Deck 16: Economic Policy

Question 1

Which of the following statements about monetarism is true?

A) It argues for the deregulation of the money supply.
B) It believes that too much money in circulation leads to high inflation.
C) It believes that too much money in circulation creates deflationary pressures on the economy.
D) It is based on the belief that discretionary spending by the government is necessary for a healthy economy.
E) It advocates cutting taxes and deregulating business to stimulate the economy.

Answer 1

B

Question 2

Which of the following products and goods is/are part of the Bureau of Labor Statistics' consumer price index, or CPI?

A) food
B) clothing and shelter
C) fuel and transportation costs
D) selected medical costs
E) All of these answers are correct.

Answer 2

E

Question 3

Which economist developed the theory of monetarism?

A) John Maynard Keynes
B) Adam Smith
C) David Ricardo
D) Milton Friedman
E) Walt Rostow

Answer 3

D

Question 4

Who wrote Wealth of Nations, which argued in favor of a laissez-faire (hands-off) economic system?

A) Adam Smith
B) Benjamin Franklin
C) Thomas Hobbes
D) Jean-Jacques Rousseau
E) John Locke

Question 5

Economists cite all of these factors as evidence of a healthy economy EXCEPT

A) low unemployment.
B) stable consumer goods prices.
C) improvements in individual productivity.
D) increasing overall economic productivity.
E) a decrease in the national tax base.

Question 6

All of these are considered features of a healthy economy by economists and government officials EXCEPT

A) an increase in imports.
B) low poverty and high literacy rates.
C) a low inflation rate.
D) increasing gross domestic product (GDP).
E) a low unemployment rate.

Question 7

Which era saw the national government take the first steps to regulate workplace rules and conditions?

A) late 18th century
B) early 19th century
C) late 19th century
D) early 20th century
E) late 20th century

Question 8

According to Keynesian economics, what should the government do during an economic boom?

A) decrease government spending and possibly increase taxes
B) increase taxes and government spending
C) decrease taxes and possibly government spending
D) increase government spending and decrease taxes
E) increase government spending despite decreased revenues

Question 9

The total value of all goods and services that are produced within a country's borders is known as

A) productive resources.
B) the gross national product.
C) the economic system.
D) the gross domestic product.
E) durable goods.

Question 10

Which event led to the end of balanced budgets for a healthy economy, and the onset of deficit spending?

A) the War of 1812
B) the Mexican-American War
C) the Civil War
D) World War I
E) the Great Depression

Question 11

In 2009, President Obama and Congress passed the American Recovery and Reinvestment Act. This "stimulus package" is based on what type of economic theory?

A) supply-side
B) pure capitalism
C) Keynesian
D) deregulation
E) monetarism

Question 12

What yearly inflation rate do monetarists today argue ensures an adequate money supply for a healthy economy?

A) less than 1 percent
B) 1-3 percent
C) 3-5 percent
D) 5-7 percent
E) 7-9 percent

Question 13

What type of economy is the U.S. economy?

A) pure capitalist
B) regulated capitalist
C) limited capitalist
D) limited mercantilist
E) regulated socialist

Question 14

Fiscal policy is a combination of ________ policy and ________ policy.

A) tax; currency
B) tax; economic
C) tax; spending
D) economic; currency
E) budget; spending

Question 15

Who argued that national governments should increase their spending to stimulate the economy during an economic recession?

A) Karl Marx
B) Adam Smith
C) David Ricardo
D) John Maynard Keynes
E) Milton Friedman

Question 16

Which race/ethnicity with an advanced college degree has the highest weekly earnings?

A) Asian American
B) African American
C) white
D) Hispanic
E) All Americans with advanced degrees, regardless of race or ethnicity, have about the same weekly earnings.

Question 17

Which two racial/ethnic groups have the lowest weekly wages, regardless of education level?

A) Asian American and African American
B) Asian American and Hispanic
C) white and Hispanic
D) Hispanic and African American
E) white and African American

Question 18

If all other factors were equal, which of following is the most important step one can take in the quest for the American dream?

A) buying a home
B) opening a retirement account
C) staying loyal to an employer
D) starting a business
E) getting at least a college degree

Question 19

Which of the following features is/are part of the American dream?

A) financial security
B) personal happiness and health
C) upward mobility
D) success through hard work and persistence
E) All of these answers are correct.

Question 20

Which of the following is a hallmark of a pure capitalist economy?

