Deck 26: The Changing Role of the Federal Government

Question 1

"Reducing taxes increases incentives to work and save."  This view is typically associated with

A) Keynesian economics.
B) "Reagonomics."
C) Johnson's "Great Society" policies.
D) the Carter administration.

Answer 1

"Reagonomics."

Question 2

Adolph Wagner wrote that the public sector would continuously and inevitably expand due to

A) bureaucratic self-interest.
B) the "tyranny of the status quo".
C) labor's increasing demand for social justice.
D) increasing demand for military protection from international threats.

Answer 2

labor's increasing demand for social justice.

Question 3

Which of the following statements would MOST accurately describe government spending between 1970 and 2006?

A) State and local governments spend more on goods and services than the federal government, but the federal government spends more in total than state and local governments.
B) As a percentage of GDP, federal government spending on goods and services increased rapidly and by 2006, the federal government spending on goods and services was about twice as high as state spending on goods and services.
C) As a percentage of GDP, federal government spending has been significantly reduced, which as forced state and local government total spending to increase dramatically to accommodate these cuts.
D) As a percentage of GDP, both federal and state and local government total spending have doubled.

Answer 3

State and local governments spend more on goods and services than the federal government, but the federal government spends more in total than state and local governments.

Question 4

Features of "Reagonomics" include all of the following except :

A) reduction in marginal tax rates.
B) increased government expenditures for defense.
C) deregulation of business.
D) regular increases in the minimum wage.

Question 5

A key innovation of the Carter administration (1976-1980) was

A) dramatic expansion of Social Security and Medicare programs.
B) large tax cuts, especially for the wealthy.
C) deregulation of airlines, trucking, railroads and the financial services industry.
D) government control of gasoline and food prices.

Question 6

Which of the following was most likely the most costly war the United States had fought?

A) the War of 1812
B) the Cold War
C) World War I
D) World War II

Question 7

Which is true of total federal spending relative to GDP?

A) It is the most commonly used measure of the size of government.
B) There really is no upper limit to the ratio of total government spending to GDP.
C) It has steadily increased over the last 50 years.
D) All of the above are correct.
E) Only a and c are correct.

Question 8

According to Arthur Schlesinger, Jr., government spending

A) may grow more slowly during conservative periods, but will never contract.
B) follows a natural cycle of increases during liberal periods and decreases during conservative periods.
C) grows at the same rate under both liberal and conservative leadership; only the distribution (defense v. civilian) of the spending changes.
D) reflects attempts by political leaders to reject the dominant political ideology of their youth.

Question 9

Which United States President is most closely linked with "The Great Society"?

A) Franklin D. Roosevelt
B) Lyndon Johnson
C) Richard Nixon
D) Ronald Reagan

Question 10

What most accurately describes the ratio of federal employment of the total labor force between 1910 and 2007?

A) Between 1930 and 1945 the federal labor force grew dramatically, but after World War II it shrank below pre-Depression levels.
B) Since 1910, federal employment has increased consistently at the rate of about 3% per year.
C) Between 1910 and 1950 federal employment dropped dramatically, but after 1950 it grew consistently.
D) The share of federal employment in the total labor force peaked briefly above four percent during the Korean War, and then began a steady decline to about the same level as the 1930s.

Question 11

During the three decades immediately following World War II,

A) conservative forces successfully blocked any expansion of New Deal-type programs.
B) the prevailing liberal ideology led to the passage of legislation that increased Social Security benefits, created of Medicare, and increased the minimum wage.
C) disillusionment with government led to deregulation of airlines and other industries.
D) most policy makers and the general public rejected Keynesian policies.

Question 12

Transfer payments include

A) government spending on tanks and planes.
B) government spending on national forests and parks.
C) the salaries of senators and federal judges.
D) welfare benefits and Social Security payments.

Question 13

According to _________, liberal programs survive attempts by conservative administrations to eliminate them because of the "tyranny of the status quo."

A) Arthur Schlesinger, Jr.
B) Wagner's Law
C) Milton and Rose Friedman
D) Robert Higgs

Question 14

On what grounds did Michael Edelstein and Robert Higgs suggest that the overall setback of economic growth as a result of defense spending is small?

A) Defense spending came primarily from the private sector.
B) Defense spending came in lieu of exports.
C) Defense spending mostly replaced consumption rather than investment.
D) Defense spending itself was always very small.

Question 15

The "Great Society" initiative led to the creation of

A) Medicare.
B) Rent subsidies for the poor.
C) the Department of Transportation.
D) the Department of Housing and Urban Development.
E) All of the above.

Question 16

Between 1940 and 2005, total government spending as a percentage of GDP nearly doubled.  The primary source of this growth in spending was

A) increases in military expenditures.
B) increases in government purchases of goods and services.
C) increases in transfer payments.
D) increases in the number of federal employees relative to the total labor force.

Question 17

Which of the following MOST accurately describes the federal budget between 1960 and 2007?

A) By the end of the period expenditures on health and income security were each greater than expenditures on defense.
B) By the end of the period expenditures on health and income security were each lower than expenditures on defense.
C) Defense, income security, and health all grew as a percentage of the federal budget.
D) As a share of the federal budget expenditures on defense and health grew consistently throughout the period while expenditures on income security fell.

Question 18

Between 1955 and 2006, the federal government purchases of goods and services as a percentage of GDP has:

A) generally trended downward
B) Not changed.
C) Grown by about 10%.
D) Tripled.

Question 19

Between 1965 and 1972, eight major pieces of consumer-protection legislation were enacted.  This burst of legislative activity was largely driven by

A) increased public fears following the thalidomide tragedy.
B) public outcry following a series of steamboat explosions.
C) a general lack of faith in the market.
D) widespread support for the "Reagan Revolution."

Question 20

The Cold War, or "war on communism,"

A) was the most expensive war of the twentieth century.
B) is believed to have caused an increase in defense spending that came at the expense of private consumption rather than private investment.
C) is believed to have caused an increase in defense spending that came at the expense of private investment rather than private consumption.
D) Both a and b are correct.
E) Both a and c are correct.

Question 21

Walton and Rockoff suggest that complementary to the economists' Phillips Curve there is one that is ___________ .

A) cultural
B) political
C) international
D) ecumenical

Question 22

Why did Allan H. Meltzer and Scott F. Richard not supposed that the poor would automatically vote for "soak the rich" policies in their rational choice model?

A) Poor people lack political insight.
B) Poor people do not necessarily realize they are poor.
C) Poor people fear that "soak the rich" programs may harm the economy overall.
D) Poor people are often lied to by political leaders.