Deck 17: The Budget and Economic Policies

Question 1

The Great Depression took place during the

A)1870s.
B) 1910s.
C) 1930s.
D) 1940s.
E) 1970s.

Answer 1

C

Question 2

Which of the following is a way in which issues make their way to government decision makers?

A) A bill in the House or Senate.
B) An executive order from the president.
C) Working their way through independent regulatory agencies.
D) Beginning as a case in a court, with a few reaching the Supreme Court.
E) All of the above

Answer 2

E

Question 3

Effectiveness is

A) an assessment of how well resources are used to meet program objectives.
B) an assessment of whether objectives have been met.
C) an evaluation of the nuts and bolts of public policy.
D) the decisions policymakers make about policy.
E) putting a law into effect.

Answer 3

B

Question 4

________ play a substantial role in managing and directing their economies.

A) Very few governments in foreign countries
B) Only socialist governments
C) Governments in all modern capitalist societies
D) Most governments in foreign countries, unlike that of the United States,
E) Capitalism does not allow governments to

Question 5

___________ are enduring features of American life that play key roles in determining what issues become important in politics and government, how political power is distributed in the population, and what attitudes and beliefs guide the behavior of citizens and public officials.

A) Political factors
B) Political linkage factors
C) Structural factors
D) Government factors
E) Electoral factors

Question 6

Economists have identified a classic trade-off problem between

A) economic growth and unemployment.
B) economic growth and low inflation.
C) high interest rates and low inflation.
D) economic recession and low inflation.
E) stock market profits and unemployment.

Question 7

The authors of your textbook hold that

A) Marxist theory is mostly correct.
B) elite theory is never right.
C) group theory best explains the process of public policy.
D) no single theory of what government does is persuasive.
E) None of the above

Question 8

A depression is defined by economists as

A) a long-lasting, deep recession with low profits of business.
B) two quarters of economic contraction.
C) four quarters of economic contraction.
D) a condition of rising prices.
E) an increase in interest rates.

Question 9

A condition of rising prices is known as

A) deflation.
B) recession.
C) depression.
D) inflation.
E) economic growth.

Question 10

The objective of macroeconomic policy is to

A) achieve full employment, steady economic growth, and stable prices.
B) study the activities of a single sector of the economy.
C) integrate the functions of the executive and legislative branches of government in setting economic policy.
D) analyze the relationship between the poverty rate and the decline of family values.
E) None of the above

Question 11

Economic growth is typically measured with

A) the gross domestic product.
B) the gross national product.
C) variability in interest rates.
D) changes in the stock market.
E) changes in the unemployment rate.

Question 12

Which of the following is identified in your textbook as a redistributive policy??A) Clean air policy
B) Clean water policy
C) Agriculture policy
D) Food Stamp program
E) Monetary policy

Question 13

Redistributive policies

A) direct benefits to a narrowly defined group.
B) provide services to select industry or business.
C) transfer resources from one group to another.
D) are designed to increase the money supply to improve the economy.
E) None of the above

Question 14

_________ theorists believe that public policies are made by the leaders of powerful institutions.

A) Elite
B) Pluralist
C) Marxist
D) Capitalist
E) Group

Question 15

____________ is two quarters of economic contraction.

A) A depression
B) Inflation
C) A recession
D) Economic growth
E) Monetary policy

Question 16

The federal government's role in the economy is so substantial that

A) it is surpassed only by General Motors as the country's largest employer.
B) presidents tend to be elected, reelected, or defeated based on the strength of the economy.
C) the Supreme Court has severely restricted the president's ability to alter interest rates and the money supply.
D) most Americans favor a market economy completely free of government regulation.
E) it has been a part of numerous constitutional amendments.

Question 17

An example of regulatory policy is

A) monetary policy.
B) drug safety.
C) tax cut policy.
D) national defense.
E) social insurance policy.

Question 18

Inflation is

A) a severe drop in economic activity.
B) a condition of lowering prices.
C) a condition of rising prices.
D) gaining control of the business cycle.
E) an increase in interest rates.

Question 19

Public policy

A) directs benefits to a narrowly defined group or individual.
B) is a decision made by government that creates laws, programs, and regulations.
C) always transfers resources from one group to another.
D) frames the issues before Congress and the presidency.
E) involves the discussion of how to benefit the most for electoral benefits.

