Deck 7: Economic and Budgetary Policy

Question 1

A ______ tax is one in which the rate of taxation is higher for individuals who earn higher incomes.

A) progressive
B) distributive
C) regressive
D) sales

Answer 1

A

Question 2

Which branch of government typically initiates the budgetary process?

A) executive
B) federal
C) legislative
D) senate

Answer 2

A

Question 3

Today, entitlement programs consume roughly ______% of the federal budget.

A) 10
B) 20
C) 60
D) 80

Answer 3

C

Question 4

As a part of the federal budgeting process, an executive agency called the ______ reviews all agency budgets and ensures that they conform to the intent of the policy.

A) Office of Management and Budget
B) Commerce Department
C) Executive Office of the President
D) Nonpartisan Budget Review Commission

Question 5

The economic policy goal of ______ refers to policies that are designed to increase productivity, commerce, sales, employment, and the general pace of activity within the economy.

A) full employment
B) economic growth
C) low levels of inflation
D) managing debts and deficits

Question 6

A ______ tax refers to a situation in which all individuals have the same rate of taxation regardless of income.

A) progressive
B) regressive
C) redistributive
D) discretionary

Question 7

______ are individuals who are concerned about the negative balance of trade.

A) Labor union representatives
B) Interventionists
C) Lobbyists
D) Protectionists

Question 8

What is the major instrument through which any government sets its overall economic policy each year?

A) the Federal Reserve Board
B) the monetary policy
C) the federal budget
D) the Economic Stimulus Program

Question 9

The government shutdown of October 2013 was due to ______.

A) a showdown between political parties over the Affordable Care Act and the deficit
B) the federal government exceeding the Fed's target inflation rate
C) a filibuster of the health-care law staged by House Tea Party elected officials
D) the impending passage of the Affordable Care Act

Question 10

The ______ is a measure that represents the average change in price over time of a market basket of consumer goods and services.

A) CPI
B) Fed
C) GDP
D) CBO

Question 11

Which of the following is NOT a goal of economic policy?

A) economic growth
B) full employment
C) low inflation
D) increasing imports

Question 12

Which of the following terms refers to the ability of a method of taxation to keep up with inflation and economic growth?

A) vertical equity
B) buoyancy
C) redistributive effects
D) progressive taxation

Question 13

An entitlement program refers to ______.

A) a program created by an unfunded federal mandate
B) a program for which people are eligible based on their economic status or age
C) a regulatory program
D) state-level programs, where states must demonstrate entitlement at the federal level

Question 14

Which of the following is NOT a tool of economic policy making?

A) regulation
B) taxation
C) efficiency
D) establishment of the budget

Question 15

Regulation is defined as ______.

A) the government levying taxes on certain goods
B) use of the budget process to encourage or discourage behavior
C) the government providing information, so citizens can make their own choices
D) the government requiring certain activities be done and, if they are not, assessing penalties

Question 16

What is the difference between the national deficit and the national debt?

A) The debt is the yearly amount government expenses exceed revenue. The deficit is the accumulation of the deficits over the years.
B) The deficit is based on the distribution of entitlement programs. The debt is the ceiling for the federal budget.
C) The deficit is the yearly amount government expenses exceed revenue. The debt is the accumulation of the deficits over the years.
D) The deficit is the portion of the federal budget allocated by Congress. The debt is the portion of the budget allocated by the executive branch.

Question 17

The economic goal of stable prices is typically measured using the ______.

A) balance of trade (BOT)
B) gross domestic product (GDP)
C) Monetary Supply Index (MSI)
D) Consumer Price Index (CPI)

Question 18

One of largest challenges facing the Obama administration has been ______, which led to the government shutdown in October 2013.

A) the growing federal deficit
B) the need for education reform
C) the need to address unemployment
D) foreign policy, especially the relationship between the United States and Russia

Question 19

______ policy refers to the government's budgetary process and includes the sum total of taxing and spending.

A) Fiscal
B) Regulatory
C) Monetary
D) Distributive

Question 20

The distributive effects of a tax are ______.

