Deck 16: Making Economic Policy

Question 1

If the Federal Reserve raises the federal funds rate,what is likely to happen?

A)There will be more money available for investment and growth.
B)Inflation will increase,and unemployment will decrease.
C)Both inflation and unemployment will decrease.
D)There will be less money available for investment and growth.

Answer 1

A

Question 2

Which of the following constitutes the largest portion of the federal budget?

A)discretionary spending
B)foreign aid
C)homeland security
D)mandatory spending

Answer 2

D

Question 3

Supporters of progressive taxation argue that __________.

A)it reduces compliance costs for businesses
B)it reduces government involvement in the economy
C)it has minimal impact on those with low income
D)it has minimal impact on the wealthy

Answer 3

C

Question 4

Inflation is best understood as the rate at which __________.

A)gross domestic product expands
B)prices for goods and services decrease
C)prices for goods and services increase
D)the federal government increases taxes to raise revenue

Question 5

In 2014,nearly half of federal spending went to __________.

A)benefit programs for individuals
B)interest on the national debt
C)national defense
D)monetary policy

Question 6

The Constitution gives __________ the power to borrow,coin,and print money.

A)Congress
B)the Treasury Department
C)the Federal Reserve Board
D)the president

Question 7

Which of the following entities is responsible for setting the federal funds rate in the United States?

A)the Congressional Budget Office
B)the Executive Office of the President
C)the Federal Reserve Board
D)the Office of Management and Budget

Question 8

The total market value of all goods and services produced in an area during a year is termed which of the following?

A)gross economic output
B)gross domestic product
C)maximum national product
D)national economic performance

Question 9

Worries about international competition often lead domestic producers to call for __________.

A)anti-trust legislation
B)an international trade injunction
C)protectionism
D)a value-added tax

Question 10

What is the main goal of fiscal policy?

A)to affect how much money is available to state governments for capital projects
B)to determine how much interest the government will pay on the federal debt
C)to stimulate the economy by increasing the number of exports into the United States
D)to use taxes and government spending to help stimulate or slow down economic growth

Question 11

One criticism of government regulation of the economy is that the regulations themselves can raise the cost of economic activity,also known as __________.

A)compliance costs
B)excise taxes
C)labor injunctions
D)tariffs

Question 12

__________ is/are among the most important tools that monetary policy uses to affect the overall economy.

A)Foreign monetary investment
B)Government spending
C)Interest rates
D)Taxation rates

Question 13

Who is included in the unemployment rate?

A)people who have taken jobs below their skill levels
B)stay-at-home parents who are not looking for jobs
C)able-bodied workers who are looking for jobs but cannot find them
D)people who would like to work,but have given up on finding a job

Question 14

The __________ provides an international forum for reaching trade agreements and resolving disputes among its 130 members.

A)GATT
B)NAFTA
C)SEC
D)WTO

Question 15

What is the main purpose of monetary policy?

A)to affect how much money is circulating through the economy
B)to control the amount of public debt sold to foreign states
C)to equalize income disparity among citizens of the United States
D)to expand the government's revenue base so as to reduce the deficit

Question 16

Certain tariffs,limits on imported goods,and import regulations limit U.S.consumption of foreign products,which has contributed to the __________.

A)federal funds rate
B)budget deficit
C)national debt
D)trade deficit

Question 17

The tax on the value of a product at each stage of production and distribution is called the __________.

A)excise tax
B)production tax
C)total tax
D)value-added tax

Question 18

The size of the national debt is __________.

A)declining
B)rising
C)marginal
D)unchanged

Question 19

Laissez-faire economics holds which of the following to be true?

A)The government should actively intervene in the economy.
B)The government should not take an active role in the economy.
C)The government should do everything possible to reduce unemployment.
D)The government should lower interest rates during a recession.

Question 20

Which of the following is true of the American Recovery and Reinvestment Act?

A)It failed to create jobs.
B)It created millions of jobs,but at a high cost per job.
C)It is widely credited with helping the economy out of recession.
D)It failed to stimulate investment.

Question 21

In general,a recession does which of these?

A)reduces the budget deficit
B)leads to higher unemployment
C)lasts at least a year
D)leads to higher inflation

Question 22

What was the main purpose of the Clayton Act?

A)to provide greater stability in the agricultural sector
B)to reduce the trade deficit
C)to prevent unfair competitive practices
D)to stimulate the economy in the wake of the Great Depression

Question 23

If the Federal Reserve wanted to slow the rate of economic growth,it would most likely __________.

A)encourage the president to lower taxes
B)increase interest rates
C)increase the money supply
D)lower interest rates

Question 24

Which of the following contributes to the growing income inequality in the United States?

