Deck 15: Economic Policy

Question 1

The costs of driving a gas-guzzling car also include the widely distributed impact of smog and the effects of carbon monoxide emissions, which economists refer to as negative

A)extensions.
B)dispersions.
C)dissipations.
D)externalities.
E)market standards.

Answer 1

D

Question 2

During the 2008 financial crisis, which program bought failing loans and purchased stock in American automobile companies?

A)Social Security
B)TRICARE
C)Market Access Program
D)Troubled Assets Relief Program
E)Currency Reserve Stabilization System

Answer 2

D

Question 3

Which term describes a company that provides all the goods and services for a particular market such that competition is nonexistent?

A)simplex
B)unigarchy
C)autogarchy
D)monopoly
E)bully firm

Answer 3

D

Question 4

Which of the following is NOT an example of a public good?

A)canal systems
B)lighthouses
C)airport security
D)dams
E)golf courses

Question 5

A contract is meaningless unless it is

A)notarized.
B)a written agreement.
C)enforceable.
D)regulated.
E)signed by both parties.

Question 6

Why does the United States adjust the welfare system to allow certain benefits to persist for only certain periods of time?

A)Humans are fundamentally entitled only to a certain amount of government benefits.
B)Welfare service provision is easier to administer over shorter time periods.
C)Limited allowance of benefits minimizes the provision of public goods.
D)Limitations create incentives that make people prefer working to the low income they get from welfare.
E)Unavailability of welfare drives up wages.

Question 7

Universal compulsory education is an example of government efforts to

A)enforce contracts.
B)create a labor force.
C)set market standards.
D)provide public goods.
E)ameliorate externalities.

Question 8

The provision of an interstate highway system is considered to be a

A)liability.
B)labor cost.
C)public good.
D)market structure.
E)tangible good.

Question 9

The differences between the private and social costs of economic behavior are known as

A)setbacks.
B)variances.
C)deviations.
D)externalities.
E)market slippage.

Question 10

Individuals or firms engaging in private behavior that has broad social consequences are said to be creating

A)externalities.
B)intangible costs.
C)unfunded mandates.
D)fungible expenditures.
E)extra market costs.

Question 11

Common terminology, uniform weights and measures, and consistent specifications for both quantities and qualities of goods are called

A)trade agreements.
B)contractual terms.
C)capital specifications.
D)public benchmarks.
E)market standards.

Question 12

What is the term for a law, rule, statute, or edict that expresses the government's goals and often incorporates rewards and punishments to promote their attainment?

A)executive order
B)public policy
C)preamble
D)popular mandate
E)rule of law

Question 13

Poorhouses and vagrancy laws are examples of government efforts to

A)enforce contracts.
B)create a labor force.
C)set market standards.
D)provide public goods.
E)ameliorate externalities.

Question 14

Which term describes a good that may be enjoyed by anyone after it is provided and may not be denied to anyone after it is provided?

A)collective action good
B)public good
C)externality
D)solid good
E)public liability

Question 15

Why are market standards so important to a functioning market economy?

A)They require contract enforcement.
B)They define property rights.
C)They help people understand what they are bargaining for.
D)They help people recognize the value of public goods.
E)They protect the fundamental rights of workers.

Question 16

What is the first feature inherent in the very idea of government?

A)law and order
B)rules for liability
C)creation of a labor force
D)maintenance of a market structure
E)individual property rights

Question 17

A voluntary agreement between two or more private persons that governs future conduct is called

A)a policy.
B)a market.
C)a contract.
D)an exchange.
E)binding arbitration.

Question 18

Trespass laws exemplify a type of law that gives concrete meaning to what constitutes

A)property.
B)sovereignty.
C)responsibility.
D)accountability.
E)civic duty.

Question 19

Laws that structure the conditions under which you can sell your property are called

A)trade agreements.
B)market standards.
C)contractual terms.
D)laws of exchange.
E)collective bargaining agreements.

Question 20

The government is more likely to provide a public good under which of the following conditions?

A)The difference between the private cost and the social cost of economic behavior is minimal.
B)The private cost of some behavior far exceeds the social cost.
C)The private cost of some behavior equals the social cost.
D)No individual or firm is likely to make the good available.
E)Individuals or firms engage in private behavior that has limited social consequences.

Question 21

An instance where the market does not produce an efficient outcome is called

A)a market failure.
B)a black Tuesday.
C)an insolvent equilibrium.
D)irrational exuberance.
E)inflation.

Question 22

The recent surge in housing prices that has been followed by dramatic decreases in housing prices is an example of

A)collective exploitation.
B)collective engagement.
C)a bubble.
D)a bull market.
E)inflation.