Question 20

Which of the following is an example of agenda setting??A) The EPA fines an industry for violating the Clean Air Act.
B) The news media addresses an issue in the news that resonates with the public and government.
C) Congress passes the yearly budget.
D) The president signs a bill at a Rose Garden signing ceremony.
E) None of the above

Question 21

With the power to tax and spend, which of the following institutions is primarily responsible for fiscal policy?

A) Congress
B) President
C) Courts
D) Federal Reserve Board
E) Treasury Department

Question 22

The Fed can increase the ____________ to decrease the money supply.

A) inflation rate
B) discount rate
C) unemployment rate
D) tax rate
E) None of the above

Question 23

Which of the following statements best characterizes government, parties, and economics??A) Democrats are Keynesians.
B) Republicans are Monetarists.
C) Democrats are Monetarists.
D) Republicans are Keynesians.
E) Democrats and Republicans have supported both Keynesian and Monetarist solutions to economic problems.

Question 24

Government monetary policy has to do with

A) taxing and spending.
B) interest rates and the money supply.
C) unemployment rates.
D) the size of the federal bureaucracy.
E) supply and demand.

Question 25

Monetary policy refers to

A) all government actions having to do with spending and taxes.
B) the set of government policies that affect how much money is available.
C) the role that Congress and the presidency play in economic policy.
D) that which affects the economy as a whole.
E) None of the above

Question 26

Who tends to endorse new growth theory??A) Labor unions
B) The unemployed
C) Leaders of high technology industries
D) Developing countries
E) The national government

Question 27

_______ believe that the economy works best when reins on the free market are loosened.

A) Supply-siders
B) Demand-siders
C) Monetarists
D) Keynsians
E) Macroeconomists

Question 28

Government fiscal policies have to do with

A) interest rates and the money supply.
B) defense and foreign policy.
C) public restraints on business activities.
D) taxing and spending.
E) supply and demand.

Question 29

For the most part, the stated goal(s) of macroeconomic policies are to

A) achieve full employment, steady economic growth, and stable prices.
B) keep wages and taxes low, to keep investment levels up, and to insure the value of financial assets.
C) protect private property from illegal seizure and to deregulate the market.
D) secure foreign markets for exports and free access to domestic markets for imports.
E) All of the above

Question 30

The Fed can use _____________ is also known as total spending in the economy.

A) Supply side economics
B) Aggregate demand
C) Demand side economics
D) Monetary policy
E) Macroeconomic forecasting

Question 31

Actions by the Federal Reserve Board are intended to affect the

A) number of military recruits available to the armed forces.
B) amount of oil in the strategic oil reserve.
C) level of business regulation of a given industry.
D) amount of money available to businesses and individuals.
E) level of unemployment in the economy.

Question 32

One way that the Federal Reserve Board controls the money supply is by

A) raising or lowering taxes.
B) vetoing federal regulations.
C) regulating the printing of money.
D) changing the discount rate.
E) spending money.

Question 33

If the Federal Reserve Board wants to increase aggregate demand in the economy, it

A) lowers tax rates to put more money in people's pockets.
B) increases military spending.
C) increases the money supply and lowers interest rates.
D) denies the president the right to regulate businesses for a short period.
E) manipulates supply and demand.

Question 34

If the Federal Reserve Board wants to slow the economy down, it

A) decreases the money supply and increases interest rates.
B) encourages Congress to increase the federal deficit.
C) increases the money supply.
D) uses expansionary monetary tools, like lowering the discount rate.
E) manipulates supply and demand.

Question 35

New growth theory

A) is premised on the idea of controlling the money supply to increase economic growth.
B) is associated with the idea that the economy works best when reins on the free market are loosened.
C) holds that long-term growth comes from invention and innovation.
D) accepts the role of governmental regulation in the growth of the economy.
E) is no longer accepted by economists.

Question 36

Which of the following institutions is primarily responsible for monetary policy?

A) Congress
B) President
C) Courts
D) Federal Reserve Board
E) Treasury Department

Question 37

Changing the discount rate is a primary tool available to which of the following institutions to influence the economy??A) Congress
B) President
C) Courts
D) Federal Reserve Board
E) Treasury Department

Question 38

___________ includes all government actions having to do with spending and taxes.

A) Fiscal policy
B) Monetary policy
C) Macroeconomic policy
D) Regulatory policy
E) Governmental policy

Question 39

The Federal Reserve Board has a number of ways to influence the economy. Which of the following is NOT within the power of the Fed?

