Deck 16: Political Economy

Question 1

President Jimmy Carter attempted to stimulate the economy, but this made inflation worse.This led him to __________.

A)lose the 1980 election
B)slash prices of corn and soybeans
C)subsidize major oil companies
D)increase the national deficit

Answer 1

A

Question 2

Examine the outcome of recent spending cuts and the tax hikes on the wealthiest one percent of Americans, instigated by the Obama administration.

A)Middle class Americans benefitted from lower taxes and more jobs.
B)The compromise satisfied few and "kicked the can down the road" for likely repeats every few months.
C)Angry Republicans struck back during the following fiscal cliff, creating gridlock and threatening government shutdown.
D)Democrats were satisfied with the cuts and tax hikes, but Republicans were left with much to explain to their wealthy constituents.

Answer 2

B

Question 3

Interpret the origin of President Clinton's budget surplus from 1997-2000.

A)The surpluses primarily resulted from budget cuts instigated by the Clinton administration from 1994-1998.
B)President Clinton created the surplus through "trickle-down" policies, stimulating growth.
C)Offshoring led to lower production costs for businesses and thus created revenue.
D)The surpluses were largely the result booms in the high-tech and investment industries, generating higher tax revenues.

Answer 3

D

Question 4

After World War II, conservative economists such as Friedrich Hayek and Milton Friedman sidelined Keynesianism with a __________ theory based on the original supply and demand of Adam Smith.

A)forward-looking
B)Marxist
C)neoclassical
D)nineteenth-century

Question 5

During the 1970s critics developed this new term to describe inflation with stagnant economic growth.

A)Growth Slope
B)Quagmire
C)Stagflation
D)Recession

Question 6

The 1973 Mideast war allowed members of the Organization of Petroleum Exporting Countries (OPEC) to __________.

A)sell to nations in Eastern Europe
B)export to Japan and China
C)quadruple oil prices
D)keep oil prices down

Question 7

Analyze the role of "animal spirits" on financial bubbles.

A)Banks produce bubbles by purchasing property at incredibly low rates and reselling that property to unsuspecting investors.
B)Financial markets tend to produce "bubble" investments that let people ignore risk, leading to alternating manias and panics.
C)The finance industry experiences massive eruptions of wealth that coincide with booms in other industries.
D)Wall Street functions on an intuitive basis, as investors cannot predict the value of volatile stocks.

Question 8

Characterize President Bush's favored economic policy of pumping billions of federal dollars into shaky banks and firms.

A)Smithian
B)Marxist
C)Keynesian
D)Millian

Question 9

How do Keynesian economic policies differ from the traditional laissez-faire policies developed by Adam Smith?

A)Laissez-faire advocates for "cutthroat" capitalism, while Keynesian policies seek to spread wealth equally among a nation's citizens.
B)Keynesian economics advocate for increased government control of economics, while traditional laissez-faire argues for a hands-free approach.
C)Smithian policies advocate for increased spending and stimuli for government-run businesses, while Keynesian economics argues for a hands-free approach.
D)The more liberal Smithian economies distribute wealth more evenly among society, while Keynesian economics tends to distribute wealth among the top one percent.

Question 10

Explain the primary source of recent cuts to the number and pay of American blue-collar manufacturing jobs.

A)Many such jobs have been outsourced to East Asia, where production costs are low.
B)American manufacturing jobs wax and wane with bubbles in the financial industry.
C)Blue-collar workers have traditionally depended on manufacturing industries, now in decline due to technological innovations.
D)More and more jobs are rendered obsolete with increases in computerized and robotic manufacturing.

Question 11

Describe British economist John Maynard Keynes' proposal to cure economic depressions.

A)Keynes suggested infusing the economy with government funds to promote spending.
B)Keynes advocated for "trickle down" economic policies.
C)Keynes argued for stronger stimulus packages to corporations and small businesses.
D)Keynes proposed to cure depressions by dampening the swings of the business cycle.

Question 12

John McCain lost the 2008 presidential race in part because voters blamed Republicans of the previous administration for __________.

A)the financial meltdown
B)the September 11ᵗʰ attacks
C)the BP oil spill
D)Hurricane Katrina

Question 13

Early twentieth-century European governments subscribed to __________ doctrines, generally keeping their hands away from the economy.

