Deck 16: Government and the Economy

Question 1

The recession of 2008 led to the loss of ________ million American jobs.

A)1
B)5
C)8
D)16

Answer 1

C

Question 2

During the 1960s, Ralph Nader was influential as a(n)

A)environmental activist.
B)consumer advocate.
C)presidential candidate.
D)member of Congress.

Answer 2

B

Question 3

Something that must be supplied by the government because the marketplace cannot provide it is called

A)a public good.
B)a commodity.
C)a governmental appropriation.
D)pork.

Answer 3

A

Question 4

Inflation reached historically ________ levels during the late 1970s, ________ ever since.

A)high; but declined by the mid-1980s and has remained low
B)low; but increased by the mid-1980s and has remained high
C)low; and has remained low
D)high; and has remained high

Question 5

Beginning in the late 1950s, the federal government

A)refused to pay any of the costs associated with highway construction.
B)began paying for 100 percent of highway construction costs.
C)agreed to pay 10 percent of highway construction costs on the condition that each state provide 90 percent of the costs of any portion of a highway built within its boundaries.
D)agreed to pay 90 percent of highway construction costs on the condition that each state provide 10 percent of the costs of any portion of a highway built within its boundaries.

Question 6

The first tax cut designed to stimulate the economy and promote full employment was enacted by President

A)Lyndon B.Johnson.
B)Theodore Roosevelt.
C)Franklin D.Roosevelt.
D)John F.Kennedy.

Question 7

Which of the following is the best example of a public good?

A)a computer
B)the interstate highway system
C)the airline industry
D)an iPhone

Question 8

________ occurs when the price level of goods and services increases over several months.

A)A budget deficit
B)An open-market operation
C)Inflation
D)A recession

Question 9

The ________ marked the major historical turning point in the relationship between the government and the marketplace.

A)Civil War
B)Depression of 1896
C)Great Depression
D)implementation of Reaganomics

Question 10

American immigration laws have

A)never given special priority to any individual on the basis of national origin.
B)never placed any limits on the total number of immigrants allowed into the country each year.
C)routinely given special priority to unskilled workers.
D)routinely given special priority to workers who have skills that are in demand among American employers.

Question 11

An officially expressed purpose or goal backed by a sanction is a

A)public policy.
B)regulation.
C)rule.
D)bill.

Question 12

Which of the following was a driving force for economic growth during the late nineteenth century?

A)agriculture
B)manufacturing industries
C)government work projects
D)international trade

Question 13

During the New Deal, ________ theory that a government could boost employment by stimulating demand became quite influential.

A)Adam Smith's
B)Milton Friedman's
C)Friedrich Hayek's
D)John Maynard Keynes's

Question 14

________ are given to states and local governments on the condition that all expenditures are limited to the problem or group specified by law.

A)Tariffs
B)Loopholes
C)Monopolies
D)Categorical grants

Question 15

The fact that a bottle of Coca Cola cost $0.05 in 1959 and $1.50 today is an example of

A)opportunity costs.
B)indexing.
C)deflation.
D)inflation.

Question 16

A federal government program that gives money to state and local governments to spend on educational and nutritional assistance for low-income families would be an example
Of a(n)

A)revenue sharing policy.
B)monetary policy.
C)categorical grant.
D)antitrust policy.

Question 17

The ________ has taken the lead in conducting basic research to counter bioterrorism.

A)National Science Foundation
B)Department of Defense
C)Department of Homeland Security
D)National Institutes of Health

Question 18

The National Science Foundation is a(n)

A)federal government agency that manages the civilian space program and conducts aerospace research.
B)national lobbying organization that seeks to increase funding for elementary school education about science.
C)federal government agency that supports basic research across a range of fields in order to advance fundamental knowledge that may be broadly useful.
D)international nonprofit organization with the stated goals of promoting cooperation among scientists, defending scientific freedom, and encouraging scientific responsibility.

Question 19

The Human Genome Project was initiated

A)by government researchers and taken up later by private corporations.
B)by private corporations and taken up later by government researchers.
C)and completed entirely by private corporations.
D)and completed entirely by government researchers.

Question 20

The index of the total output of goods and services produced in a national economy is called the

A)inflation index.
B)gross domestic product.
C)monetary fund.
D)consumer price index.

