Question 1

Which of these was saved by a government purchase of stocks, resulting in federal majority ownership?&#10;A) Lehman Brothers&#10;B) Goldman-Sachs&#10;C) IBM&#10;D) General Motors

Accepted Answer

The only option that fits this description is General Motors, which received a government bailout in 2009 that resulted in the federal government owning a majority stake in the company.

Question 2

The government takes about&#10;Of the GDP, but we (as a nation) still owe the&#10;Equivalent of&#10;A) 25 percent; $45,000&#10;B) 20 percent; $25,000&#10;C) 15 percent; $20,000&#10;D) 10 percent; $15,000&#10;For every person in the U.S.

Accepted Answer

The correct choice is A) 25 percent; $45,000. This reflects a scenario where the government's spending or revenue intake as a percentage of the Gross Domestic Product (GDP) is 25%, and the national debt per capita (for every person in the U.S.) amounts to approximately $45,000. This is a hypothetical scenario meant to illustrate the relationship between government fiscal policies, GDP, and national debt.

Question 3

A long-standing proponent of the balanced budget amendment is&#10;A) Ben Bernanke&#10;B) Orrin Hatch&#10;C) Timothy Geithner&#10;D) Henry Paulson

Accepted Answer

Orrin Hatch, a former Republican senator from Utah, has been a proponent of the balanced budget amendment for many years. He has introduced several versions of the amendment in the Senate and has argued that it is necessary to rein in government spending and reduce the national debt. While other figures, such as former Treasury Secretaries Timothy Geithner and Henry Paulson, have weighed in on the issue of deficit reduction, they have not been as closely associated with the push for a balanced budget amendment as Orrin Hatch. Ben Bernanke, a former chairman of the Federal Reserve, has expressed support for deficit reduction measures in general, but has not specifically endorsed a balanced budget amendment.

Question 4

Traditional economic policymaking has been&#10;A) incremental.&#10;B) elite.&#10;C) public choice.&#10;D) interest group.

Accepted Answer

Traditional economic policymaking has been incremental, meaning that changes are made gradually over time rather than in sweeping reformations. This approach is more cautious and less likely to have unintended consequences. Elite, public choice, and interest group approaches may also be involved in policymaking, but they are not necessarily characteristic of traditional economic policymaking.

Question 5

The view that the market is self-adjusting and should be left alone by the government&#10;Is associated with&#10;A) Keynesian&#10;B) classical&#10;C) supply-side&#10;D) group

Accepted Answer

The view that the market is self-adjusting and should be left alone by the government
Is associated with

A) Keynesian
B) classical
C) supply-side
D) group

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Question 6

The United States enjoyed a budget surplus during the administration of President&#10;A) Reagan.&#10;B) Carter.&#10;C) Clinton.&#10;D) Nixon.

Accepted Answer

The United States enjoyed a budget surplus during the administration of President Clinton, from 1998 to 2001. During this time, the country experienced low unemployment and strong economic growth, which helped to increase tax revenues and reduce spending on programs like unemployment benefits. The surplus was short-lived, however, as the onset of the Iraq War and a series of tax cuts under President George W. Bush contributed to significant deficits in subsequent years.

Question 7

The financial crisis beginning in 2008 was most closely tied to what market?&#10;A) automobile&#10;B) housing&#10;C) electronics&#10;D) agricultural products

Accepted Answer

The financial crisis beginning in 2008 was most closely tied to the housing market. The crisis was primarily caused by the collapse of the housing bubble, which was fueled by subprime mortgages and a lack of regulation in the mortgage industry. This led to widespread foreclosures and a sharp decline in the value of mortgage-backed securities, which had been heavily traded by banks and other financial institutions.

Question 8

The largest federal expenditures go for&#10;A) defense.&#10;B) Medicare.&#10;C) Social Security.&#10;D) the War on Terror.

Accepted Answer

Social Security is the largest federal expenditure, accounting for 24% of the federal budget in 2020. This is because it provides benefits to an estimated 64 million people, including retired workers, disabled individuals, and surviving family members. Defense is the second largest federal expenditure, accounting for 15% of the budget in 2020. Medicare is the third largest expenditure at 14%. The War on Terror is not a specific budget item and is instead categorized under defense spending.

Question 9

Federal spending that is not included in the budget is termed&#10;A) back-door&#10;B) in-kind&#10;C) indexed&#10;D) deficit

Accepted Answer

Federal spending that is not included in the budget is commonly referred to as "back-door" spending. This type of spending is usually in the form of tax expenditures and direct spending, such as emergency funding for disaster relief or unplanned military operations. It is often considered controversial as it bypasses the normal budgetary process and can add significantly to the national debt.