Question 23

The problem of asymmetrically distributed information, when sellers know something about their product that buyers do not, is recognized as a potential source of

A)monopoly.
B)trade deficit.
C)market failure.
D)contract abrogation.
E)moral hazard.

Question 24

What are the basic prerequisites of economic growth?

A)strong public investment, technological innovation, and a productive workforce
B)government-established monopolies, strong investment, and technological innovation
C)freedom of religion, technological innovation, and a productive workforce
D)freedom of the press, racial equality, and strong investment
E)a good social safety net, shared societal values, and rich natural resources

Question 25

The collapse of a major bubble almost always leads to

A)higher prices for securities that were not a part of the bubble.
B)decreases in the price of gold.
C)calls for freedom from government regulation.
D)demands for government intervention.
E)a secondary bubble in the same market.

Question 26

According to Keynesian principles, which of the following actions by the federal government provides a means to spark economic growth?

A)public investment
B)tax cuts
C)deregulation
D)holding new elections
E)decreasing the size of the bureaucracy

Question 27

Why did Congress begin to adopt national business regulations?

A)It wanted to increase the amount of money the government earns from monopolies.
B)It thought government-sponsored monopolies were the best way to provide services to consumers in most industries.
C)It wanted to alleviate the burdens companies faced of adapting to the regulatory inconsistencies across states.
D)It wanted to encourage the development of an automotive industry that would strengthen America's position in the world economy.
E)Occasional bubbles, fostered by regulation, are actually a healthy part of a market economy.

Question 28

The basic prerequisites of economic growth are

A)different in the United States than in any other country.
B)different in North America than elsewhere in the world.
C)different in the Western world than elsewhere in the world.
D)different in the Middle East than elsewhere in the world.
E)similar everywhere in the world.

Question 29

When Microsoft was sued for business practices that allegedly could have made it the only viable provider of certain software, it was accused of trying to form a(n)

A)simplex.
B)oligarchy.
C)autogarchy.
D)monopoly.
E)bully firm.

Question 30

Which term describes a market failure resulting from speculative buying that drives up the price of major commodities to levels exceeding their intrinsic value?

A)collective exploitation
B)collective engagement
C)inflation
D)bull market
E)bubble

Question 31

The market value of the goods and services produced in an economy minus income from foreign investments equals the

A)total national product (TNP).
B)gross domestic product (GDP).
C)net national worth.
D)net domestic worth.
E)net international economic contribution.

Question 32

British economist John Maynard Keynes argued that government could boost employment by

A)reducing regulation.
B)raising taxes on the wealthy.
C)implementing a national sales tax.
D)stimulating demand.
E)stimulating supply.

Question 33

A consistent increase in the general level of prices is called

A)inflation.
B)incrementalism.
C)price bumps.
D)accession.
E)price controls.

Question 34

The most important federal agency in regards to the regulation of financial markets is the

A)Office of Management and Budget (OMB).
B)Securities and Exchange Commission (SEC).
C)Independent Regulatory Commission (IRC).
D)Office of Market Management (OMM).
E)Department of the Treasury.

Question 35

Which term describes the inefficient allocation of society's economic resources?

A)trade deficit
B)black market
C)market failure
D)inflationary spiral
E)market slippage

Question 36

Before the 1930s, what were the attitudes of the federal and state governments toward full employment?

A)Both federal and state governments worked to promote full employment.
B)The federal government worked to promote full employment, but the state governments did not.
C)The state governments worked to promote full employment, but the federal government did not.
D)Neither the federal nor the state governments worked to promote full employment.
E)The federal and state governments not only promoted work but also guaranteed a job to anyone who sought one.

Question 37

What is one of the most important ways government can protect welfare and property?

A)by maintaining law and order
B)by granting legal monopolies for the most profitable industries
C)by allowing states to set their own unique business regulations
D)by supporting the unfettered use of credit-default swaps
E)by purchasing shares of stock in all major sectors of the American economy

Question 38

The most fundamental way that government affects investment is by

A)cutting taxes.
B)lowering tariffs.
C)deregulating businesses engaged in interstate commerce.
D)promoting business, investor, and consumer confidence.
E)minimizing inflation.

Question 39

Which of the following is something the federal government does to promote economic prosperity?

A)allows skilled immigrants to enter to the United States and work
B)encourages high inflation
C)incentivizes workers to retire early
D)drafts teenagers for military service
E)limits loans to small businesses

Question 40

The market value of the goods and services produced in an economy is the

A)gross national product (GNP).
B)total domestic product (TDP).
C)net national worth.
D)net domestic worth.
E)net international economic contribution.