Question 21

Which of the following actions marked a decisive break with the tradition of the federal government promoting compromises between labor and management?

A)President Ronald Reagan firing striking air traffic controllers and hiring permanent replacements to fill their jobs in 1981
B)President Reagan sending in the National Guard to break up picketing in front of major defense contractors in 1985
C)Congress passing and George H.W.Bush signing legislation dismantling the National Labor Relations Board in 1992
D)the National Labor Relations Act setting up a framework for labor relations in 1935

Question 22

Upton Sinclair's 1906 exposé The Jungle revealed

A)widespread use of child labor in coal mines and factories throughout the United States.
B)violent suppression of labor unions by big business.
C)control of politicians by corporate interests who run the political machines.
D)unsanitary practices at meatpacking plants.

Question 23

The federal government

A)determines which classes will be taught in colleges and universities but provides no financial assistance for higher education.
B)provides all of the funding for higher education, but state and local governments are placed in charge of operating colleges and universities.
C)supports higher education through educational grants, tax breaks, and loans.
D)is in charge of running the day-to-day operations of every public college and university around the country.

Question 24

Which of the following are the three basic prerequisites for economic growth?

A)domestic investment, foreign investment, and government regulation
B)foreign investment, productive workforce, and economic regulation
C)public investment, government investment, and financial stability
D)public investment, innovation, and a productive workforce

Question 25

The federal minimum wage was last raised in

A)2001.
B)2004.
C)2009.
D)2012.

Question 26

What is the MOST important way that government officials affect personal and corporate investments?

A)granting tax breaks for stock gains and losses
B)promoting investor confidence through policies enforcing stability and regard for the law
C)allowing Social Security pensions to be invested in the stock market
D)bailing out corporations like General Motors that are considered "too big to fail"

Question 27

Which of the following has been a fundamental goal of the government's involvement in the economy?

A)promoting economic equality
B)encouraging investment in businesses abroad
C)stimulating economic growth
D)reducing imports from foreign economies

Question 28

Before the 1930s, relations between labor and management in the United States were

A)defined by peaceful negotiations.
B)among the most violent in the world.
C)dependent on labor unions for stability.
D)stable.

Question 29

The federal government's relationship with Sematech illustrates that

A)expensive government bailouts of private companies often increase the national debt by a large amount.
B)partnerships between the federal government and private industry never succeed in saving vulnerable sectors of the economy.
C)government policies promoting private industry can successfully protect and develop vulnerable sectors of the economy.
D)private companies often fail, despite receiving considerable financial support from federal grants and tax breaks.

Question 30

In the 1800s, Congress ________ the creation of the railroad system ________.

A)supported; by providing categorical grants to the state and local governments that were placed in charge of constructing rail lines
B)supported; by paying for the construction of all rail lines and starting a national railcar service
C)supported; by granting more than 100 million acres of public-domain land to railroad interests
D)opposed; and did nothing to support it

Question 31

The Fair Labor Standards Act was significant because it

A)created the National Labor Relations Board (NLRB) to oversee union elections and collective bargaining between labor and industry.
B)created the minimum wage.
C)made changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation's financial services industry.
D)outlawed the so-called closed shop, but it permitted the "union shop" in those states that had right-to-work laws.

Question 32

According to many analysts, the spurt of economic growth in 2003 illustrates that

A)the federal government can always produce large levels of economic growth if the right decisions are made regarding deficit spending.
B)inflation is always a problem that government officials should attempt to solve.
C)inflation is not a problem that government officials should attempt to solve.
D)some kinds of public investment, such as military spending on wars, can produce economic growth as a by-product of pursuing other more central objectives.

Question 33

The Great Depression and World War II

A)made Americans realize that unemployment was an unfortunate but largely irremediable occurrence.
B)made Americans realize that unemployment could only be solved by a major international crisis, such as a war.
C)showed that the government could help to ensure full employment.
D)showed that ill-advised government programs could cause large increases in unemployment.

Question 34

In response to the financial crisis of 2008, Congress enacted a series of reforms that

A)created the Federal Reserve Board and the Securities and Exchange Commission.
B)eliminated the Federal Reserve Board and the Securities and Exchange Commission.
C)substantially strengthened the Securities and Exchange Commission's enforcement capabilities.
D)substantially weakened the Securities and Exchange Commission's enforcement capabilities.