A) the degree to which the tax is fair
B) loopholes that are not fiscally neutral
C) the impact a tax has on different groups
D) the results of collecting the tax

Question 21

The name of the agency that compiles all of the statistics on employment patterns in the United States is the ______.

A) Department of the Interior
B) Wages and Employment Agency
C) Economic Policy Development Institute
D) Bureau of Labor Statistics

Question 22

Which statement is true describing the U.S. overall unemployment rate in recent years?

A) The unemployment rate has steadily increased from a low of 3% in 2001 to more than 14% in 2014.
B) The unemployment rate rose from 10% to 16% during the recession and now has returned to 14%.
C) For most of the 2000s, the unemployment rate has remained around 10%.
D) The unemployment rate rose to more than 9% during the recession and recently has returned to rates typical of recent years of 4-6%.

Question 23

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

A) income tax
B) medicare tax
C) sales tax
D) payroll tax

Question 24

Which of the following economic policy concerns is often present with a growing economy and high levels of employment?

A) increasing deficits
B) high labor-force participation
C) increasing entitlement costs
D) growing inflation

Question 25

Social Security, Medicare, and Medicaid are examples of ______ programs, in which individuals are eligible to receive a benefit based on demographic characteristic such as age or income.

A) government investment
B) health-care
C) entitlement
D) discretionary spending

Question 26

The name for the federal agency with appointed, long-serving board members that sets monetary policy in order to keep inflation in check and encourage economic growth.

A) Congressional Budget Office (CBO)
B) Federal Reserve (Fed)
C) Office of Management and Budget (OMB)
D) Council of Economic Advisors (CEA)

Question 27

According to the Congressional Budget Office (CBO), the United States can expect a nearly ______ billion deficit in 2016.

A) 400
B) 501
C) 590
D) 673

Question 28

______ is critical to all other areas of policy but is not often recognized for its central role.

A) Education policy
B) Health-care policy
C) Federal policy
D) Economic policy

Question 29

Which statement best describes the trend in the labor force participation rate since 1970 for adult females in the United States? The rate has ______.

A) steadily increased by 3-5% a year
B) decreased steadily
C) stayed approximately the same now as it was in 1980 after a brief increase
D) increased, although more slowly in recent years.

Question 30

Which statement summarizes the changing patterns of employment in the United States in recent years?

A) Higher unemployment rates are seen among certain demographic groups more than others.
B) The types of jobs available are shifting away from manufacturing toward the service sector.
C) A greater number of households have all adults in the workforce.
D) all of these

Question 31

Attaining the goal of economic growth may make ______ more acceptable to the general public, since the public's own earnings may be increasing.

A) welfare and other redistributive programs
B) an unfavorable balance of trade
C) globalization
D) unemployment

Question 32

Tax policy is one of the areas of greatest political tension. One variable affecting policy makers' decisions about tax policy includes ______, which refer(s) to the equity issue of which subgroups of citizens are most impacted by the tax.

A) diagonal equity
B) collectability
C) distributive effects
D) expenditure effects

Question 33

Although slight growth has occurred, many economic indicators show that the economy has been sluggish in recent months. What monetary policy option can be imposed to spur economic growth?

A) pass a budget that cuts the deficit
B) increase the money supply and reduce the discount rate
C) increase the balance of trade
D) offer tax breaks for certain economic activity

Question 34

According to the authors, there has been an economic downturn since ______.

A) 2005
B) 2007
C) 2009
D) 2011

Question 35

The main problem with running a large debt is that ______.

A) the interest we will have to pay on the debt continues to grow, squeezing out other needs
B) a growing portion of debt is owned by foreigners (including other countries)
C) we will have less money available to fund growing programs like Medicare and Social Security.
D) all of these

Question 36

The American Recovery and Reinvestment Act (2009) attempted to stimulate economic growth primarily using which economic policy tool?

