interests an incremental increase in benefits. The fact that it is often difficult to measure the benefits of special programs suggests that a legislature may be able to do no better than giving each agency an incremental increase each year.
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According to public choice theory, a voter will favour a candidate whose political program is
a) favoured by the median voter b) perceived by the voter to be in his self-interest c) closest to efficiency d) all of the above
For the gold standard to achieve its maximum functioning efficiency, central banks should theoretically play the "rules of the game." What are these rules?
(a) Central bank policy should tie the flow of their gold reserves to their current accounts. (b) Central banks should "lean against the wind" and follow policies that offset gold movements. (c) Central banks should raise interest rates as gold flows in and lower them as gold flows out. (d) Central banks should sell securities as gold flows in and buy them as gold flows out.