A) public ownership of modes of production
B) government-mandated business practices
C) economic policy that is influenced by concern for the public good
D) government-free marketplace transactions
E) national policies that are enacted to influence the economy

Question 21

Which of the following is/are among the criteria used by the United Nations to comparatively assess global living standards in the Human Development Index (HDI)?

A) a long and healthy life, educational opportunities, and decent standard of living
B) access to food, clothing, and shelter
C) living, fuel, and transportation costs
D) physical health, income levels, and educational access
E) access to adequate medical care, food, and shelter

Question 22

Which of the following is income adjusted for inflation so that it can be compared across years?

A) per capita income
B) average income
C) real income
D) household income
E) median household income

Question 23

Which of the following is the income level in the middle of all household incomes?

A) per capita income
B) average income
C) real income
D) household income
E) median household income

Question 24

Which country had the highest Human Development Index score in 2016?

A) United States
B) Norway
C) Canada
D) France
E) New Zealand

Question 25

Which of these terms refers to the percentage of the population with income below the nationally designated poverty level?

A) poverty level
B) poverty rate
C) poverty threshold
D) poverty mark
E) poverty median

Question 26

Which year had the lowest GDP growth?

A) 2007
B) 2008
C) 2009
D) 2010
E) 2011

Question 27

When must both the House and Senate agree to the concurrent budget resolution each fiscal year?

A) March 1
B) March 15
C) April 1
D) April 15
E) May 1

Question 28

All of the following are considered nondefense discretionary expenditures EXCEPT

A) justice.
B) energy.
C) environment.
D) international affairs.
E) transportation.

Question 29

What type of tax takes a larger percentage of lower income earners' income and a smaller percentage of the income of those who earn more?

A) progressive tax
B) proportional tax
C) regressive tax
D) direct tax
E) indirect tax

Question 30

Which of the following is the total pretax earnings of all residents over the age of 15 living in a home?

A) per capita income
B) average income
C) real income
D) household income
E) median household income

Question 31

When is the president required by law to submit the executive budget to Congress?

A) first Monday in January
B) first Monday in February
C) first Monday in March
D) first Monday in April
E) first Monday in May

Question 32

Through its power to grant tax expenditures, the national government provides financial support to which of the following groups?

A) homeowners
B) individual taxpayers
C) businesses, colleges, and universities
D) state and local governments
E) All of these answers are correct.

Question 33

What type of tax takes a larger percentage of wealthier taxpayers' income and a smaller percentage of the income of those who earn less?

A) progressive tax
B) proportional tax
C) regressive tax
D) direct tax
E) indirect tax

Question 34

Which year had the lowest unemployment rate?

A) 2008
B) 2010
C) 2012
D) 2014
E) 2016

Question 35

What date signals the beginning of the national government's fiscal year (FY)?

A) January 1
B) April 1
C) July 1
D) August 1
E) October 1

Question 36

The deadline for Congress to complete budget reconciliation, the annual process of rewriting authorization legislation to comply with the concurrent budget resolution, is

A) May 15.
B) June 15.
C) July 15.
D) August 1.
E) August 15.

Question 37

Which governmental body has the constitutionally delegated power of the purse?

A) president
B) judiciary
C) Congress
D) federal reserve
E) department of the treasury

Question 38

Which of the following provide(s) the largest share of tax revenue in the FY 2017 budget?

A) social insurance receipts
B) individual income tax
C) corporate tax
D) excise taxes
E) estate and gift taxes

Question 39

What type of tax takes the same percentage of each taxpayer's income?

A) progressive tax
B) proportional tax
C) regressive tax
D) direct tax
E) indirect tax

Question 40

Which of the following programs is among those defined as mandatory spending obligations?

A) Social Security
B) Medicare
C) Medicaid
D) national debt payments
E) All of these answers are correct.

Question 41

All of the following are responsibilities of today's Fed EXCEPT

A) enacting regulations for the purpose of decreasing the national debt.
B) setting monetary policy aimed at price stability.
C) maintaining the stability of financial markets.
D) providing financial services to depository institutions.
E) supervising and regulating banking institutions.

Question 42

Which of the following years had the largest budget deficit?

A) 1994
B) 2004
C) 2009
D) 2012
E) 2014

Question 43

In which year did the federal government have a budget surplus?