A) government spending
B) regulations
C) deficit reduction
D) market incentives

Question 37

Which statement accurately reflects how regulatory policy is typically used with regard to the economy?

A) Regulations are typically enacted to protect society from unsafe business practices or negative externalities as opposed to addressing economic growth.
B) Regulations are typically applied to the service sector as opposed to manufacturing.
C) Regulations are used to control the money supply and discount rate.
D) Regulations are applied to address unique situations that might apply to a discrete issue or single business.

Question 38

When the economy grows, often inflation increases as well. This condition illustrates the principle of ______.

A) interrelationship of economic goals
B) increasing balances of the economy
C) fiscal policy failure
D) competition of economic goals

Question 39

How has the nature of U.S. jobs changed in the past few decades?

A) Jobs in the service sector are growing while the manufacturing sector is decreasing.
B) Construction jobs have rapidly decreased while retail jobs are increasing.
C) Government jobs have rapidly increased due to the growing size of government.
D) Jobs in the manufacturing sector are growing while the service sector is decreasing.

Question 40

In general, increasing levels of unemployment will lead to ______ government revenue and ______ government expenditures.

A) decreasing; decreasing
B) increasing; increasing
C) decreasing; increasing
D) increasing; decreasing

Question 41

The Labor Department's ______ is the primary agency responsible for collecting data on employment and unemployment.

Question 42

Discuss the two major ways that the federal government can reduce the deficit. In your discussion, explain the advantages and obstacles to each major approach.

Question 43

A CPI between ______% and ______% is one that most government policy makers can accept as tolerable.

A) 1; 2
B) 1; 4
C) 1; 6
D) 1; 8

Question 44

The United States is said to run an annual ______, which refers to an excess of spending over revenues in a given year.

Question 45

______ means an increase in the production of goods and services each year, and it is expressed in terms of a rising gross domestic product (GDP).

Question 46

______ refers to the sum total of the use of taxing and spending by the federal government.

Question 47

Tax policy includes a variety of methods used to increase revenues. Explain the variables of taxation noted by
B. Guy Peters (2006).

Question 48

A ______ tax is a tax that increases with the amount of income a person earns.

Question 49

The national debt, which is the accumulation of all of the deficits the nation has run, was nearly ______ in December 2016.

A) 10 million
B) 20 billion
C) 20 trillion
D) 30 trillion

Question 50

A positive ______ occurs when the United States exports more than it imports.

Question 51

How does an increase in unemployment levels affect the federal budget?

Question 52

What is the difference between the federal deficit and the federal debt? How does the deficit relate to economic growth?

Question 53

Inflation is measured by the ______.

Question 54

______ is critical to all other government functions.

Question 55

A simple definition of inflation is an increase in the costs of goods and services.

Question 56

______ is a component of economic policy related to the amount of money in circulation that is implemented by the Federal Reserve Board (Fed).

Question 57

Describe the positions that opposing sides take with regard to the U.S. balance of trade. Why do some argue that a negative balance of trade is undesirable, while others argue that a negative balance of trade is not a problem?

Question 58

The Federal Reserve Board is also referred to as the ______.

Question 59

The accumulation of deficits over time is known as the federal ______.

Question 60

______ has obvious benefits to the economy as well as to the individuals.

Question 61

Discuss how the Federal Reserve (Fed) can use monetary policy to affect the economy. What is the impact of this action?

Question 62

Discuss the following national trends related to the U.S. workforce: labor force participation by women and unemployment rates of certain demographic groups.

Question 63

Explain the difference between fiscal policy and monetary policy. How does each tool work? Who is responsible for them?

Question 64

Explain three policy options available to the U.S. government to reduce its annual deficits and accumulating national debt. For each option, discuss considerations relative to that option, such as economic, political, or equity concerns.