Deck 3: The History of American Political Economy

Question 1

The 1920s was characterized by

A) an economic depression that lasted almost the entire decade.
B) prosperity that did more to boost the income of poor people than of rich people.
C) prosperity that did more to boost the income of rich people than of poor people.
D) the growing strength of the Populist Party.
E) stagflation.

Answer 1

C

Question 2

Ownership and control of the means of production allow the corporate elite to do all of the following except

A) manage the workforce.
B) organize production.
C) make investment decisions.
D) retain profits.
E) get Congress to pass whatever laws it (the corporate elite) wants.

Answer 2

E

Question 3

Compared with the nineteenth century, in the twentieth century, government's involvement in the economy was

A) much smaller.
B) slightly smaller.
C) about the same.
D) greater.
E) so difficult to determine that the text doesn't even try to make this comparison.

Answer 3

D

Question 4

State and local governments' subsidies for railroad construction during the nineteenth century are best understood as an example of why the text says that

A) the corporate elite does not have a decisive advantage in politics.
B) the free market has always been a fiction.
C) there is no such thing as a mobilization of bias in U.S. politics.
D) throughout U.S. history, the government too has been involved in the economy.
E) Keynesianism in Europe was more conservative than Keynesianism in the United States.

Question 5

According to the text's discussion of the history of the U.S. economy

A) the free market has always been a fiction.
B) the free market existed until the Civil War.
C) the free market existed until the New Deal.
D) the free market existed until the presidency of Barack Obama.
E) the free market continues to exist.

Question 6

According to the text, a tension exists between democracy and capitalism primarily because

A) politicians don't understand the needs of business.
B) there is too much corruption in government.
C) business executives think they are above the law and can escape punishment no matter what they do.
D) capitalism is based on profits for the few, but democracy is based on democratic rights for the many.
E) the values and ideals of business executives have nothing in common with those of politicians.

Question 7

According to the text, the totality of public institutions that form the government of a country is called the

A) executive branch.
B) Congress.
C) bureaucracy.
D) state.
E) courts.

Question 8

Which of the following men was president when the Great Depression began?

A) Theodore Roosevelt
B) Woodrow Wilson
C) Herbert Hoover
D) Franklin Delano Roosevelt
E) Harry Truman

Question 9

During the 1930s, membership in labor unions

A) increased.
B) stayed about the same.
C) declined somewhat.
D) declined by a huge amount.
E) was so difficult to determine that the text says nothing about this issue.

Question 10

The Progressive Era occurred from about

A) 1850-66.
B) 1870-86.
C) 1900-16.
D) 1930-46.
E) 1970-86.

Question 11

All of the following are true about the Populist Party except that

A) it arose and flourished in the late nineteenth century.
B) it challenged both major parties.
C) it excluded farmers.
D) it claimed that big business and Wall Street had captured political power.
E) it helped created a heritage of radicalism upon which later generations could draw.

Question 12

______________ is a rise over time in the price of goods and services. This rise is often accompanied by a decline in the value of currency, which affects the purchasing power of money.

A) Deflation
B) Inflation
C) Stagflation
D) Deficit spending
E) Price controls

Question 13

During the Progressive Era, there was a profound change in the American political economy. This change was composed of

A) demands for more intervention by state governments to promote business.
B) demands for less intervention by the federal government to promote business.
C) demands for more intervention by the federal government to regulate business.
D) demands for less intervention by the state governments to regulate business.
E) demands for more market fundamentalism.

Question 14

At the turn of the twentieth century, broad-based social movements such as the Farmers Alliance, the Grange, the Populist Party, and the Socialist Party sought to create an alternative culture based on all of the following values except

A) the dignity of labor.
B) the benefits of a rough equality.
C) competitive individualism.
D) solidarity.
E) self-sufficiency.

Question 15

Beginning in the 1840s, the first phase of expansion of state interference in the market focused on

A) agricultural technology.
B) transportation.
C) education.
D) Social Security.
E) health care.