Question 35

The value of the minimum wage declines if it is not raised periodically because

A)federal income taxes inevitably become more regressive over time.
B)federal income taxes inevitably become more progressive over time.
C)the minimum wage is not indexed to inflation.
D)the minimum wage is indexed to inflation.

Question 36

The Securities and Exchange Commission

A)manages the federal government's antiterrorism strategy, provides border security, and oversees immigration and customs enforcement.
B)requires companies to disclose information about the stocks and bonds they are selling, inform buyers of investment risks, and protect investors against fraud.
C)facilitates exchanges of credit, regulates national banks, and uses monetary policies to fight inflation and deflation.
D)provides independent analyses of budgetary and economic issues to support the congressional budget process.

Question 37

Prior to the Great Depression

A)only state governments sought to promote full employment.
B)only the federal government sought to promote full employment.
C)both the federal government and the state governments sought to promote full employment.
D)neither the federal government nor the state governments sought to promote full employment.

Question 38

The National Labor Relations Act was designed to

A)oversee union elections and collective bargaining between labor and industry.
B)prohibit workers from forming unions.
C)establish a national minimum hourly wage.
D)limit the amount of money labor unions and corporations could donate to political parties.

Question 39

In addition to the Consumer Product Safety Commission, the two federal agencies that play the MOST active role in protecting the public from unsafe products are the

A)Department of Transportation and the Food and Drug Administration.
B)Environmental Protection Agency and the Department of Interior.
C)American Consumer Institute and the Public Patent Foundation.
D)Environmental Protection Agency and the American Consumer Institute.

Question 40

Sematech is a

A)New York-based global investment bank and securities trading and brokerage firm that failed in 2008 as part of the global financial crisis and recession; it was subsequently sold to JPMorgan Chase.
B)federal government agency that supports basic research across a range of fields in order to advance fundamental knowledge that may be broadly useful.
C)nonprofit consortium of major U.S.computer microchip manufacturers set up in the 1980s to work with the federal government to reestablish American leadership in semiconductor manufacturing.
D)manufacturer of cylindrical solar panels that received a $535 million loan guarantee under the American Recovery and Reinvestment Act of 2009.

Question 41

Supply-side economics is the idea that

A)the best method of producing high levels of economic growth is to engage in high levels of government spending.
B)the government should impose heavy tariffs on imported goods in order to protect domestic suppliers.
C)the government's role in the economy should be strictly limited to regulating the supply of money.
D)reducing the marginal rate of taxation will create a productive economy by promoting levels of work and investment that would otherwise be discouraged by higher taxes.

Question 42

According to the nonpartisan Congressional Budget Office, the Troubled Asset Relief Program (TARP) will ultimately cost taxpayers about

A)$9 trillion more than initially expected.
B)$665 billion more than initially expected.
C)$9 trillion less than initially expected.
D)$665 billion less than expected.

Question 43

Which of the following is the best description of the changing expectations of government's role in the economy since the 1930s?

A)People hold government officials responsible for a healthy economy.
B)People demand that government officials provide health insurance.
C)People expect that government officials will engage in deficit spending.
D)People expect government officials to print more money in times of inflation.

Question 44

The federal minimum wage was ________ an hour in 2018.

A)$6.50
B)$7.25
C)$9.10
D)$15.00

Question 45

Adam Smith's theory of ________ maintains that many individual economic transactions come together to create a greater good for all.

A)rational expectations
B)the Prisoner's Dilemma
C)the invisible hand
D)trickle-down economics

Question 46

Classic laissez-faire theory is based on the idea that

A)government monopolies stimulate economic growth.
B)self-interest does nothing to promote the public good.
C)a truly efficient government allows private enterprise to provide all government services.
D)economic competition unleashes growth and innovation.

Question 47

The MOST consistently powerful nongovernment actors in determining economic policy are

A)labor unions.
B)environmental groups.
C)business organizations.
D)foreign nations.

Question 48

During the Great Depression of 1929-39, approximately ________ percent of the workforce became unemployed.