A)classic liberal
B)inflationary
C)neoclassical
D)Smithian

Question 14

During the Vietnam War, too much money chased too few goods, the classic definition of __________.

A)a tax hike
B)fixed rate exchange
C)demand-pull inflation
D)imbalance of payments

Question 15

Map analysis suggested that Pennsylvania's Perot vote in 1996 came from __________.

A)wealthy business men in Pittsburgh and Philadelphia
B)alienated people who typically do not vote
C)left-leaning independents in urban areas
D)conservatives fed up with Republican Party rhetoric

Question 16

Radicals use the term "political economy" instead of __________ to describe their critique of capitalism and the inequitable distribution of wealth among nations.

A)Marxism
B)laissez-faire
C)public-choice
D)Keynesian

Question 17

Identify the United States presidential candidate who famously used the slogan, "It's the economy, stupid!"

A)Ronald Reagan
B)Walter Mondale
C)Bill Clinton
D)Bob Dole

Question 18

Describe Aristotle's view of government, society and the economy.

A)He understood them as maintaining a symbiotic relationship.
B)He viewed them all as a single entity.
C)He thought they exhibited an antagonistic relationship.
D)He felt they functioned as mutual drains on one another.

Question 19

Describe how today's conservatives use the term "political economy."

A)Conservatives use the term to try to get back to the pure market system advocated by Adam Smith.
B)Conservatives understand the term within the context of Machiavelli's The Prince.
C)Conservatives veer toward John Stuart Mill's usage, which advocated utilitarianism.
D)Conservatives take a neo-utilitarian approach, hoping to benefit the weakest members of society.

Question 20

Why was President Johnson reluctant to request a tax increase to pay for the Vietnam War?

A)He felt it was an unjust and emotionally taxing conflict.
B)He had just gotten a tax cut through Congress in 1964.
C)He wanted to avoid blame for a war he knew the U.S. couldn't win.
D)He saw U.S. involvement as the fault of the Kennedy administration.

Question 21

Due to increased medical costs, Medicare recipients are required to contribute bigger __________ to hold down overuse.

A)contributions
B)subsidies
C)imbursements
D)copayments

Question 22

Since the 1950s, the American unionized workforce has declined from 40% to __________.

A)7%
B)16%
C)24%
D)33%

Question 23

Differentiate between the rising costs of Medicare and Medicaid.

A)Medicare anticipates rising costs due to changing proportions of people over 65.
B)Medicaid expects rising costs due to looming financial busts.
C)Medicare plans to keep spending down by raising the eligibility age to 69.
D)Medicaid hopes to beat rising costs by adjusting the poverty level.

Question 24

Analyze the role of "derivatives" in the recent housing market bubble.

A)"Deriving" their value from real estate speculation, derivatives created a volatile value system.
B)Derivatives fluctuate widely in value, which led many investors to buy, only to lose large sums upon downward fluctuation.
C)Derivatives became so complex that no one could understand them, which masked losses and made assets extremely difficult to evaluate.
D)Derivatives forced many banking institutions to sell or close, condensing the control of the finance industry into a few small hands.

Question 25

Identify the major critique of workfare programs.

A)They fail to adequately locate jobs for the people they train.
B)They leave the government with unnecessary deficits.
C)They are more expensive than traditional welfare programs.
D)They drain the resources of potential employers.

Question 26

According to the U.S.Labor Department, what determines the "poverty line"?

A)The poverty line is three times a minimal food budget for nonfarm families of four.
B)The poverty line is twice the minimal food budget plus $400 for lodging.
C)The poverty line is three times the city minimal lodging budget.
D)The poverty line is four times the minimal living expenses for an urban family of five.

Question 27

Analyze recent changes to the Food Stamps program.

A)The distribution of cash grants allows the program to be easily misused.
B)The updated debit card system makes the program more difficult to misuse.
C)Many recipients sell Food Stamps for 50 cents on the dollar in order to purchase drugs and alcohol.
D)The program allocates surplus government dairy to the poor, ameliorating milk and cheese inflation.

Question 28

Which of the following is an increasing financial concern of the Medicare program?

A)The proportion of older people in American society is increasing steadily.
B)Every American citizen on reaching 65 obtains Medicare, regardless of class.
C)Economic inequality renders Medicare more necessary for some than for others.
D)Wealthy Americans are taking advantage of the Medicare system.