Question 16

Compared with the federal government, the role of the state governments in shaping the country's political economy in the years before the Civil War was

A) much smaller.
B) slightly smaller.
C) about the same.
D) greater.
E) so difficult to determine that the text doesn't even try to make this comparison.

Question 17

The series of policies associated with President Roosevelt's response to the Great Depression is called the

A) Great Society.
B) New Frontier.
C) New Deal.
D) Fair Deal.
E) New Federalism.

Question 18

According to the text, an economy dominated by many small firms that produce for local markets is called

A) competitive capitalism.
B) corporate capitalism.
C) extreme market capitalism.
D) market fundamentalism.
E) New Deal capitalism.

Question 19

In the Progressive Era

A) citizens demanded that the federal government decrease regulation of business.
B) citizens demanded that the federal government increase regulation of business.
C) Franklin Delano Roosevelt was president.
D) the states provided more subsidies for canal construction than ever before.
E) competitive capitalism was still the dominant form of capitalism in the United States.

Question 20

During World War I, government influence in the economy

A) decreased by a large amount.
B) decreased slightly.
C) stayed roughly the same.
D) increased.
E) was so difficult to determine that the text says nothing about it.

Question 21

A principle goal of market fundamentalism was to

A) get government spending under control.
B) reduce the size of government deficits.
C) provide more regulation of financial markets.
D) starve the government of funds.
E) expand the social safety net.

Question 22

Which of the following families saw their share of aggregate household income increase during the period of market fundamentalism?

A) only families in the bottom quintile of the economic ladder
B) the families in the bottom and middle quintiles of the economic ladder
C) only the families in the middle quintile of the economic ladder
D) the families in the middle quintiles and in the top quintile of the economic ladder
E) only the families in the top quintile of the economic ladder

Question 23

According to the text, the theory that states markets are "rational, self-correcting, and beneficial" is called

A) market fundamentalism.
B) competitive capitalism.
C) conservative Keynesianism.
D) New Deal liberalism.
E) regulated capitalism.

Question 24

According to the text, the period from 1945 to 1973 when wages, productivity, and economic growth all rose together, inequality declined, and the average American's standard of living increased is called

A) the Progressive Era.
B) the Reconstruction Era.
C) the Golden Age of capitalism.
D) competitive capitalism.
E) Pax Americana.

Question 25

According to the text, the tax cuts that took place under President George W. Bush

A) benefited poor people more than rich people.
B) lowered the federal deficit.
C) were consistent with the long-standing Republican call for fiscal restraint and balanced budgets.
D) were ultimately declared unconstitutional by a sharply divided Supreme Court.
E) helped starve the government of funds necessary to pursue policies offering an alternative to the market.

Question 26

During the golden age of capitalism

A) there was much greater conflict between unions and corporations than at any time before or after.
B) consumer demand was much lower than it had been in the previous ten years.
C) there was more European investment in the United States than there was U.S. investment in Europe.
D) contrary to popular belief, living standards in the United States actually fell.
E) the U.S. economy benefited from the emergence of U.S. global dominance.

Question 27

The Full Employment Act proposed by President Truman is best understood as an example of

A) extreme market capitalism.
B) supply-side economics.
C) the reasons why living standards fell during the golden age of capitalism.
D) Keynesian economic policies.
E) the reasons why there is no mobilization of bias in U.S. politics.

Question 28

Ronald Reagan's economic policies

A) were based on the belief that supply-side economics is "voodoo economics."
B) led to much bigger tax cuts for poor people than for rich people.
C) argued that the economy suffered from insufficient investment capital, not insufficient demand.
D) were based on Keynesian economic principles.
E) led to a major expansion of the welfare state.

Question 29

What the text calls the golden age of capitalism occurred

A) in the approximately twenty-five years after World War I.
B) in the approximately twenty-five years after World War II.
C) in the approximately fifty years after World War II.
D) during the presidencies of Ronald Reagan and Bill Clinton.
E) during the presidency of George W. Bush.