Question 10

A key measure of the performance of the American economy is the&#10;A) GDP.&#10;B) OMB.&#10;C) FED.&#10;D) CBO.

Accepted Answer

GDP (Gross Domestic Product) is the total value of goods and services produced within the borders of the United States in a specific period, usually a year. It is widely used as a measure of economic performance, reflecting the size and health of the economy. The other options listed (OMB, FED, CBO) are government agencies that play important roles in economic policy and management, but they are not themselves indicators of economic performance.

Question 11

Government decisions regarding taxing, spending, and deficits reflect&#10;A) monetary policy.&#10;B) fiscal policy.&#10;C) classical policy.&#10;D) Keynesian policy.

Accepted Answer

The answer of Government decisions regarding taxing, spending, and deficits...

Question 12

The control of the money supply is a responsibility of the&#10;A) Office of Management and Budget.&#10;B) Federal Reserve Board.&#10;C) Congressional Budget Office.&#10;D) Treasury.

Accepted Answer

The answer of The control of the money supply is...

Question 13

Automatic increases in government benefits to keep up with price increases are called&#10;A) back door allowances.&#10;B) indexing.&#10;C) inflationary adjustment.&#10;D) monetary equalization.

Accepted Answer

The answer of Automatic increases in government benefits to keep...

Question 14

About what percentage of U.S.national debt is essentially borrowed from foreign countries?&#10;A) one-quarter&#10;B) one-third&#10;C) one-half&#10;D) two-thirds

Accepted Answer

The answer of About what percentage of U.S.national debt is...

Question 15

When GDP falls for six months, this is termed&#10;A) a depression.&#10;B) inflation.&#10;C) a recession.&#10;D) deflation.

Accepted Answer

The answer of When GDP falls for six months, this...

Question 16

The Republican &#34;Path to Prosperity&#34; has the goal of&#10;A) increasing taxes.&#10;B) increasing spending on welfare programs.&#10;C) reducing deficit spending.&#10;D) eliminating Medicare and Social Security.

Accepted Answer

The answer of The Republican &#34;Path to Prosperity&#34; has the...

Question 17

Supply-side economists argue for all of the following EXCEPT&#10;A) lower tax rates.&#10;B) less government involvement in the economy.&#10;C) concentration of long-term growth.&#10;D) no tax incentives to encourage investing.

Accepted Answer

The answer of Supply-side economists argue for all of the...

Question 18

Countercyclical policies are associated with&#10;A) classical theory.&#10;B) monetarist theory.&#10;C) supply-side theory.&#10;D) Keynesian theory.

Accepted Answer

The answer of Countercyclical policies are associated with&#10;A) classical theory.&#10;B)...

Question 19

The 2009 stimulus package differed from traditional Republican economic stimulus efforts in being primarily composed of&#10;A) tax cuts.&#10;B) higher export tariffs.&#10;C) spending increases.&#10;D) public works projects.

Accepted Answer

The answer of The 2009 stimulus package differed from traditional...

Question 20

The federal budget's discretionary, nondefense spending is about federal budget.&#10;A) 20 percent&#10;B) 15 percent&#10;C) 10 percent&#10;D) 5 percent

Accepted Answer

The answer of The federal budget's discretionary, nondefense spending is...

Question 21

The Dodd-Frank Act concerned regulation of the financial system.

Accepted Answer

The answer of The Dodd-Frank Act concerned regulation of the...

Question 22

The Federal Reserve Board's main task is to regulate the money supply.

Accepted Answer

The answer of The Federal Reserve Board's main task is...

Question 23

The national deficit has grown steadily since 1980.

Accepted Answer

The answer of The national deficit has grown steadily since...

Question 24

According to Keynes, only the government had the ability to remedy economic problems in the case of a recession.

Accepted Answer

The answer of According to Keynes, only the government had...

Question 25

The Wall Street bailout was opposed by both the Treasury secretary and the head of the Federal Reserve Board.

Accepted Answer

The answer of The Wall Street bailout was opposed by...

Question 26

The economic stimulus package passed in 2009 was primarily composed of tax cuts.

Accepted Answer

The answer of The economic stimulus package passed in 2009...

Question 27

GDP, unemployment, and inflation are all measures of a nation's economic health.

Accepted Answer

The answer of GDP, unemployment, and inflation are all measures...

Question 28

The economic crisis beginning in 2008 marked a turn in economic policy towards incrementalism.

Accepted Answer

The answer of The economic crisis beginning in 2008 marked...

Question 29

In classical economic theory, the government should not intervene in the economy.

Accepted Answer

The answer of In classical economic theory, the government should...

Question 30

Monetary policy concerns the money supply.

Accepted Answer

The answer of Monetary policy concerns the money supply....

Deck 10: Economic Policy