Deck 26: The Changing Role of the Federal Government

Question 1

Between 1965 and 1972,eight major pieces of consumer-protection legislation were enacted.This burst of legislative activity was largely driven by

A)increased public fears following the thalidomide tragedy.
B)public outcry following a series of steamboat explosions.
C)a general lack of faith in the market.
D)widespread support for the "Reagan Revolution."

Answer 1

a general lack of faith in the market.

Question 2

In early 1996,Congress passed the "Freedom to Farm Bill." Following the bill's enactment,

A)farmers found that competition from international agriculture declined.
B)farm prices rose steadily for the next 4 years.
C)agriculture was completely deregulated,and farmers began to operate without any government subsidies or assistance.
D)farm prices fell,leading Congress to authorize emergency payments to farmers in 1998 and 1999.

Answer 2

farmers found that competition from international agriculture declined.

Question 3

A key innovation of the Carter administration (1976-1980)was

A)dramatic expansion of Social Security and Medicare programs.
B)large tax cuts,especially for the wealthy.
C)deregulation of airlines,trucking,railroads and the financial services industry.
D)government control of gasoline and food prices.

Answer 3

deregulation of airlines,trucking,railroads and the financial services industry.

Question 4

The "Great Society" initiative led to the creation of

A)Medicare.
B)Rent subsidies for the poor.
C)the Department of Transportation.
D)the Department of Housing and Urban Development.
E) All of the above.

Question 5

"Reducing taxes increases incentives to work and save." This view is typically associated with

A)Keynesian economics.
B)"Reagonomics."
C)Johnson's "Great Society" policies.
D)the Carter administration.

Question 6

The passage of major pieces of consumer protection legislation in the postwar period

A)was one of the most dramatic development of that period.
B)was influenced by the "red scare," and other hysteria over rumors of deliberate sabotage of consumer products.
C)often were the result of highly visible public tragedies.
D)Both a and b are correct.
E) Both a and c are correct.

Question 7

Transfer payments include

A)government spending on tanks and planes.
B)government spending on national forests and parks.
C)the salaries of senators and federal judges.
D)welfare benefits and Social Security payments.

Question 8

During the three decades immediately following World War II,

A)conservative forces successfully blocked any expansion of New Deal-type programs.
B)the prevailing liberal ideology led to the passage of legislation that increased Social Security benefits,created of Medicare,and increased the minimum wage.
C)disillusionment with government led to deregulation of airlines and other industries.
D)most policy makers and the general public rejected Keynesian policies.

Question 9

After 1960,all of the following declined except

A)the number of U.S.farms.
B)the portion of U.S.labor force employed by the agricultural sector.
C)the total amount of U.S.land devoted to farming.
D)the average acreage per U.S.farm.

Question 10

Which of the following federal farm programs was successful in reducing agricultural surpluses?

A)The Agricultural Act of 1948
B)The Emergency Act of 1978
C)The Emergency Feed Grain Bill of 1961
D)The Soil Bank Act of 1956

Question 11

Features of "Reagonomics" include all of the following except:

A)reduction in marginal tax rates.
B)increased government expenditures for defense.
C)deregulation of business.
D)regular increases in the minimum wage.

Question 12

New Deal environmental policies included all of the following except:

A)withdrawal of much of the public domain from private entry.
B)the use of the "soil bank" to encourage agricultural conservation.
C)projects such as the TVA that simultaneously protected many resources in a region.
D)the establishment of Yellowstone as a national park.

Question 13

Under the deficiency payments system,which was used to subsidize grain production,

A)the government purchased all surplus grain and destroys it.
B)deficiency payments were increased when farmers cultivated their land more intensively.
C)farmers were required reduce cultivated acreage by 10 percent.
D)farmers had a greater incentive to engage in beneficial crop rotation.

Question 14

Market-oriented economists favor the use of _____ to solve the global warming problem.

A)explicit emission targets
B)taxes on emissions
C)tradable rights
D)Both (a)and (b)
E) Both (b)and (c)

Question 15

All of the following changes characterize the postwar agricultural sector except

A)the rise of corporate farms.
B)increasing reliance on expensive,large-scale machinery.
C)innovations by federal and state laboratories that increased output.
D)increasing numbers of tenant farms in the South.

Question 16

Between 1940 and 2005,total government spending as a percentage of GDP nearly doubled.The primary source of this growth in spending was

A)increases in military expenditures.
B)increases in government purchases of goods and services.
C)increases in spending on health and income security.
D)increases in the number of federal employees relative to the total labor force.