Question 30

During the period of market fundamentalism, the deficit when computed as a percentage of the GDP

A) increased.
B) stayed about the same.
C) decreased by a slight amount.
D) decreased by a large amount.
E) was so difficult to compute that the text says nothing about this issue.

Question 31

The removal of rules that constrain market actors is called

A) earmarks.
B) monetary policy.
C) fiscal policy.
D) deregulation.
E) outsourcing.

Question 32

The U.S. version of conservative Keynesianism included all of the following except

A) economic stimulation through military spending.
B) deficit spending through tax cuts.
C) a symbolic commitment to full employment.
D) nationalization of major industries.
E) creation and expansion of the welfare state.

Question 33

The theory that government can use its budgetary authority to tame the business cycle to maintain full employment is called

A) the New Deal.
B) market fundamentalism.
C) socialism.
D) Keynesianism.
E) supply-side economics.

Question 34

Stagflation

A) was characterized by decreased prices.
B) was characterized by heightened unemployment.
C) led to immense increases in productivity growth.
D) was the main cause of the crisis of market fundamentalism.
E) was characterized by the lowest interest rates in U.S. history.

Question 35

In trying to prevent a recession or decrease the effects of a recession, a president who sought to implement Keynesian policies would most likely

A) be willing to engage in deficit spending.
B) steadfastly refuse to engage in any deficit spending.
C) oppose any policy that would redistribute income from very wealthy people to very poor people.
D) propose policies aimed at increasing stagflation.
E) oppose all welfare state programs.

Question 36

What the text calls market fundamentalism has all of the following characteristics except

A) a belief that markets are rational.
B) a belief that markets are self-correcting.
C) growing economic inequality.
D) increased deregulation.
E) the eclipse of financial capital by industrial capital.

Question 37

Policies and programs including Social Security, unemployment insurance, minimum-wage laws, public works programs for the unemployed, and laws protecting workers' right to organize unions were all created under the

A) Square Deal.
B) New Deal.
C) Fair Deal.
D) Great Society.
E) Reagan Revolution.

Question 38

Compared with Keynesianism in Europe, Keynesianism in the United States

A) was more conservative.
B) involved much greater spending on welfare state programs.
C) involved more government nationalization of the railroads and airlines.
D) saw more economic redistribution from the rich to the poor.
E) regulated business to a greater extent than in Europe.

Question 39

According to Keynes, the major cause of the Great Depression was

A) the stagflation of the 1920s.
B) too much deficit spending by governments.
C) a shortage of investment capital.
D) government capitulation to the demands of labor unions.
E) inadequate consumer demand.

Question 40

Ronald Reagan was first elected president in

A) 1960.
B) 1970.
C) 1980.
D) 1990.
E) 2000.

Question 41

When President Obama tried to influence the economy by cutting taxes and increasing government spending, he was applying

A) monetary policy.
B) fiscal policy.
C) deregulation policy.
D) partisan policy.
E) debt reduction policy.

Question 42

Which income group has benefited the most from market fundamentalism?

A) the bottom 40 percent of households
B) the middle quintile of households
C) the top 20 percent of households
D) all income levels have benefited equally
E) the poorest 10 percent of households

Question 43

The increased importance of finance capitalism in the U.S. economy has resulted in all of the following except

A) increased pay for workers in the financial sector.
B) increased consumer debt.
C) an increase in the number of finance firms in the top Fortune 500 companies.
D) a decrease in the economic power and importance of companies that manufacture things.
E) an improved balance of trade with China.

Question 44

As a result of their victories in the 2008 election, according to the text, Democrats were able to use government to

A) bring about socialism.
B) stabilize capitalism.
C) restore competitive capitalism.
D) eliminate racial inequality.
E) implement supply-side economic policies.

Question 45

What are the main characteristics of Keynesian economic policy? In what ways did Keynesianism in the United States differ from Keynesianism in Europe?