A)5
B)20
C)40
D)60

Question 49

The key argument of John Maynard Keynes is that

A)government can pull an economy out of a recession by stimulating demand and creating a cycle of increased production and jobs.
B)government regulations during economic depressions must be lifted because they destroy the already-slim profit margin.
C)the economy of size shows that monopolies are the most efficient way to distribute goods throughout a national marketplace.
D)government can rectify a falling economy by regulating the money supply.

Question 50

Which president said in his inaugural address, "Government is not the solution to our problem, government is the problem."

A)Richard Nixon
B)Franklin Roosevelt
C)Dwight Eisenhower
D)Ronald Reagan

Question 51

The nonpartisan Congressional Budget Office estimated that the American Recovery and Reinvestment Act of 2009

A)increased the number of full-time jobs by about 3.6 million.
B)increased the number of full-time jobs by about 500,000.
C)had no effect on the overall number of full-time jobs in the United States.
D)decreased the number of full-time jobs by about 500,000.

Question 52

Which president rejected the theory of Keynesian economics?

A)John Kennedy
B)Lyndon Johnson
C)Richard Nixon
D)Ronald Reagan

Question 53

Today, labor unions represent about ________ percent of the labor force.

A)50
B)35
C)25
D)10

Question 54

The American Recovery and Reinvestment Act of 2009 is a good example of ________ principles.

A)laissez-faire
B)Keynesian
C)supply-side economic
D)neo-Malthusian

Question 55

In the 50 years that followed the Great Depression

A)Democrats generally expressed more concern about unemployment, while Republicans focused more on reducing budget deficits.
B)Republicans generally expressed more concern about unemployment, while Democrats focused more on reducing budget deficits.
C)both parties ignored unemployment and focused entirely on reducing budget deficits.
D)both parties ignored unemployment and budget deficits.

Question 56

The idea that the government can stimulate a slow economy by increasing public spending or cutting taxes is called

A)laissez-faire economics.
B)Keynesianism.
C)social democracy.
D)monetarism.

Question 57

The minimum wage was first enacted in

A)1879.
B)1901.
C)1938.
D)1995.

Question 58

Which president contended with double-digit inflation?

A)John Kennedy
B)Jimmy Carter
C)George H.W.Bush
D)Bill Clinton

Question 59

Those who believe in the theory of ________ maintain that the government's role in regulating the economy should be focused on lowering taxes and creating incentives for a
More productive and efficient use of resources.

A)Keynesianism
B)supply-side economics
C)fiscalism
D)laissez-faire capitalism

Question 60

Which of the following statements best summarizes the Democratic and Republican parties' views on the appropriate role of government in the economy?

A)Republicans tend to draw on the ideas of laissez-faire economics as they argue for significant reductions in nonmilitary spending; Democrats stress the importance of government regulation in promoting a strong economy.
B)Democrats tend to draw on the ideas of laissez-faire economics as they argue for significant reductions in nonmilitary spending; Republicans stress the importance of government regulation in promoting a strong economy.
C)Both the Democratic and Republican parties believe in government ownership of key industries.
D)Both the Democratic and Republican parties believe strongly in the ideas of laissez-faire economics and would like to keep the government out of the economy altogether.

Question 61

Which of the following statements about American public opinion is MOST accurate?

A)A majority of Americans regularly say they would prefer a larger government with more services, but polls also reveal very little support for increasing spending on any specific government program.
B)A majority of Americans regularly say they would prefer a smaller government with fewer services, but polls also reveal very little support for cutting any specific government programs.
C)A majority of Americans regularly say they would prefer a smaller government with fewer services, and polls also reveal strong support for cutting nearly every government program.
D)A majority of Americans regularly say they would prefer a larger government with more services, and polls also reveal strong support for increasing spending on nearly every government program.

Question 62

The ________ insures bank deposits up to $250,000.

A)Federal Reserve Board
B)Federal Deposit Insurance Corporation
C)U.S.Department of Treasury
D)Office of Management and Budget

Question 63

The federal funds rate refers to the

A)percentage of federal spending that is made up of "uncontrollables," budget items that cannot be controlled through the regular budget process.
B)percentage of federal spending on programs that are controlled through the regular budget process.
C)congressionally determined limit on the amount of national debt that can be issued by the U.S.Treasury.
D)interest rate on loans between banks.