A) Set the interest rates for credit cards.
B) Buy federal securities.
C) Change the discount rate.
D) Change reserve requirements.
E) All of the above

Question 40

Which of the following presidents are considered supply-siders??A) Ronald Reagan
B) Bill Clinton
C) Jimmy Carter
D) George W. Bush
E) A and D

Question 41

The national government depends primarily on

A) flat taxes.
B) income and payroll taxes.
C) consumption taxes.
D) national sales taxes.
E) investment.

Question 42

The biggest increases in federal government spending are associated with

A) the New Deal.
B) the War on Poverty.
C) major wars.
D) public assistance.
E) economic recessions.

Question 43

The federal budget deficit is

A) the total of what government owes to individuals and institutions.
B) the annual shortfall between what the government spends and what it takes in.
C) the rate of interest that government must pay on short-term financial obligations.
D) the measure of efficiency and fairness that is built into the tax code.
E) the annual difference between payments and receipts between a country and its trading partners.

Question 44

Examples of a regressive tax in the United States are

A) excise taxes on alcohol.
B) social security payroll taxes.
C) medicare payroll taxes.
D) excise taxes on cigarettes.
E) All of the above

Question 45

In _________ the executive branch gained control of preparing the budget.

A) 1876
B) 1892
C) 1907
D) 1921
E) 1947

Question 46

Decisions about the budgets for federal departments are handled in Congress by the __________ committees.

A) standing
B) select
C) conference
D) appropriations
E) rules

Question 47

Special, one-time expenditures to cover emergencies are also known as

A) ear marks.
B) pork barrel spending.
C) supplemental appropriations.
D) incidental spending.
E) partial appropriations.

Question 48

Property taxes are most important for

A) social security programs.
B) medicare funding.
C) funding local governments.
D) funding the national government.
E) regulating discrepancies in spending across cities and counties.

Question 49

Since 1980, the proportion of total federal expenditures represented by human resources has grown considerably. Most of the growth is accounted for by

A) AFDC and food stamps.
B) Medicaid and WIN.
C) AFDC and SSI.
D) Social Security and Medicare.
E) TANF.

Question 50

The annual shortfall between what the government spends and what it takes in is known as

A) the national debt.?B) the federal budget deficit.
C) the expenditure differential.
D) the revenue differential.
E) None of the above

Question 51

The ___________ is responsible for initiating the yearly budget process.

A) Congress
B) president
C) Federal Reserve Board
D) state government
E) A combination of each is correct.

Question 52

Combining all federal taxes, Americans pay about ________ of their income in taxes.

A) 18 percent
B) 32 percent
C) 50 percent
D) 65 percent E0 75 percent

Question 53

Which of the following estimates the annual budget deficit?

A) Federal Reserve Board
B) Securities and Exchange Commission
C) Congressional Budget Office
D) Congressional Accounting Office
E) All of the above

Question 54

Figure 17.1 shows that

A) Federal spending in absolute dollars has increased over time.
B) Federal spending as a percentage of GDP has increased over time.
C) Federal spending as a percentage of GDP has remained constant over time.
D) Federal spending as a percentage of GDP has declined over time.
E) Federal spending is currently at it highest rate since 1900

Question 55

Which (or who) of the following required that increases in discretionary spending be offset with cuts in entitlements?

A) Ronald Reagan
B) The Office of Management and Budget
C) The Government Accounting Office
D) The Budget Enforcement Act
E) The Deficit Reduction Act

Question 56

Examples of a progressive tax in the United States are

A) excise taxes on alcohol.
B) social security payroll taxes.
C) medicare payroll taxes.
D) excise taxes on cigarettes.
E) federal income taxes.

Question 57

______________ tax rates increase as wealth and income increase.

A) Progressive
B) Property
C) Regressive
D) Sales tax
E) Income

Question 58

From the early 1930s to the early 1980s, the relative spending of the federal government

A) decreased dramatically.
B) increased slightly.
C) remained constant.
D) increased steadily.
E) increased dramatically

Question 59

The federal government spends most of its money on

A) social insurance.
B) means-tested programs.
C) Medicare.
D) entitlement programs.
E) national defense.

Question 60

The federal government spent a little more than ________ in 2006.