Question 29

In 1996, President Clinton signed a major welfare reform that __________.

A)ended the Aid to Families with Dependent Children program that provided federal matching funds to the states to help the poor, mostly single mothers
B)restructured the Food Stamps program to distribute aid only to citizens and families far below the poverty line
C)reduced funding to the Women, Infants, and Children (WIC)program, which provides healthy food options to mothers with young children
D)introduced healthcare reforms, ensuring that all U.S. citizens under 24 years of age would be covered

Question 30

Between 1965 and 1973, the percentage of Americans living below the poverty line __________.

A)doubled
B)greatly decreased
C)slightly increased
D)rapidly increased

Question 31

Most liberals feel that the poverty line is _________.

A)reasonable
B)disproportionate
C)too high
D)too low

Question 32

Which U.S.president is responsible for implementing Food Stamps as a nationwide program?

A)John F. Kennedy
B)Lyndon B. Johnson
C)Richard Nixon
D)Jimmy Carter

Question 33

Medical costs consume nearly __________ percent of the U.S.gross domestic product, most of it paid through government and private health insurance.

A)11
B)18
C)22
D)26

Question 34

The 2010 healthcare reform, known officially as __________, does not go nearly as far as most European and Canadian medical insurance and lacks a "public" option.

A)the Federal Health and Welfare Act
B)Obamacare
C)the Affordable Care Act
D)the Medical and Dental Reform Act

Question 35

What event is largely considered responsible for deterring Johnson's War on Poverty?

A)Great Society
B)Vietnam War
C)Middle-class entitlements
D)Tax expenditures

Question 36

Conservatives hold that Johnson's Great Society was a waste of money, locking recipients into __________ and encouraging a subculture of drugs and crime.

A)entitlement benefits
B)perpetual subsidies
C)social safety nets
D)welfare dependency

Question 37

Investigate the possible outcome of sequestration had it taken place in 2013.

A)Spending cuts would have pulled from social welfare programs, allowing Republicans to reform entitlements.
B)The defense budget would have taken a major hit, as increased spending and decreased taxes led the government to seek investments elsewhere.
C)New tax hikes would have taken money from the ultra-rich and redistributed it among the working class.
D)The sudden tax increases and simultaneous spending cuts would likely have produced a "double-dip" recession just as the U.S. was coming out of the first.

Question 38

The __________ administration simplified the Food Stamps program by eliminating the provision that recipients buy the stamps at a discount with their own money.

A)Kennedy
B)Johnson
C)Ford
D)Carter

Question 39

U.S.federal expenditures mandated by law, such as Social Security and Medicare, are referred to as __________.

A)privileges
B)entitlements
C)benefits
D)subsidies

Question 40

What was the poverty line in 2012?

A)$14,505
B)$17,060
C)$23,050
D)$26,750

Question 41

The classical economists of the late eighteenth and nineteenth centuries-Adam Smith, David Ricardo, John Stuart Mill, and Karl Marx-all wrote on what they called socialist economies.

Question 42

President Clinton's 1996 entitlement reforms gave welfare recipients two years to get off government assistance.

Question 43

Investigate what historically happens to conservatives when firms are supposedly "too big to fail."

A)Conservatives argue for expensive bail-out packages.
B)Most conservatives suggest letting the free market run its course.
C)Most argue against expensive stimulus packages.
D)They switch parties.

Question 44

Attempting to correct the imbalance of 1960s deficits, President Nixon cut the link between the dollar and gold.

Question 45

One major problem with Medicaid is the large amount of it that ends up in the hands of fraudsters.

Question 46

Many Americans think the federal budget goes primarily toward welfare, which is __________.

A)absolutely True
B)somewhat exaggerated
C)not at all the case
D)slightly offensive

Question 47

Compare American and Canadian views on the size of government.

A)Americans believe the government is too small, while Canadians feel that government intrudes on individual privacy.
B)Similar nations located in North America, both Americans and Canadians feel that government is too large.
C)Americans and Canadians generally agree that government should be larger, funding welfare programs such as Medicaid and Food Stamps.
D)Many Americans believe government is too large, while Canadians recognize that government has a pivotal role to play and accept higher taxes.

Question 48

Why are many politicians wary about limiting Social Security and Medicare expenses?

A)Many would be left without enough to support them.
B)Caps to these program would undermine the welfare state.
C)It can cost them votes.
D)Both are primary social safety nets.

