Deck 3: The Government, the Economy, and Economic Development

Question 1

In recent years, what percentage of the total U.S. economy is total government expenditures?

A) Less than 10%
B) Between 10% and 20%
C) Between 25% and 35%
D) Above 40%

Answer 1

C

Question 2

What unemployment rate is considered full employment in the United States?

A) 5-6%
B) Above 4%
C) 1-2%
D) <1%

Answer 2

B

Question 3

What is the term for the value of goods and services and the value of investment flows between the United States and other countries?

A) Rate of exchange
B) Simple trade balance
C) Net flow of investments
D) Balance on current account

Answer 3

D

Question 4

Foreign investors own approximately what percentage of federal debt held by the public?

A) 11%
B) 25%
C) 22%
D) 39%

Question 5

Historically, the three assets that combine to produce goods and services were land, labor, and capital. What is the main factor that still enables the United States to have the highest GDP and one of the highest levels of GDP per capita in the world today?

A) Population
B) Technology
C) Location
D) Productivity

Question 6

According to CBO projections, what is the most likely negative consequence from the expansion in federal debt?

A) "Crowding out" private investment
B) Increase in federal spending on interest payments
C) Potential fiscal crisis if investors lose confidence in U.S. Treasury securities
D) All of these are equally possible.

Question 7

GDP and GNP have been only 1% to 2% different from each other over the last 20 years.

Question 8

U.S. economic well-being is heavily influenced by the economic behavior of billions of individuals around the world and on the economic policy decisions of dozens of foreign governments in both underdeveloped and developing nations.

Question 9

The inflow of foreign capital has helped keep U.S. interest rates low because it finances high levels of consumption, including imported products, by U.S. households.

Question 10

The U.S. savings rate is too low to finance all of the demand for investments; this means the economy is increasingly dependent on foreign investment.

Question 11

Economic events in other industrial nations or groups of developing nations rarely have significant repercussions in the United States.

Question 12

The inflow of investments from abroad is the more important explanation for the current account deficit than is the import-export imbalance.

Question 13

So-called Modern Monetary Theory gained visibility among some economists and elected politicians leading up to the 2020 presidential election as an explanation for why the U.S. government could increase borrowing to finance infrastructure and other investments without threatening to push the inflation rate up.

Question 14

To the extent that state and local governments offer special incentives like tax breaks and below-market-cost facilities for industrial expansion, little national economic growth results.

Question 15

The significant increase in the degree of inequality in income distribution in the United States can be attributed to the significant cuts in federal corporate and personal income taxes and cuts in transfer programs.

Question 16

What are the two most basic measures that economists use to estimate the size of the economy?

Question 17

What is meant by the term "net debtor nation"?

Question 18

Briefly describe "structural unemployment."

Question 19

The primary impact of the government on economic productivity and long-term growth is primarily due to what factors?

Question 20

What is the primary cause of the U.S. trade imbalance?

Question 21

What is the difference between total federal debt and federal debt held by the public?

Question 22

What were the most significant indicators signaling the start of the recession in 2007?

Question 23

Describe the impact of the federal government's budgets and policies on inequality in distribution of income across the population. Include discussion of personal income and corporate tax policies, and income transfer and other assistance programs. Also include factors that are less susceptible to government actions.