Deck 17: Economic Policy

Question 1

Money spent on annual military expenditures would be categorized as which type of spending?

A) Progressive spending
B) Mandatory spending
C) Uncontrollable spending
D) Discretionary spending
E) Incremental spending

Answer 1

D

Question 2

Which of the following would involve using fiscal policy to affect changes in economic activity?

A) Altering the amount of money in circulation
B) Taxing and government spending
C) Altering interest rates
D) Court-mandated wage and price controls
E) All of these are correct.

Answer 2

B

Question 3

When the U.S. government adjusts the amount of money in circulation in order to alter credit markets and employment, which of the following is the government relying on to influence the economy?

A) Domestic policy
B) Fiscal policy
C) Monetary policy
D) Regressive tax policy
E) Progressive tax policy

Answer 3

C

Question 4

Benefits to which every eligible person has a legal right and the government cannot deny are provided by which of the following programs?

A) Retroactive policies
B) Discretionary spending
C) Controllable spending
D) Entitlements
E) Earmarks

Question 5

The Federal Reserve System was created to do which of the following?

A) Designate certain governmental powers as reserved for the federal government
B) Provide a secondary military force in times of war
C) Pay off the national debt
D) Stabilize nationwide economic activity by controlling the amount of money in circulation
E) All of these are correct.

Question 6

Monetary policies are largely determined by which of the following groups?

A) Presidents
B) Federal Reserve Board
C) Congress
D) Congressional Budget Office
E) Treasury Department

Question 7

President Reagan backed a sweeping tax reform that reduced the number of brackets. Such a plan incorporates which type of tax?

A) Progressive
B) Flat
C) Payroll
D) Value added
E) Excise

Question 8

Which of the following are government expenditures that exceed receipts?

A) Upturns
B) Inflation
C) Surpluses
D) Deficits
E) Rebates

Question 9

Which of the following is true of fiscal policy?

A) It is popular with conservatives.
B) It is an approach to stabilize the economy through control of the money supply.
C) It is controlled by the Federal Reserve Bank.
D) It is an approach to stabilizing the economy through government spending and taxing.
E) It requires that, during economic slowdowns, the government tighten its belt on spending.

Question 10

Which of the following would be an example of an entitlement program?

A) Federal income tax
B) Federal student loans
C) Medicare
D) Medicaid
E) An IRA

Question 11

The Department of Education successfully lobbies to add to the budget a new federally funded program that would provide for technology in classrooms. This program would be best described as which of the following?

A) Mandatory
B) Presidential
C) Pork barrel
D) Discretionary
E) Earmark

Question 12

A body that decided which programs would be funded would be fulfilling the role of which of the following?

A) An appropriations committee
B) A central bank
C) A general accounting office
D) A budget signature authority
E) A financial review office

Question 13

If government cuts taxes to encourage people to spend more money in order to stimulate economic growth, what policy is it engaging in?

A) Fiscal policy
B) Business cycling
C) Monetary policy
D) Keynesian policy
E) Subsidies

Question 14

Controlling U.S. monetary policy is the responsibility of which of the following?

A) Presidency
B) Federal Deposit Insurance Corporation
C) Federal Reserve Board
D) International Monetary Fund
E) Treasury Department

Question 15

Entitlement programs fall into the text's categorization of which type of spending?

A) Progressive spending
B) Mandatory spending
C) Uncontrollable spending
D) Discretionary spending
E) Incremental spending

Question 16

Monetary policy includes which of the following?

A) Using changes in the amount of money in circulation to alter national economic variables
B) Using changes in the size of the federal budget deficit to alter national economic variables
C) Regulating tax rates to ensure controlled growth and low inflation
D) All economic policies of the president and Congress
E) Linking the consumer price index and the gross national product

Question 17

Which of the following best describes the Federal Reserve?

A) A partner with the U.S. Congress in determining economic volatility
B) A source of economic decision-making power in the U.S. government largely independent of the three branches of government
C) A division of the Office of Management and Budget
D) A resource for college loans and home loans
E) A diplomatic arm of the U.S. government that focuses on the foreign exchange market

Question 18

On what basis does the text suggest that no one in Congress is responsible for the budget as a whole?

A) One group in each house plans for revenues, and many other groups plan for spending.
B) The executive branch dominates the process at every point.
C) Committee chairpersons make the critical decisions in secret.
D) The election cycle creates too much turnover in membership.
E) Informal norms prevent members from revealing the sources of key decisions.

Question 19

Individuals who meet certain requirements, such as age or income level, qualify to receive benefits under a particular federal program. What are these programs called?

A) Entitlements
B) Discretionary spending
C) Wealth redistribution
D) Pensions
E) Subsidies

Question 20

Unemployment insurance is an example of what type of program that guarantees benefits to the recipients?

A) Welfare
B) Need-based
C) Means-tested
D) Altruistic
E) Entitlement

Question 21

Roughly what percentage of all national government spending does the interest on the accumulated national debt account for?

A) 20%
B) 53%
C) 8%
D) 33%
E) 45%

Question 22

What was the federal government's single largest budgeted spending item for fiscal year 2017?

A) Social Security
B) Food stamps
C) Welfare
D) National defense
E) Foreign aid

Question 23

A tax allocated based on a person's ability to pay, rather than, for example, requiring everyone to pay an equal percentage of their income, is known as what type of tax?

A) Progressive
B) Flat
C) Regressive
D) Value added
E) Excise

Question 24

A tax where the rich pay proportionately higher taxes as a share of their income than the poor is also known as what type of tax?

A) Progressive
B) Flat
C) Regressive
D) Payroll
E) Excise

Question 25

Which of the following best describes what is meant by the phrase "uncontrollable spending" in the context of the federal budget?

