Question 1

The U.S. economy is the largest in the world. What two factors primarily explain this? What makes the U.S. economy unique?

Accepted Answer

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Question 2

The government redistributes income to the poor, primarily through

Accepted Answer

The government redistributes income to the poor through transfer payments, such as welfare, unemployment benefits, and food stamps, which provide direct monetary assistance. These transfer payments are funded by progressive taxes, meaning that higher-income individuals pay a higher percentage of their income in taxes compared to lower-income individuals. Therefore, choice B, transfer payments and progressive taxes, is the best choice. The other options, such as regressive taxes and disability payments (A) or higher wages (D), do not provide direct income assistance to the poor and are not primarily used by the government for income redistribution. Government purchases (C) also do not directly provide income assistance to the poor.

Question 3

How does the United States compare to other nations on a per capita scale as far as government production and taxation?

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Question 4

Differentiate between an open and a closed economy? Do you agree that the U.S. economy is more open among the advanced industrial countries in the world?

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Question 5

Since the mid-1970s, compared to the United States, European unemployment rates are\is

Accepted Answer

European unemployment rates have consistently been higher than those in the United States since the mid-1970s. This is due to a variety of factors including labor market regulations, welfare policies, and structural issues within certain industries.

Question 6

Annual incomes of James, Jack, and Stanley are $30,000, $50,000, and $80,000 and their tax rates are 10 percent, 20 percent, and 30 percent respectively. Which tax structure is this an example of?

Accepted Answer

This is an example of a progressive tax structure because the tax rates increase as the income increases. James pays 10% of his income in taxes, Jack pays 20%, and Stanley pays 30%. This means that the higher income earners are paying a higher percentage of their income in taxes compared to the lower income earner.

Question 7

List five major economic activities of government, and give an example of each.

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Question 8

What important changes have occurred in the composition of the labor force since 1960? Is the popular image of the American worker as a factory worker accurate? Describe the types of jobs Americans are working in today.

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Question 9

Between 1960 and 2017 U.S. GDP, measured in dollars of constant purchasing power, expanded by a factor of 5. However, the standard of living only increased by 3 times over this period. Explain the difference.

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Question 10

A mixed economy is one in which

Accepted Answer

In a mixed economy, both the government and private markets play a role in the economy. The government may regulate or subsidize certain industries, but private businesses are also able to operate and compete in the market. Therefore, choice D is the best answer as it accurately reflects the role of government in a mixed economy.

Question 11

Is the image of the typical American worker as a blue-collar worker true? Substantiate your answer with facts.

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Question 12

The United States provides a reasonable illustration of

Accepted Answer

The United States has a mixed economy, which means it combines elements of both a market economy and a planned economy. While individuals and businesses are free to make economic decisions in the market, the government also plays a significant role in regulating and overseeing economic activity. The government provides certain public goods and services, such as national defense and public education, and also enforces laws and regulations to protect consumers and promote competition. Overall, the United States has a complex and dynamic economic system that blends market forces with government intervention in various ways.

Question 13

The largest share of the typical American family budget goes to

Accepted Answer

According to the Bureau of Labor Statistics, the largest share of the typical American family budget (33%) goes to housing expenses such as rent, mortgage payments, utilities, and home maintenance. Transportation comes in second at 16%, followed by food at 13%, and personal insurance and pensions at 11%. Health care accounts for roughly 8% of the average budget. Therefore, the best choice is C)housing.

Question 14

Since the 1970s, unemployment rates in the United States have generally been

Accepted Answer

Unemployment rates in the United States have been consistently lower than in Europe since the 1970s. This is partly due to the flexibility of the US labor market and less regulation, which allows for more job creation and easier hiring and firing practices.

Question 15

Which of the following nations can be called a mixed economy?

Accepted Answer

All of these nations have mixed economies, meaning they have elements of both market and planned economies. The exact balance and combination of these elements can vary between countries. The United States has a relatively open market system with some government regulations and interventions, Italy has a mixed economy that leans more towards government control and intervention, Sweden has a mixed economy with a strong welfare state and high taxes, and France has a mixed economy with significant government ownership of some industries.

Question 16

A typical American family sends about _____ percent of its budget on services.

Accepted Answer

According to the Bureau of Labor Statistics, a typical American family spends around 66% of their budget on services, such as housing, healthcare, and transportation. Therefore, the best choice is C.

Question 17

In a mixed economy,

Accepted Answer

In a mixed economy, there is no identical mix of private and public involvement, and the government is not necessarily more important than the private sector in generating output. However, there is some government influence over the workings of the free market, which is the distinguishing characteristic of a mixed economy. Therefore, choice C is the best answer.

Question 18

All of the following are associated with a mixed economy except

Accepted Answer

Public ownership of the society's productive resources is not typically associated with a mixed economy, as a mixed economy emphasizes the coexistence of both private and public ownership.

Question 19

Based on data from 2016, which of the following countries has the lowest tax burden?

Accepted Answer

According to data from 2016, the United States had the lowest tax burden among the four countries listed. The tax burden is the percentage of total tax revenue to GDP (gross domestic product). In 2016, the tax burden in the United States was 26 percent, while the tax burdens in the United Kingdom, Italy, and Sweden were 32 percent, 43 percent, and 44 percent, respectively. Therefore, the United States (B) is the best choice for the country with the lowest tax burden.

Question 20

Progressive income taxes are designed to

Accepted Answer

Progressive income taxes increase the tax burden on higher income earners, thus reducing income inequality and making the distribution of income more equal.

Quiz 2: The Economy: Myth and Reality