Long Answer Questions:1) Almost all observers see major problems in the financial sustainability of government, pay-as-you-go pension systems (a pay-as-you-go pension system is one that is not backed by assets, but rather is simply a system of redistribution from current workers to retirees) throughout the world due to an again population. What model of political economy best accounts for these problems? Are the problems hopeless, or can you suggest reform (or set of reforms) that would improve the long run viability of a government run retirement system (i.e. voting or institutional reforms, etc)?2) It is often claimed that public enterprises have a cost advantage over private firms in that they do not have to return a profit to equity holders. This allows the public enterprises potentially to pass along cost savings to consumers. Among the areas where this argument has been applied are hospitals, schooling, refuse collection, and the supply of gas, water, and electricity. Use your knowledge of public choice and finance to explain why this claim is incorrect.Short Answer Question:1) It is often the case that funds from the federal government are used to finance projects that have only local or regional impacts. Does this fact lead to over- or under-provision of public goods and services? Why?2) Under which condition does logrolling (vote trading) lead to increased efficiency? Under which conditions does logrolling lead to decreased efficiency? Which is more likely, and why?3) Explain the logic behind the irrationality of voting. What might explain why people actually do vote?
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