A) $100 billion
B) $10 billion
C) $2 trillion
D) $100 trillion
E) $500 trillion

Question 61

Americans complain about taxes

A) though they pay less than citizens in nearly all other industrialized countries.
B) though they seem to believe the welfare system works well.
C) and they always seem to complain about Social Security.
D) justifiably, because they pay a higher proportion than anyone else in the world.
E) but also support substantial spending cuts.

Question 62

The economic theory of regulation holds that

A) big business almost inevitably resists regulation.
B) regulation is the end result of liberalism.
C) regulation is supported by Republicans but not by Democrats.
D) powerful business firms turn to government for protection against competitors.
E) None of the above

Question 63

Why is the regulatory state likely to expand in the future?

A) The Democrats control the United States Congress.
B) Little permanent deregulation was achieved during the 1980s, an era dominated by conservative ideas, business values, and an extremely popular president committed to deregulation.
C) Few regulatory policies are supported by the public.
D) Regulation makes American businesses more efficient and competitive in the world market.
E) All of the above

Question 64

Compared to the United States, other industrial democracies rely much more on

A) flat taxes.
B) consumption taxes and national sales taxes.
C) payroll taxes.
D) income taxes.
E) investment.

Question 65

The annual shortfall between what the government spends and what it takes in is called the

A) national debt.
B) federal budget deficit.
C) revenue stream.
D) debit.
E) national tax rate.

Question 66

Most economists believe the federal budget will

A) continue to suffer increasingly large deficits over the long term, further increasing the national debt.
B) run deficits in the near future.
C) show a surplus over the short term, gradually reducing the national debt.
D) achieve balance and stay there, leaving the national debt at existing levels.
E) None of the above

Question 67

State governments get most of their revenues from

A) property taxes.
B) personal income taxes.
C) payroll taxes.
D) sales taxes.
E) social security taxes.

Question 68

Figure 17.2 illustrates

A) trends in the national debt of the United States.
B) trends in the budget deficit of the United States.
C) the percentages of economic growth in terms of GDP across numerous developed countries.
D) receipts of all levels of government as a percentage of GDP in several OECD countries, including the United States.
E) receipts of all levels of government as a percentage of GDP in several OECD countries, including the United States.

Question 69

The total of what government owes is called the

A) deficit.
B) revenue stream.
C) national debt.
D) expenditure shortfall.
E) national revenue overshoot.

Question 70

During the progressive era, which of the following argued for greater regulation of powerful new corporations and breaking up the enormous "trusts"?

A) The Populists
B) Labor unions
C) Middle-class Americans
D) President Roosevelt
E) All of the above

Question 71

Agenda setting is the process by which a problem or concern comes to the attention of government.

Question 72

Being "captured" is

A) synonymous with being heavily influenced by those businesses an agency is supposed to regulate.
B) what happens when Congress rejects the president's budget.
C) what happens when the president gets his budget through Congress.
D) when the bureaucracy regulates industry.
E) None of the above

Question 73

The single largest category of federal spending is

A) national defense spending.
B) mandatory expenditures.
C) discretionary spending.
D) pork-barrel projects.
E) grants to states.

Question 74

One of the principal areas of New Deal regulation was

A) the environment.
B) speculative and unsafe practices in the banking and securities industries.
C) consumer protection.
D) nuclear energy.
E) public works projects.

Question 75

On which type of economic policy would business interest groups be most likely to speak with a unified voice?

A) Interest rates
B) Tax shelters
C) Business deregulation
D) Defense spending
E) Fiscal spending

Question 76

Local governments depend most heavily on

A) property taxes.
B) sales taxes.
C) personal income taxes.
D) corporate taxes.
E) investment.

Question 77

Decision making is not usually considered to be part of the policy process.

Question 78

Figure 17.3 shows that

A) the national debt in absolute dollars has increased over time.
B) the national debt as a percentage of GDP has increased over time.
C) the national debt as a percentage of GDP has remained constant over time.
D) the national debt as a percentage of GDP has declined over time.
E) the national debt is currently at its highest rate since 1900.

Question 79

The federal budget deficit is the

A) total of what government owes to individuals and institutions.
B) annual shortfall between what the government spends and what it takes in.
C) rate of interest that government must pay on short-term financial obligations.
D) measure of efficiency and fairness that is built into the tax code.
E) None of the above

Question 80

Government regulates primarily

A) so that members of Congress can be reelected.
B) so that presidents can fulfill campaign promises.
C) to expand the size of the national government.
D) because the American people want the government to fix negative externalities.
E) None of the above