A)the progressive tax structure
B)the decline in manufacturing jobs
C)the deep impact of the financial recession on the wealthy
D)the high rate of inflation

Question 25

The cost of borrowing money is directly linked to the interest rate a bank's best customers receive on short-term loans,or the __________.

A)the federal funds rate
B)the prime rate
C)the fixed rate
D)the adjustable rate

Question 26

The Great Depression pitted economists favoring __________ against those favoring __________.

A)regulatory policy;deregulation
B)monetary policy;fiscal policy
C)protectionism;free trade
D)laissez-faire economics;Keynesian economics

Question 27

Upon taking office in 2009,which of the following did President Obama advocate to deal with the economic crisis?

A)increasing exports
B)increasing government spending
C)raising interest rates
D)enacting stricter regulation of business

Question 28

What is the purpose of deregulation in the American political economy?

A)Deregulation seeks to increase the political power of labor unions.
B)Deregulation seeks to increase the power of large economic monopolies.
C)Deregulation seeks to remove inefficient barriers in the collection of taxes.
D)Deregulation seeks to remove inefficient barriers to productivity and growth.

Question 29

Which of the following is a consequence of government subsidies to the farming industry?

A)lower food exports
B)higher food prices
C)lower food prices
D)fewer jobs in agriculture

Question 30

U.S.monetary policy involves which of the following?

A)import and export policies
B)interest rates and the money supply
C)supply-side economics
D)the national debt and the budget deficit

Question 31

When it comes to taxes,which of the following statements is true?

A)There is much agreement on what is the best type of tax,but not much agreement on the tax rates.
B)Income taxes provide the most consistent stream of revenue for the government.
C)Overall,there is considerable disagreement over what is the best type of tax.
D)Sales taxes are the primary mechanism by which the federal government raises revenues.

Question 32

Which of the following is an example of corporate social responsibility?

A)antitrust legislation
B)boycotting a product that is dangerous to the environment
C)encouraging employees to volunteer by giving them extra days of paid leave
D)issuing an environmental impact statement

Question 33

According to economists,what are the stages of the normal business cycle?

A)contraction,expansion,recession,and recovery
B)expansion,contraction recession,and recovery
C)growth,depression,recession,and recovery
D)slow-down,rebound,and stability

Question 34

Regulatory legislation at the start of the twentieth century primarily dealt with __________.

A)business monopolies
B)education
C)labor unions
D)agriculture

Question 35

Which of the following is true regarding mandatory spending policies?

A)They are designed to increase the money supply to improve economic growth.
B)They create a serious ongoing financial burden on the federal government.
C)They reduce the overall cost of compliance for major industrial sectors.
D)They reduce the overall cost of doing business overseas.

Question 36

Why do most economists oppose protectionism?

A)because it contributes to the trade deficit
B)because it artificially lowers prices,hurting businesses
C)because it gives labor unions too much power
D)because it prevents the efficient use of resources

Question 37

Under the Taft-Hartley Act,courts are allowed to issue __________.

A)union shop agreements
B)public contracts
C)collective bargaining agreements
D)labor injunctions

Question 38

If Congress adopts a policy to make cars more fuel efficient,they have adopted a __________.

A)fiscal stimulus policy
B)microeconomic policy
C)monetary policy
D)regulatory policy

Question 39

Which of the following provides the greatest source of revenue for the federal government?

A)individual income taxes
B)payroll taxes
C)corporate income taxes
D)excise taxes

Question 40

The payroll tax is considered a _________.

A)progressive tax
B)regressive tax
C)tax expenditure
D)subsidy

Question 41

If you support laissez-faire economic policies,you would generally favor __________.

A)a reduction in economic regulation
B)an increase in economic regulation
C)an increase in the collective bargaining rights for labor unions
D)an increase in the tariffs assessed on imported goods

Question 42

In the early 1970s,the federal government took on a larger role in environmental policy,starting with passage of __________.

A)the Toxic Substances Control Act
B)the Safe Drinking Water Act
C)the Clear Skies Initiative
D)the Clean Air and Clean Water Acts

Question 43

The signing of the North American Free Trade Agreement has had a significant impact on the economies of __________.

A)the United States,Mexico,and Canada
B)the United States,Canada,and Greenland
C)the United States and Cuba
D)the United States and Panama

Question 44

Compared to other nations such as Russia and Sweden,the United States has __________ than many of its competitors.

A)fewer economic regulations
B)higher taxes
C)lower interest rates
D)more regulation

Question 45

If government wanted to prevent or break up monopolies,it might do which of the following?

A)reduce economic regulation
B)pass antitrust legislation
C)pass an economic stimulus package
D)reduce interest rates

Question 46

What is the purpose of government regulation of the economy?

A)to increase the revenue collected by the federal government
B)to increase the level of profits for multinational corporations
C)to minimize the costs of doing business for corporations
D)to minimize abuses and promote competition

Question 47

Most construction projects using federal funds are required to prepare __________.