Question 64

"Right to work" laws

A)provide subsidies to companies who hire previously unemployed workers.
B)limit the amount of payroll taxes that can be taken out of the checks of full-time employees.
C)forbid employment discrimination on the basis of race, ethnicity, and gender.
D)guarantee that a worker does not have to belong to a union or pay union dues as a condition of employment.

Question 65

Congress was granted the power to tax personal income in

A)1789.
B)1846.
C)1913.
D)1943.

Question 66

The Sixteenth Amendment allows

A)state governments the power to collect income taxes.
B)Congress the power to collect income taxes.
C)Congress the power "to regulate commerce with foreign nations, and among the several states."
D)the popular election of U.S.senators by the people of the states.

Question 67

The American Recovery and Reinvestment Act of 2009 did NOT include

A)major reductions in individual and business taxes.
B)measures to limit teacher layoffs and cutbacks in local school districts.
C)job training programs for low-income and unemployed workers.
D)economic incentives to purchase new, more fuel-efficient vehicles when trading in less fuel-efficient vehicles.

Question 68

A tax designed to reduce the disparities in wealth between the rich and poor is called a(n)

A)entitlement program.
B)tariff.
C)regressive tax policy.
D)policy of redistribution.

Question 69

During the nineteenth century, the federal government received MOST of its revenue from

A)corporate taxes.
B)personal income taxes.
C)social insurance taxes.
D)tariffs.

Question 70

________ are government grants of cash or other valuable commodities such as land that are used to promote activities desired by government leaders.

A)Contracts
B)Business development funds
C)Categorical grants
D)Subsidies

Question 71

The Federal Reserve Board is composed of ________ members who are appointed to ________-year terms.

A)7; 4
B)7; 14
C)9; 4
D)9; 14

Question 72

The power to raise or lower the tax rate is part of

A)fiscal policy.
B)monetary policy.
C)the contracting power.
D)budgetary policy.

Question 73

The federal minimum wage is

A)the highest minimum wage that can legally be paid in the country, and state and local governments are not allowed to pass laws requiring higher levels of hourly compensation.
B)lower than the minimum wage currently required in two states, California and Washington.
C)lower than the minimum wage currently required in 29 states.
D)lower than the minimum wage currently required in all 50 states.

Question 74

The constitutional source of Congress's monetary and fiscal powers is in

A)Article I, Section 4.
B)Article I, Section 8.
C)the Tenth Amendment.
D)Article II, Section 4.

Question 75

________ taxation occurs when people in lower income brackets pay a larger percentage of their incomes in taxes.

A)Progressive
B)Regressive
C)Redistributive
D)Distributive

Question 76

A ________ is an incentive in the tax code for individuals and corporations to invest their money in ways that government officials desire in exchange for a reduction in tax liabilities.

A)categorical grant
B)loophole
C)block grant
D)subsidy

Question 77

Nondefense discretionary spending refers

A)only to what the government spends on Medicare.
B)only to what the government spends on Social Security.
C)to everything on which the government spends money outside of defense.
D)to everything on which the government spends money outside of defense and mandatory programs such as Social Security and Medicare.

Question 78

The phrase "starving the beast" is used to describe

A)the Republican Party's strategy of reducing taxes and increasing deficits in order to win support for federal spending cuts.
B)the Democratic Party's strategy of raising taxes on wealthy individuals in order to pay for social programs that benefit those at the lower end of the income distribution.
C)Congress's strategy of slowly reducing budget appropriations for unpopular programs over the course of many years rather than ending them immediately.
D)the federal government's strategy of taking power away from state governments by imposing an increasingly large number of regulations on their behavior.

Question 79

The Bank of the United States was terminated during the administration of

A)Alexander Hamilton.
B)Andrew Jackson.
C)Thomas Jefferson.
D)Ronald Reagan.

Question 80

The American Recovery and Reinvestment Act of 2009

A)passed with widespread bipartisan support in Congress.
B)passed Congress despite receiving no Republican votes in the House and only three Republican votes in the Senate.
C)failed because no Democrats voted for it in the House and only three Democrats voted for it in the Senate.
D)was an executive order issued by President Obama without explicit congressional approval.