A) 1982
B) 1989
C) 1991
D) 1999
E) 2006

Question 44

Social regulatory policy

A) is fully funded by the government.
B) increases the cost of doing business.
C) does not have an economic impact, unlike business regulation.
D) deals exclusively with issues of public health.
E) All of these answers are correct.

Question 45

The legal borrowing limit for the national government is called the

A) national debt.
B) budget deficit.
C) debt ceiling.
D) continuing resolution.
E) subsidy.

Question 46

Today, efforts to shrink annual deficit spending involves the use of

A) spending caps and continuing resolutions.
B) continuing resolutions and sequestration.
C) sequestration and budget reconciliations.
D) budget reconciliation and decreasing the debt ceiling.
E) concurrent budget resolutions.

Question 47

To navigate the global economy, each country has its own ________, a collection of tax laws and regulations to support its international commerce.

A) business regulations
B) trade barriers
C) tariffs
D) subsidies
E) trade policy

Question 48

All of the following are tools used by the Fed for setting monetary policy EXCEPT

A) lowering the reserve requirement.
B) authorizing a government spending sequester.
C) lowering the discount rate.
D) selling Treasury Securities to decrease the money supply.
E) raising the reserve requirement and raising the discount rate.

Question 49

How many appropriations bills must Congress approve by the end of June to fund the national government each fiscal year?

A) 6
B) 10
C) 12
D) 16
E) 26

Question 50

Congress and which president established the Federal Reserve System in 1913?

A) William McKinley
B) Theodore Roosevelt
C) Woodrow Wilson
D) Calvin Coolidge
E) Herbert Hoover

Question 51

Which of the following was NOT among the basic objectives established by the General Agreement on Tariffs and Trade (GATT)?

A) nondiscrimination in trade matters
B) elimination of regulatory barriers to trade
C) imposition of nontariff trade barriers
D) negotiation of trade conflicts with one another
E) elimination of restrictive tariffs on trade

Question 52

What organization, which came into existence in 1995, continues the free trade advocacy of the General Agreement on Tariffs and Trade?

A) the North American Free Trade Organization
B) the World Trade Organization
C) the United Nations
D) the International Trade Organization
E) the North American Treaty Organization

Question 53

Which of these agencies monitors the implementation of the previous fiscal year's budget?

A) Office of Management and Budget (OMB)
B) House Budget Committee
C) Senate Budget Committee
D) Congressional Budget Office (CBO)
E) Government Accountability Office (GAO)

Question 54

Sequestration would most likely lead to

A) smaller budget deficits.
B) higher income taxes.
C) a greater need to raise the debt ceiling.
D) a greater increase in the size of the national debt.
E) All of these answers are correct.

Question 55

Which of the following was/were established as part of the Fair Labor Standards Act of 1938?

A) standards for a legal workweek
B) overtime pay
C) minimum wages
D) limits on child labor
E) All of these answers are correct.

Question 56

After World War II, the United States and its international partners shifted toward which type of trade policy?

A) subsidy-based
B) protectionist
C) limited protectionist
D) regional protectionist
E) free trade

Question 57

Identify the factors necessary for people to live the American dream today.

Question 58

In which year did Congress pass the American Recovery and Reinvestment Act?

A) 2007
B) 2008
C) 2009
D) 2010
E) 2011

Question 59

Which of the following is the newest of the business-regulating government agencies that was established to help protect consumers of banking and financial industries?

A) Interstate Commerce Commission (ICC)
B) Federal Trade Commission (FTC)
C) Consumer Financial Protection Bureau (CFPB)
D) Congressional Budget Office (CBO)
E) Securities and Exchange Commission (SEC)

Question 60

Sequestration first occurred in FY

A) 2009.
B) 2010.
C) 2011.
D) 2012.
E) 2013.

Question 61

Outline the key features of Keynesian economic theory.

Question 62

Outline the theories of monetarism and identify monetarists' ideal level of inflation.

Question 63

Within the budgetary process, what is a continuing resolution, and by when must it be approved?

Question 64

Explain the main features and arguments of supply-side economics.

Question 65

Compare and contrast the two forms of discretionary spending programs.

Question 66

Describe the features of business regulation and social regulation in the U.S. economy today.

Question 67

Discuss the course and identify benefits of the pursuit of free trade policy by the United States after World War II.

Question 68

Discuss the difference between a pure capitalist economy and a regulated capitalist economy.

Question 69

What is the CPI and what is it used for by the national government?