A)collective bargaining agreements
B)corporate social responsibility agreements
C)labor injunctions
D)environmental impact statements

Question 48

Which of these is most consistent with the philosophy of Keynesianism?

A)interest rate increases by the Federal Reserve
B)government decisions to increase the money supply
C)increases in government spending during recession
D)deregulation of the economy

Question 49

When did the deregulation movement have its greatest success?

A)in the early 1900s
B)in the 1930s
C)in the 1970s
D)in the 1990s

Question 50

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

A)tax breaks to companies that invest in innovation and expansion
B)federal grants to companies for research and development
C)federal loans to banks
D)fees paid to farmers for not planting their fields

Question 51

Which of the following best characterizes the federal budget process?

A)complicated
C)nonpolitical
D)short-sighted
E)streamlined

Question 52

What has been the result of regulatory policies designed to curb air pollution,such as the Clean Air Act?

A)Levels of air pollution have fallen only slightly,much to the disappointment of the Environmental Protection Agency.
B)Levels of air pollution have continued to increase,despite the regulations.
C)Levels of air pollution have fallen dramatically,though pollution has not been completely eliminated.
D)Levels of air pollution have remained the same,though they probably would be higher without the government policies.

Question 53

Which of the following is an ongoing challenge in the area of environmental regulation?

A)convincing the public to support environmental protection
B)convincing the federal government to become involved,given that most environmental problems are dealt with at the state level
C)anticipating the impacts of increasingly sophisticated technology
D)finding ways to reverse the trend of increasing air and water pollution

Question 54

Which of the following is an example of monetary policy?

A)decreasing federal spending
B)increasing taxes on wealthy Americans
C)lowering interest rates
D)lowering state property and sales tax

Question 55

When does the federal government's fiscal year begin?

A)January 1
B)June 1
C)October 1
D)December 1

Question 56

Advocates of aggressive monetary policy contend that the key factor affecting the economy's performance is __________.

A)the federal funds rate
B)inflation
C)the money supply
D)tax expenditures

Question 57

Which of the following most accurately describes the recent financial crisis in the United States?

A)a depression
B)a mild recession
C)a severe recession
D)an inflationary cycle

Question 58

Which of the following is an advantage of deregulation?

A)Deregulation would decrease the inflationary pressures in the economy.
B)Deregulation would encourage corporate social responsibility.
C)Deregulation would reduce compliance costs for business.
D)Deregulation would strengthen American labor unions.

Question 59

If a government wanted to use monetary policy to increase economic growth,which of the following steps should be taken?

A)Decrease interest rates to increase the amount of money in supply.
B)Increase the amount of foreign currency kept on reserve in U.S.banks.
C)Increase the amount of public revenue for investment by raising taxes.
D)Increase government spending on public works projects.

Question 60

Which of the following is a consequence of offshore outsourcing?

A)a decrease in monopolies and other unfair business practices
B)stronger international policies to protect the environment
C)higher prices on consumer goods
D)widespread unemployment in heavy industries

Question 61

The federal income tax is considered a progressive tax.

Question 62

The best way to influence the money supply is through fiscal policy.

Question 63

Federal regulations protect workers through labor injunctions and collective bargaining.

Question 64

The Fed's most important tool for monetary policy is its ___________.

Question 65

Corporate income taxes account for the largest share of the federal government's tax revenue.

Question 66

Keynesians would likely approve of the recent government stimulus package passed by Congress to deal with the economic crisis of the Great Recession.

Question 67

Deregulation of the __________ industry was the first major victory in the deregulation movement and remains one of its most visible successes.

Question 68

Monetary economic policy uses the money supply to affect growth in the U.S.economy.

Question 69

The federal government relies on a ___________ tax to fund the Social Security program.

Question 70

The most recent economic crisis was a depression.

Question 71

The Federal Reserve Board is responsible for fiscal policy.

Question 72

One of the goals of U.S.economic policy is to work to make sure that no single industry or company has an unfair advantage.

Question 73

When members of Congress talk about the ___________,they are talking about the difference between annual government expenditures and revenues.

Question 74

The national debt is the yearly difference between government revenues and the deficit.

Question 75

Congress has the primary responsibility for setting interest rates in the United States.

Question 76

Because of the Great Recession,Congress is more likely to deregulate commercial and investment banks.

Question 77

Government regulation of the economy is often criticized for imposing heavy paperwork and reporting burdens on the economy.

Question 78

Regulatory activities exist to help control the negative effects of economic activity.

Question 79

The U.S.Constitution prohibits the use of taxing and spending to influence the national economy.

Question 80

The ___________ is responsible for overseeing the budget process on behalf of the president.