Deck 7: Economic and Budgetary Policy

Question 1

A ______ tax refers to a situation in which all individuals have the same rate of taxation regardless of income.

A) progressive
B) regressive
C) redistributive
D) discretionary

Answer 1

B

Question 2

A ______ tax is one in which the rate of taxation is higher for individuals who earn higher incomes.

A) progressive
B) distributive
C) regressive
D) sales

Answer 2

A

Question 3

Which of the following terms refer to the ability of a method of taxation to keep up with inflation and economic growth?

A) vertical equity
B) buoyancy
C) redistributive effects
D) progressive taxation

Answer 3

B

Question 4

The government shutdown of October 2013 was due to ______.

A) a showdown between political parties over Obamacare and the budget
B) the federal government exceeding the Fed's target inflation rate
C) a filibuster of the health-care law staged by House Tea Party elected officials
D) the impending passage of the Affordable Care Act

Question 5

What is the major instrument through which any government sets its overall economic policy each year?

A) the Federal Reserve Board
B) the monetary policy
C) the federal budget
D) the Economic Stimulus Program

Question 6

______ are individuals who are concerned about the negative balance of trade.

A) Labor union representatives
B) Interventionists
C) Lobbyists
D) Protectionists

Question 7

Today, entitlement programs consume roughly ______% of the federal budget.

A) 10
B) 20
C) 61
D) 80

Question 8

An entitlement program refers to ______.

A) a program created by an unfunded federal mandate
B) a program for which people are eligible based on their economic status or age
C) a regulatory program
D) state-level programs, where states must demonstrate entitlement at the federal level

Question 9

Regulation is defined as ______.

A) the government levying taxes on certain goods
B) use of the budget process to encourage or discourage behavior
C) the government providing information, so citizens can make their own choices
D) a government decree that forces or prevents a particular activity

Question 10

Which branch of government typically initiates the budgetary process?

A) executive
B) federal
C) legislative
D) senate

Question 11

The ______ is a measure that represents the average change in price over time of a market basket of consumer goods and services.

A) CPI
B) Fed
C) GDP
D) CBO

Question 12

______ policy is a term that describes taxing and spending tools.

A) Fiscal
B) Regulatory
C) Monetary
D) Distributive

Question 13

The distributive effects of a tax are ______.

A) the degree to which the tax is fair
B) loopholes that are not fiscally neutral
C) the impact a tax has on different groups
D) the results of collecting the tax

Question 14

The economic policy goal of ______ means an increase in the production of goods and services.

A) full employment
B) economic growth
C) low levels of inflation
D) managing debts and deficits

Question 15

What is the difference between the national deficit and the national debt?

A) The debt is the yearly amount government expenses exceed revenue. The deficit is the accumulation of the deficits over the years.
B) The deficit is based on the distribution of entitlement programs. The debt is the ceiling for the federal budget.
C) The deficit is the yearly amount government expenses exceed revenue. The debt is the accumulation of the deficits over the years.
D) The deficit is the portion of the federal budget allocated by Congress. The debt is the portion of the budget allocated by the executive branch.

Question 16

Inflation is measured by the ______.

A) balance of trade (BOT)
B) gross domestic product (GDP)
C) Monetary Supply Index (MSI)
D) Consumer Price Index (CPI)

Question 17

The name of the agency that compiles all of the statistics on employment patterns in the United States is the ______.

A) Department of the Interior
B) Wages and Employment Agency
C) Economic Policy Development Institute
D) Bureau of Labor Statistics

Question 18

The name for the federal agency that influences the economy by increasing or decreasing the amount of money in circulation is called the ______.

A) Congressional Budget Office (CBO)
B) Federal Reserve (Fed)
C) Office of Management and Budget (OMB)
D) Council of Economic Advisors (CEA)

Question 19

As a part of the federal budgeting process, an executive agency called the ______ reviews all agency budgets and ensures that they conform to the intent of the policy.

A) Office of Management and Budget
B) Commerce Department
C) Executive Office of the President
D) Nonpartisan Budget Review Commission

Question 20

Which statement is true describing the U.S. overall unemployment rate in recent years?

A) The unemployment rate has steadily increased from a low of 3% in 2001 to more than 14% in 2014.
B) The unemployment rate rose from 10% to 16% during the recession and now has returned to 14%.
C) For most of the 2000s, the unemployment rate has remained around 10%.
D) The unemployment rate rose to more than 9% during the recession and recently has returned to a rate of 4% in 2019.

Question 21

How has the nature of U.S. jobs changed in the past few decades?

A) Jobs in the service sector are growing while the manufacturing sector is decreasing.
B) Construction jobs have rapidly decreased while retail jobs are increasing.
C) Government jobs have rapidly increased due to the growing size of government.
D) Jobs in the manufacturing sector are growing while the service sector is decreasing.

Question 22

______ is critical to all other areas of policy but is not often recognized for its central role.

A) Education policy
B) Health-care policy
C) Federal policy
D) Economic policy

Question 23

Which of the following economic policy concerns is often present with a growing economy and high levels of employment?