A) Much of the budget is already committed by past contracts and agreements.
B) Congress and the president seldom agree on a budget.
C) Politicians lack the courage to make budget cuts.
D) The amount of time spent in hearings and debates on the federal budget increases every year.
E) Spending is automatic if no budget agreement is reached.

Question 26

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

A) Income tax
B) Medicare tax
C) Social Security tax
D) Estate tax
E) Excise tax

Question 27

From World War II until the collapse of the Soviet Union, the national budget allowed for the most spending in which area?

A) Social Security
B) Transportation
C) Welfare
D) National defense
E) Foreign aid

Question 28

For what reason was the U.S. income tax first introduced?

A) To help finance the Civil War
B) To respond to the dramatic drop in federal revenues as a result of the Great Depression
C) To finance U.S. participation in World War I
D) To reduce the ability of a few industrialists to create economic disadvantage for the majority of citizens
E) To enable the U.S. government to grow in response to competition from foreign countries

Question 29

Which of the following statements best describes the status of the total federal tax burden on U.S. citizens since the 1950s?

A) It increased slightly.
B) It increased dramatically.
C) It stayed about the same.
D) It decreased.
E) It is impossible to determine.

Question 30

Much of the federal budget goes toward the cost of Social Security, yet congressional efforts to change this are hampered because spending for this program is considered to be which of the following?

A) Infallible
B) Partisan
C) Uncontrollable
D) Unnecessary
E) Majoritarian

Question 31

Social Security and Medicare are funded by taxes on which of the following?

A) Luxury items
B) Employer's gross receipts
C) An individual's salary
D) Value of an individual's personal property
E) Capital gains

Question 32

Which president was especially notable for boosting defense spending?

A) John Kennedy
B) George H. W. Bush
C) Jimmy Carter
D) Bill Clinton
E) Ronald Reagan

Question 33

Which amendment empowered the national government to collect taxes on income?

A) Fourteenth
B) Sixteenth
C) Seventeenth
D) Eighteenth
E) Twenty-First

Question 34

Which tax is currently the single greatest source of federal revenues, comprising almost half of total federal tax revenue?

A) Tariff
B) Income tax
C) Social Security tax
D) Corporate income tax
E) Excise tax

Question 35

Which of the following is an important governmental justification for progressive taxation?

A) Assisting small businesses
B) Promoting equality
C) Giving corporations more incentive to hire new employees
D) Allowing people to keep more of the income that they earn
E) Enhancing national security by enhancing federal revenues

Question 36

What budgeting principle or process involves developing a budget by using last year's budget as the base and adding an amount to cover the increased costs of doing business (inflation) and any new programs?

A) Zero-based budgeting
B) Incremental budgeting
C) The program planning budgeting system (PPBS)
D) Deficit budgeting
E) Cost analysis

Question 37

Which of the following best describes how the Social Security system is funded?

A) Fees paid to the Federal Deposit Insurance Corporation (FDIC)
B) A pay-as-you-go system where those currently working support those who are retired
C) Funded solely by employees' contributions through wages
D) Funded by a progressive tax on income
E) Essentially, a private pension fund in which employees decide how much to contribute

Question 38

Which of the following best describes the number of democratic countries that the United States has a higher tax burden than?

A) Almost all
B) About three-fourths
C) About half
D) About one-fourth
E) Almost none

Question 39

Because everyone pays the same rate of sales tax on purchases, and less wealthy people spend most of their income buying things, as opposed to saving and investing, what kind of impact does the sales tax have?

A) Pluralist
B) Regressive
C) Discretionary
D) Positive
E) Progressive

Question 40

Which of the following best describes how tax rates would be distributed under a flat tax?

A) The wealthy pay a lower tax.
B) The wealthy pay a higher tax.
C) The poor pay a lower tax.
D) The poor pay a higher tax.
E) Everyone pays at the same rate.

Question 41

Describe President George W. Bush's election tax pledges and what happened to budget deficits during his presidency.

Question 42

Explain the concept of a federal budget outlay, and give an example of one.

Question 43

Describe the factors that can affect spending policies and the ways these factors either increase or decrease budget outlays.

Question 44

Explain what an entitlement program is. Describe two federal entitlement programs, their purpose, and their eligibility requirements.

Question 45

Compare and contrast the flat tax and the progressive tax, and describe which tax was more closely related to President Reagan's policies.

Question 46

Examine the federal budget deficit, why it occurred, and what measures should be taken to bring it down.

Question 47

Explain the taxation systems used in the United States.

Question 48

Discuss the creation of the income tax in the United States, and explain why the Sixteenth Amendment was necessary.

Question 49

Describe the historic role of the U.S. government in addressing unemployment.

Question 50

A sales tax is an example of which type of tax?

A) Progressive
B) Flat
C) Value added
D) Regressive
E) Excise

Question 51

Discuss some of the reasons that America's system of taxation does not do more to promote economic equality.

Question 52

Describe some of the ways that the Federal Reserve Board arguably affects the nation's economy more than the president can.

Question 53

Describe the three ways the Federal Reserve System controls the money supply.

Question 54

What are the goals of the Federal Reserve Board, and what tools does it use to achieve them?

Question 55

Explain the difference between budget authority and budget outlays.

Question 56

Define fiscal policy and monetary policy. Explain the tools used by the institutions of the national government to shape economic policy.

Question 57

Discuss how federal government bureaucracies typically determine how much to ask for in budget allocations. Explain what factors keep most such budgets from going down.

Question 58

Discuss monetary policy. Explain how it compares to economic policy.

Question 59

Explain what makes a tax regressive, and provide an example of one.

Question 60

Explain the role of the Federal Reserve System in the United States.