Question 17

Alfred Kahn's plan for airline deregulation emphasized

A)marginal cost pricing of tickets.
B)average cost pricing of tickets.
C)federal subsidies for certain airlines.
D)increased federal taxes on airline profits.

Question 18

By 1994,the percentage of the U.S.labor force employed in agriculture was

A)less than 3 percent.
B)between 5 and 7 percent.
C)about 10 percent.
D)15 percent.

Question 19

Which is true of total federal spending relative to GDP?

A)It is the most commonly used measure of the size of government.
B)There really is no upper limit to the ratio of total government spending to GDP.
C)It has steadily increased over the last 50 years.
D)All of the above are correct.
E) Only a and c are correct.

Question 20

According to Arthur Schlesinger,Jr. ,government spending

A)may grow more slowly during conservative periods,but will never contract.
B)follows a natural cycle of increases during liberal periods and decreases during conservative periods.
C)grows at the same rate under both liberal and conservative leadership;only the distribution (defense v.civilian)of the spending changes.
D)reflects attempts by political leaders to reject the dominant political ideology of their youth.

Question 21

According to William Niskanen's model of bureaucracy,Congress tends to approve a bureau's budget at a level where

A)the marginal value of the last unit of the bureau's output is greater than the marginal cost.
B)the marginal cost of the last unit of the bureau's output is greater than the marginal value.
C)the marginal value of the last unit of the bureau's output equals the marginal cost.
D)the marginal cost of the last unit of the bureau's output is zero.

Question 22

Adolph Wagner wrote that the public sector would continuously and inevitably expand due to

A)bureaucratic self-interest.
B)the "tyranny of the status quo".
C)labor's increasing demand for social justice.
D)increasing demand for military protection from international threats.

Question 23

In the 1960s and 1970s the U.S.passed several major consumer safety laws,including the Flammable Fabrics Act and the Child Protection Act.The economic impact of such legislation may include all of the following except:

A)reducing the price of the regulated product.
B)increasing the cost of producing the regulated product.
C)reducing the supply of the regulated product.
D)reducing competition within the regulated industry.

Question 24

The existence of external costs means that

A)the producer's marginal cost is greater than the marginal social cost of production.
B)the producer's marginal cost is less than the marginal social cost of production.
C)the consumer's marginal benefit is greater than the marginal social benefit of the good.
D)the consumer's marginal benefit is less than the marginal social benefit of the good.

Question 25

If the government-imposed price of corn is greater than the market price,

A)the quantity of corn supplied will exceed the quantity of corn demanded.
B)the quantity of corn supplied will be less than the quantity of corn demanded.
C)the demand curve for corn will increase.
D)the supply curve for corn will increase.

Question 26

The income elasticity of demand for agricultural products is typically

A)less than zero.
B)greater than zero,but less than one.
C)greater than one.
D)infinity.

Question 27

Comparisons between industrialized nations and less-developed countries indicates that as income rises,the demand for a clean and well-preserved environment

A)increases by a proportional amount.
B)decreases by a proportional amount.
C)increases by a more than proportional amount.
D)decreases by a less than proportional amount.

Question 28

According to _________,liberal programs survive attempts by conservative administrations to eliminate them because of the "tyranny of the status quo."

A)Arthur Schlesinger,Jr.
B)Wagner's Law
C)Milton and Rose Friedman
D)Robert Higgs

Question 29

The Cold War,or "war on communism,"

A)was the most expensive war of the twentieth century.
B)is believed to have caused an increase in defense spending that came at the expense of private consumption rather than private investment.
C)is believed to have caused an increase in defense spending that came at the expense of private investment rather than private consumption.
D)Both a and b are correct.
E) Both a and c are correct.

Question 30

A comparison of a traditional price support program and the Brannan plan shows that

A)consumers would clearly prefer the traditional program.
B)farmers would clearly prefer the Brannan plan.
C)losses due to inefficiency are completely avoided under the Brannan plan.
D)the more elastic the supply and demand curves,the lower the relative cost of the Brannan plan will be.
E) All of the above.

Question 31

Federal support for road building into publicly owned commercial forests has caused

A)an increase in the supply of timber.
B)an increase in the demand for timber.
C)higher timber prices.
D)a shortage of timber.
E) All of the above.

Question 32

According to William Niskanen's model of bureaucracy,bureaus tend to be overfunded because

A)it is difficult for Congress to determine the shape of a bureau's supply curve.
B)it is difficult for Congress to determine the shape of a bureau's demand curve.
C)Congressional leaders believe that deficit spending leads to economic growth.
D)Congressional leaders believe that government employees are underpaid.