A) increasing deficits
B) high labor-force participation
C) increasing entitlement costs
D) growing inflation

Question 24

A CPI between ______% and ______% is one that most government policy makers can accept as tolerable.

A) 1; 2
B) 1; 4
C) 1; 6
D) 1; 8

Question 25

Social Security, Medicare, and Medicaid are examples of ______ programs.

A) government investment
B) health-care
C) entitlement
D) discretionary spending

Question 26

When the economy grows, often inflation increases as well. This condition illustrates the principle of ______.

A) interrelationship of economic goals
B) increasing balances of the economy
C) fiscal policy failure
D) competition of economic goals

Question 27

Which statement summarizes the changing patterns of employment in the United States in recent years?

A) Higher unemployment rates are seen among certain demographic groups more than others.
B) The types of jobs available are shifting away from manufacturing toward the service sector.
C) There are plenty of jobs available for recent college graduates.
D) all of these

Question 28

During times of inflation, which of the following is done by the Fed?

A) pass a budget that cuts the deficit
B) decrease the money supply
C) increase the balance of trade
D) offer tax breaks for certain economic activity

Question 29

In general, increasing levels of unemployment will lead to ______ government revenue and ______ government expenditures.

A) decreasing; decreasing
B) increasing; increasing
C) decreasing; increasing
D) increasing; decreasing

Question 30

The American Recovery and Reinvestment Act (2009) attempted to stimulate economic growth primarily using which economic policy tool?

A) government spending
B) regulations
C) deficit reduction
D) market incentives

Question 31

The national debt, which is the accumulation of all of the deficits the nation has run, was nearly ______ in December 2018.

A) 10 million
B) 20 billion
C) 22 trillion
D) 30 trillion

Question 32

Attaining the goal of economic growth may make ______ more acceptable to the general public, since the public's own earnings may be increasing.

A) welfare and other redistributive programs
B) an unfavorable balance of trade
C) globalization
D) unemployment

Question 33

When does a positive balance of trade occur?

Question 34

Why don't people recognize economic policy as being critical to government functions?

Question 35

Which statement best describes the trend in the labor force participation rate?

A) steadily increased by 3-5% a year
B) decreased steadily
C) stayed approximately the same now as it was in 1980 after a brief increase
D) women are entering the workforce more than in the past

Question 36

Tax policy is one of the areas of greatest political tension. One variable affecting policy makers' decisions about tax policy includes ______, which is mainly an equity criterion.

A) diagonal equity
B) collectability
C) distributive effects
D) expenditure effects

Question 37

According to the Congressional Budget Office (CBO), the United States can expect to see a ______ billion deficit in 2017.

A) 400
B) 501
C) 665
D) 673

Question 38

According to the authors, there has been an economic downturn since ______.

A) 2005
B) 2007
C) 2009
D) 2011

Question 39

Which of the following is an example of a regressive tax?

A) income tax
B) Medicare tax
C) sales tax
D) payroll tax

Question 40

Which statement accurately reflects how regulatory policy is typically used with regard to the economy?

A) Regulations are typically enacted to protect society from unsafe business practices or negative externalities as opposed to addressing economic growth.
B) Regulations are typically applied to the service sector as opposed to manufacturing.
C) Regulations are used to control the money supply and discount rate.
D) Regulations are applied to address unique situations that might apply to a discrete issue or single business.

Question 41

Discuss the following national trends related to the U.S. workforce: labor force participation by women.

Question 42

What is monetary policy?

Question 43

Provide an example of a regressive tax.

Question 44

What are the benefits of full employment?

Question 45

What is the difference between the federal deficit and the federal debt? How does the deficit relate to economic growth?

Question 46

Define inflation.

Question 47

How does an increase in unemployment levels affect the federal budget?

Question 48

Tax policy includes a variety of methods used to increase revenues. Explain the variables of taxation noted by
b. Guy Peters (2006).

Question 49

What is the national debt?

Question 50

How is inflation measured?

Question 51

Describe the positions that opposing sides take with regard to the U.S. balance of trade. Why do some argue that a negative balance of trade is undesirable, while others argue that a negative balance of trade is not a problem?

Question 52

Explain fiscal policy.

Question 53

What does economic growth mean?

Question 54

Explain three policy options available to the U.S. government to reduce its annual deficits and accumulating national debt. For each option, discuss considerations relative to that option, such as economic, political, or equity concerns.

Question 55

What does the Bureau of Labor Statistics do?

Question 56

Discuss the two major ways that the federal government can reduce the deficit. In your discussion, explain the advantages and obstacles to each major approach.

Question 57

What does the Federal Reserve Board (Fed) do?

Question 58

Discuss how the Federal Reserve (Fed) can use monetary policy to affect the economy. What is the impact of this action?

Question 59

Explain the difference between fiscal policy and monetary policy. How does each tool work? Who is responsible for them?

Question 60

Provide an example of a progressive tax.