Question 46

According to the text, President Obama's proposals to deal with the financial services industry

A) leave in place the very regulators whose oversight failed because they were too cozy with the banks.
B) deal with the problem of some banks being too big to fail by breaking them up into much smaller ones.
C) succeed in eliminating the financial innovations (derivatives) that proved so risky.
D) immediately achieved dramatic success in redistributing power and money from those who are rich and powerful to those who are poor and economically disadvantaged.
E) are nothing more than affirmative action in disguise.

Question 47

According to the text, market fundamentalism is associated with which political party in the United States?

A) Democrats
B) Republicans
C) Socialists
D) Progressives
E) Grangers

Question 48

The precipitating factor for the crisis of market fundamentalism was

A) the tax cuts implemented by the George W. Bush administration as soon as it took office.
B) the invasion of Iraq in 2003.
C) the collapse of the stock market in 2006.
D) the collapse of the housing market in 2007.
E) Barack Obama's election in 2008.

Question 49

For much of the period of market fundamentalism

A) economic growth was fairly robust, but wages for working people stagnated.
B) economic growth was fairly robust, and wages for working people increased sharply.
C) there was no economic growth, and wages for working people stagnated.
D) there was no economic growth, but wages for working people increased sharply.
E) the data are so murky that it's impossible to say anything meaningful about economic growth and the wages of working people.

Question 50

The text divides U.S. political-economic history into a series of stages, four of which are competitive capitalism, extreme market capitalism, the New Deal, and the golden age. What is the sequence (earliest first, most recent last) in which these four stages occurred?

A) competitive capitalism, New Deal, Golden Age, and extreme market capitalism
B) competitive capitalism, extreme market capitalism, New Deal, and Golden Age
C) New Deal, Golden Age, extreme market capitalism, and competitive capitalism
D) extreme market capitalism, competitive capitalism, New Deal, and Golden Age
E) competitive capitalism, Golden Age, New Deal, and extreme market capitalism

Question 51

What were the main causes and characteristics of the golden age of capitalism?

Question 52

According to the text, government has been deeply involved in the economy from the earliest days of the United States. In what ways was government involved in the economy in the nineteenth century? In what ways was government involved in the economy in the twentieth century? In what ways has government been involved in the economy in the first decade of the twenty-first century?

Question 53

The deficits occurring during the Obama administration differ from those occurring during the George W. Bush administration primarily because the Obama-era deficits result more from

A) repeated tax cuts.
B) deregulation.
C) stagflation.
D) affirmative action.
E) deficit spending.

Question 54

According to the text, there have been periodic swings throughout U.S. history "in which the power of business has ebbed and flowed, and the government has supported and limited the play of free markets." What are three major swings of the pendulum since the 1930s?

Question 55

According to the text, the crisis of market fundamentalism shows that

A) the corporate elite does not have a decisive advantage in politics.
B) contrary to popular belief, there was too much government regulation during the George W. Bush administration.
C) markets are always rational.
D) the United States is doomed to at least a decade in which there will be no economic growth.
E) markets are not always self-correcting.

Question 56

By setting short-term interest rates and buying government bonds, mortgage-backed assets, and other securities, the Federal Reserve Bank applies

A) monetary policy.
B) fiscal policy.
C) deregulation policy.
D) partisan policy.
E) debt reduction policy.

Question 57

Summarize the reasons for the authors' claim that "the free market has always been a fiction."

Question 58

Market fundamentalism has had all of the following consequences except

A) increased federal deficits.
B) reduced regulation of corporations.
C) declining incomes for the bottom 80 percent of Americans.
D) growth of the financial sector of the economy.
E) growth of the U.S. steel industry.

Question 59

What are the main characteristics and economic policies of market fundamentalism?

Question 60

What were the main causes and characteristics of the crisis of market fundamentalism?

Question 61

What are the main characteristics and economic policies of the Obama administration?