Question 41

The amount of liquid assets and ready cash that banks are required to hold to meet depositors' demands for their money is called the

A)depositors' allowance.
B)withdrawal protection account.
C)reserve requirement.
D)stress test fund.
E)residual resource fund.

Question 42

Zip codes in Manhattan (New York City) and Beverly Hills are the top two recipients of what form of government subsidy?

A)farm subsidies
B)export loan guarantees
C)Social Security
D)trade adjustment assistance
E)National Science Foundation grants

Question 43

Changing the interest rate at which banks lend to each other is a process called

A)open-market operations.
B)federal loan management.
C)acquisition and divestiture functionality.
D)adjustment of the federal funds rate.
E)quantitative easing.

Question 44

Categorical grants-in-aid that funded a 900,000-mile national highway system indirectly promoted business because the highway

A)pulled more workers from the private sector into government jobs.
B)also funded a worker training program.
C)facilitated the use of motor transportation to improve national markets.
D)required the import of massive amounts of oil from the Middle East.
E)required the import of massive amounts of gravel from Mexico.

Question 45

When the Federal Reserve purchased large quantities of government securities to release more money into the economy, the Fed was

A)changing the reserve requirement.
B)engaging in open-market operations.
C)adjusting the federal funds rate.
D)adjusting the effective tax rate.
E)seizing private assets using the power of eminent domain.

Question 46

National tariff policies promote domestic markets by

A)encouraging free trade.
B)restricting imported goods.
C)building interstate transportation links.
D)subsidizing family farmers and urban industries.
E)bringing inexpensive labor to the United States.

Question 47

Which of the following agencies is responsible for consumer safety by informing consumers about hazards associated with products and working with industry to set product standards?

A)Consumer Ombudsman's Office
B)Consumer Protection Agency
C)Consumer Product Safety Commission
D)Bureau of Consumer and Family Rights
E)Food and Drug Administration

Question 48

The swift passage of a $700 billion bill to bail out failing financial corporations in 2008 was the result of politicians' career ambition (mixed with concern for the nation) operating through the legislative process.Which of the five principles did this illustrate?

A)history principle
B)collective action principle
C)institution principle
D)policy principle
E)rationality principle

Question 49

The agency that oversees bargaining between workers and industry is the

A)Office of Union Management.
B)Worker's Assistance Administration.
C)Agency for Business-Worker Partnership.
D)National Labor Relations Board (NLRB).
E)Occupational Safety and Health Administration (OSHA).

Question 50

Which of the following hypothetical policies is a monetary policy?

A)a policy where the federal government buys securities to release more money into the economy
B)a policy that raises income taxes
C)a policy that creates a national sales tax
D)a policy where the government gives grants to states to build highways
E)a policy where the government requires citizens to purchase health insurance

Question 51

During the nineteenth century, the national government built roads and canals, levied tariffs, and subsidized railroads to promote

A)markets.
B)monopolies.
C)deregulation.
D)secession.
E)Keynesian policies.

Question 52

For most of American history, the engagement of government with business and labor is best characterized by which of the following?

A)neither the federal government nor local governments doing much to regulate business-labor relations
B)the federal government helping labor and local governments helping business
C)the federal government helping business and local governments helping labor
D)the federal government doing little and local governments helping business
E)the federal government helping labor and local governments doing little

Question 53

Which book published in the early 1900s galvanized public concern about unsanitary food processing?

A)The Jungle
B)Animal Farm
C)The Omnivore's Dilemma
D)An Inconvenient Truth
E)The Passionate Epicure

Question 54

Policies that manipulate the growth of the entire economy by controlling the availability of money to banks are called __________ policies.

A)monetary
B)reserve
C)fiscal
D)pecuniary
E)social

Question 55

The Federal Reserve only truly had a mandate to reduce inflation beginning in the

A)Great Depression.
B)Korean War.
C)Vietnam War.
D)peacetime inflation of the late 1970s.
E)Great Recession of 2008.

Question 56

Government funds given to a state or locality that are earmarked by law for specific categories are called

A)categorical grants-in-aid.
B)block grants.
C)furtherances.
D)endowments.
E)pass-throughs.

Question 57

The modern system of central banks that facilitates exchanges of cash, checks, and credit is called the

A)Bank of the United States.
B)Central Banking Administration.
C)Federal Reserve System.
D)Washington Mutual Bank.
E)Department of the Treasury.

Question 58

An increase in the federal funds rate would

A)increase the availability of credit.
B)decrease the availability of credit.
C)have no effect on the availability of credit.
D)have an unpredictable effect on the availability of credit.
E)stimulate the economy.

