Question 1

Keynes would insist that there is no need for the government to

Accepted Answer

E

Question 2

When there is an economic downturn, this economic theory argues that the proper thing for government to do is increase demand through pumping more money into the economy by spending more than it takes in in taxes and by creating public-works programs.

Accepted Answer

Keynesian economics argues that in times of economic downturn, the government should increase demand through fiscal policy, such as spending money on public-works programs and increasing government spending, in order to stimulate economic growth. Monetarist economics, on the other hand, argues that the government should focus on controlling the money supply in order to control inflation, rather than using fiscal policy to manipulate demand. Economic planning refers to the use of central planning to control and direct economic activity, while supply-side economics emphasizes reducing taxes and regulations to encourage investment and business growth. Credit-based economics is not a recognized economic theory.

Question 3

The amount the government spends in excess of what it takes in each year is called the __________.

Accepted Answer

The term used to describe the amount the government spends in excess of what it takes in each year is the deficit. The government accrues a budget deficit when its spending exceeds its revenue.

Question 4

In 1980, about two-thirds of those who said they had become worse off economically voted for Ronald Reagan, the challenger, while over half of those who felt they had become better off voted for __________.

Accepted Answer

The only sitting president in 1980 who could have been viewed as responsible for the state of the economy at that time was Jimmy Carter. Therefore, those who felt they had become better off economically would have been more likely to vote for Carter.

Question 5

The health of the American economy creates __________ politics.

Accepted Answer

The answer of The health of the American economy creates...

Question 6

According to the monetarist theory, inflation occurs when

Accepted Answer

According to the monetarist theory, inflation occurs when there is too much money in circulation, which can happen when the government prints too much money. This excess money leads to an increase in demand without a corresponding increase in supply, leading to higher prices and inflation.

Question 7

In 2012, the national debt rose to over $__________ trillion.

Accepted Answer

According to data from the US Treasury Department, the national debt surpassed $16 trillion in 2012.

Question 8

As a group, low-income people tend to be most concerned with __________.

Accepted Answer

Low-income people are often most concerned with employment as it directly affects their ability to earn a living and meet basic needs.

Question 9

__________'s campaign aides often reminded each other, "It's the economy, stupid!"

Accepted Answer

"It's the economy, stupid!" was a famous slogan coined by James Carville, a campaign strategist for Bill Clinton's successful 1992 presidential campaign. This phrase was used to keep Clinton's campaign focused on the economic issues that were most important to voters at the time.

Question 10

The total value of all a nation's goods and services produced each year is called

Accepted Answer

The total value of all goods and services produced each year by a nation is referred to as its gross domestic product (GDP).

Question 11

A twentieth-century example of government use of money to influence elections was

Accepted Answer

Increasing Social Security benefits in election years is a known strategy used by some governments to gain favor with voters, particularly older voters who are more likely to benefit from such increases. This tactic is seen as a way to influence election outcomes by appealing to a significant portion of the electorate.

Question 12

The huge new demands for Social Security benefits and medical payments under Medicare is largely due to

Accepted Answer

The population aging is the main factor leading to the increased demand for Social Security benefits and medical payments under Medicare. As the baby boomer generation reaches retirement age and life expectancy increases, the number of retirees relying on these programs is growing, putting strain on the system.

Question 13

Elected officials are strongly tempted to take

Accepted Answer

Elected officials often take a short-run view of the economy because they want to show quick results to their constituents in order to improve their chances of being re-elected. They are also tempted to take positions that will best satisfy the self-regarding voter, even if those policies might not be in the long-term interest of the economy. Therefore, options B and C are both true.

Question 14

The pocketbook issue tends to preoccupy politicians most

Accepted Answer

The pocketbook issue, which relates to people's economic well-being, tends to preoccupy politicians just before elections. This is because voters often prioritize their own economic circumstances when choosing who to vote for, and politicians want to appeal to their constituents' concerns.

Question 15

As a group, low-income people tend to vote

Accepted Answer

Numerous studies have found that low-income people tend to vote for Democratic candidates. This is likely due to the fact that the Democratic party typically advocates for policies that benefit low-income individuals, such as increased access to healthcare, public education, and social welfare programs.

Question 16

In 2010, Barack Obama became the first president since __________ to be reelected despite an unemployment rate on election day that was higher than the unemployment rate on the day of his first inaugural.

Accepted Answer

The answer of In 2010, Barack Obama became the first...

Question 17

When there is an economic downturn, this economic theory argues that the proper thing for government to do is to have a steady, predictable increase in the money supply at a rate about equal to growth in the economy's productivity.

Accepted Answer

This is the basic principle of Monetarist economics, which advocates for a steady increase in the money supply at a rate equal to the growth in the economy's productivity to combat a recession. Keynesian economics, on the other hand, suggests that the government should increase spending during a downturn to stimulate demand and job creation. Economic planning typically involves a more centralized approach to managing the economy. Supply-side economics focuses on lowering taxes and reducing regulations to encourage economic growth. Credit-based economics is not a recognized economic theory.

Question 18

In 2011, Standard & Poor's, a credit ratings agency, issued

Accepted Answer

Standard & Poor's issued a first-ever warning about America's national debt in 2011, citing concerns about the country's long-term fiscal health. This warning led to a downgrade of the U.S. credit rating from AAA to AA+.

Question 19

Milton Friedman believed that inflation occurs

Accepted Answer

Milton Friedman believed that inflation occurs when there is too much money in the economy chasing too few goods. This means that if the government increases the money supply without a corresponding increase in the production of goods and services, prices will rise to reflect the excess demand. This is also known as demand-pull inflation.

Question 20

When voting behavior and economic conditions correlate at the national but not at the individual level, it can be said that the voters are

Accepted Answer

The term "sociotropic" refers to voting behavior that is influenced by the broader economic conditions and well-being of society as a whole, rather than by individual economic circumstances. Therefore, if voting behavior and economic conditions correlate at the national level but not at the individual level, it suggests that voters are more influenced by sociotropic factors than by their own personal economic circumstances.

Quiz 18: Economic Policy