Question 49

According to political scientist Ira Sharkansky, "All modern states are welfare states, and all welfare states are __________."

A)democratic
B)compassionate
C)bureaucratic
D)incoherent

Question 50

Conservatives argue that high taxes encourage effort and investment.

Question 51

Conservatives complain that the poverty line is set too low; it can take two to three times that amount to survive in big cities.

Question 52

Starting in the late 1950s, the United States spent more abroad than it sold, leading to large deficits.

Question 53

Many conservative economists argue that some banks are __________, because they would topple the rest of the economy with them.

A)inherently successful
B)too big to fail
C)destined for profit
D)practically invincible

Question 54

Despite its extensive welfare programs, New York City maintains a high degree of poverty.

Question 55

Many of today's American welfare programs began during the 1960s, under Kennedy and Johnson.

Question 56

Theoretically, what are the consequences if the government assumes the burden of bad loans?

A)Citizens will default on their mortgages.
B)Banks will learn from their mistakes and pay back the burden with interest.
C)Ultimately, the government will profit.
D)Firms will be encouraged to continue their risky behavior.

Question 57

Radicals use the term "political economy" instead of "late capitalism," which is a hard sell these days.

Question 58

How might Americans' reluctance toward entitlement programs benefit them in the long run?

A)Citizens will pay lower taxes, stimulating the economy via "trickle down" economics.
B)Entitlement programs are complex and inefficient; our government will save time and money by proceeding with caution.
C)Americans can justify raising the debt ceiling through entitlement programs, so long as they are wary of the choices they make.
D)Government subsidies to businesses, rather than spending on welfare programs, will help the United States generate revenue and reduce overall spending.

Question 59

What major 2008 event sparked debate concerning the government's size and role?

A)Financial Crisis
B)Hurricane Katrina
C)War in Libya
D)Arab Spring

Question 60

How does the American welfare state compare to those of other industrialized nations?

A)Much less is allocated to welfare in the United States.
B)Other nations allocate less to welfare than the United States.
C)The United States allocates about the same to welfare.
D)Few nations besides the United States maintain funds for welfare.

Question 61

Some analysts call the federal __________ the best welfare program because it encourages people to work their way out of poverty.

Question 62

Analyze the 2008 financial crisis.What was the conflict in issuing bailouts to large firms? How is this form of government welfare fundamentally different from entitlement programs? Which presents the greater moral hazard?

Question 63

Considered by Carter but easily misused, __________ would have functioned as a replacement for food stamps.

Question 64

Critique President Carter's attempts at welfare reform.

Question 65

Explain the escalating inflation rate under the Johnson administration.

Question 66

Examine the efficacy of workfare programs.What do such programs intend to accomplish? What are some criticisms against them? Cite specific examples.

Question 67

Analyze the American trend against creating new entitlement programs.

Question 68

Official poverty figures do not include __________ benefits, such as food stamps, transferred to the poor by government programs.

Question 69

During bad times, government used to increase aggregate demand through __________ on public works and welfare to make recessions shorter and milder.

Question 70

Differentiate between liberal and conservative definitions of "poverty."

Question 71

Examine the government's hand in fixed exchange and floating exchange rates as they relate to the Gold Standard.How did Nixon intervene in the free market? Was this intervention successful?

Question 72

Examine the fundamental differences between Smithian and Marxist economic theories.What is the government's role in each? Where do you see each playing out in the American economy, and how does such implementation benefit or harm our economy? Provide examples.

Question 73

The government assumed responsibility for the ___________ of bad loans in 2008.

Question 74

Deficit, debt, and taxation problems came together at the start of 2013 in what was popularly called a __________.

Question 75

The __________ agreement priced an ounce of gold at $35 and fixed other currencies in relation to the dollar.

Question 76

Established by Nixon, the __________ exchange rate devalued the dollar by about one fifth.

Question 77

Illustrate conservative and liberal definitions of "poverty." How do these understandings focus the way each party views the poor? And how do those understandings influence the creation of social welfare programs?

Question 78

Briefly, what is the relationship between politics and economy?

Question 79

Many conservatives argue that poor communities develop a culture of poverty that instills ___________, an indifference to providing for their families and futures.

Question 80

Conservatives champion Adam Smith for developing the __________ system.