Question 59

Inflation is caused by

A)high taxes.
B)too many dollars chasing relatively few goods.
C)fluctuation in prices.
D)increases in the price of gold coupled with low stock market returns.
E)stringent government regulations.

Question 60

The power of the central banking system in the United States to buy and sell government securities to increase or decrease the supply of money in the economy is called

A)open-market operations.
B)reserve requisitions.
C)acquisition and divestiture functionality.
D)federal funds adjustment.
E)quantitative easing.

Question 61

Which of the following policies is NOT a fiscal policy?

A)cutting the income tax
B)raising a tariff
C)eliminating the capital gains tax
D)borrowing money for federal spending
E)changing the federal funds rate

Question 62

A policy designed to tax or spend in such a way as to reduce the disparities of wealth between the lowest and highest income brackets is called a

A)regressive policy.
B)policy of redistribution.
C)wealth-sharing policy.
D)policy of retribution.
E)flat tax.

Question 63

The limit on the amount the government is permitted to borrow is also referred to as

A)the tariff.
B)discretionary spending.
C)cap and trade.
D)the budget.
E)the debt ceiling.

Question 64

The amount by which government spending exceeds revenues in a fiscal year is called the

A)national debt.
B)trade shortfall.
C)gross national product.
D)gross domestic product.
E)budget deficit.

Question 65

The allocation of land grants to farmers and to railroad companies by Alexander Hamilton to encourage western settlement is an early example of

A)contracting.
B)lending.
C)deregulation.
D)subsidies.
E)monetary policy.

Question 66

An incentive to individuals and businesses that reduces their tax liability when they invest their money in areas that the government designates is called

A)inequity deductions.
B)tax incentives (or loopholes).
C)standard deductions.
D)earmarks.
E)selective incentives.

Question 67

Grants of cash or other commodities to an individual or organization that are used to promote activities desired by the government are called

A)subsidies.
B)block grants.
C)contracts.
D)deregulation stimuli.
E)rents.

Question 68

The type of policy that governs taxing and spending powers is

A)fiscal policy.
B)dollar policy.
C)pecuniary policy.
D)open-market operations.
E)monetary policy.

Question 69

Between 1980 and 1987, Present Reagan reduced the total number of regulations issued by federal agencies, dropping the number of pages in the Federal Register from 74,000 to 49,600.This effort is otherwise known as

A)underregulation.
B)deregulation.
C)retrenchment.
D)contraction.
E)deficit reduction.

Question 70

The administration of fiscal policy occurs primarily in the

A)Office of Management and Budget.
B)Congressional Budget Office.
C)Treasury Department.
D)Federal Reserve System.
E)House and Senate Appropriations Committees.

Question 71

Since 1950, the average incomes of every income group increased-though the incomes of the wealthiest Americans (top 5 percent) increased more sharply than those of any others.This observation is also referred to as

A)the gender gap.
B)hyperinflation.
C)the income gap.
D)the baby boom effect.
E)inflation.

Question 72

The government's use of taxing and spending powers to manipulate the economy is called

A)fiscal policy.
B)budgeting policy.
C)pecuniary policy.
D)open-market operations.
E)social management.

Question 73

The Interstate Commerce Commission Act of 1887, which was designed to control the monopolistic practices of the railroads, is an example of

A)monetary policy.
B)fiscal policy.
C)antitrust policy.
D)monopoly policy.
E)budget policy.

Question 74

The existence of a single firm in a market that controls all the goods and services of that market is called a(n)

A)single company sector.
B)captured market.
C)dominated market.
D)monopoly.
E)iron triangle setup.

Question 75

A sales tax is deemed __________ because everybody pays at the same rate, but the more you make, the lower the percentage of your income that goes to buying items and paying sales tax.

A)a tariff
B)progressive
C)regressive
D)redistributive
E)policy borrowing

Question 76

During the nineteenth century, the government received most of its revenue from

A)the income tax.
B)a flat tax.
C)tariffs.
D)tobacco taxes.
E)paper taxes.

Question 77

The proportion of the federal budget devoted to mandatory spending is

A)large and growing.
B)large but shrinking.
C)small but growing.
D)small and shrinking.
E)staying about the same.

Question 78

The income tax in the United States today is a __________ tax.

A)flat
B)sales
C)square
D)regressive
E)progressive

Question 79

Budgetary items that are beyond the ability of budgetary committees to alter and can only be changed by congressional legislation (or in some instances, not even by congressional legislation) are called

A)unforgivable.
B)discretionaries.
C)mandatory.
D)immutables.
E)prohibitions.

Question 80

Government regulation of large businesses that have established monopolies is called

A)monopolistic regulation.
B)monetary policy.
C)antitrust policy.
D)uncontrollable divestitures.
E)anticapture policies.