Deck 16: Economic Policy

Question 1

What yearly inflation rate do monetarists argue ensures an adequate money supply for a healthy economy?

A) less than 1 percent
B) 1-3 percent
C) 3-5 percent
D) 5-7 percent
E) 7-9 percent

Answer 1

B

Question 2

Which of the following features is/are part of the American dream?

A) financial security
B) personal happiness and health
C) upward social mobility
D) success through hard work and persistence
E) All these answers are correct.

Answer 2

E

Question 3

According to Keynesian economics, what should the government do during an economic boom?

A) decrease government spending and possibly increase taxes
B) increase taxes and government spending
C) decrease taxes and possibly government spending
D) increase government spending and decrease taxes
E) increase government spending despite decreased revenues

Answer 3

A

Question 4

Who wrote Wealth of Nations, which argued in favor of a laissez-faire (hands-off) economic system?

A) Adam Smith
B) Benjamin Franklin
C) Thomas Hobbes
D) Jean-Jacques Rousseau
E) John Locke

Question 5

In 2009, President Obama and Congress passed the American Recovery and Reinvestment Act. This "stimulus package" is based on what type of economic theory?

A) supply-side
B) pure-capitalism
C) Keynesian
D) deregulation
E) monetarism

Question 6

Economists cite all these factors as evidence of a healthy economy EXCEPT

A) low unemployment.
B) stable consumer goods' prices.
C) improvements in individual productivity.
D) increased overall economic productivity.
E) a decrease in the national tax base.

Question 7

Which of the following products and goods is/are part of the Bureau of Labor Statistics' consumer price index, or CPI?

A) food
B) clothing and shelter
C) fuel and transportation costs
D) selected medical costs
E) All these answers are correct.

Question 8

Which economist developed the theory of monetarism?

A) John Maynard Keynes
B) Adam Smith
C) David Ricardo
D) Milton Friedman
E) Walt Rostow

Question 9

Which of the following is a hallmark of a pure capitalist economy?

A) public ownership of modes of production
B) government-mandated business practices
C) economic policy that is influenced by concern for the public good
D) government-free marketplace transactions
E) national policies that are enacted to influence the economy

Question 10

Fiscal policy is a combination of

A) tax policy and currency policy.
B) tax policy and economic policy.
C) tax policy and spending policy.
D) economic policy and currency policy.
E) budget policy and spending policy.

Question 11

All of these are considered features of a healthy economy by economists and government officials EXCEPT

A) an increase in currency supply.
B) low poverty and high literacy rates.
C) a low inflation rate.
D) expanding gross domestic product (GDP).
E) a low unemployment rate.

Question 12

What caused President H. W. Bush to abandon supply-side economic policies and increase taxes?

A) political pressure to increase social services
B) need for increased military funding
C) the pressure to deregulate major industries
D) the growing national debt
E) the emergent belief in monetarism

Question 13

The total value of all goods and service that are produced within a country's borders is known as

A) productive resources.
B) the gross national product.
C) the economic system.
D) the gross domestic product.
E) durable goods.

Question 14

Who argued that national governments should increase their spending to stimulate the economy during an economic recession?

A) Karl Marx
B) Adam Smith
C) David Ricardo
D) John Maynard Keynes
E) Milton Friedman

Question 15

Which era saw the national government take steps to regulate workplace rules and conditions?

A) late eighteenth century
B) early nineteenth century
C) late nineteenth century
D) early twentieth century
E) late twentieth century

Question 16

Which president introduced supply-side economics, which advocated tax cuts and a decrease in government regulation?

A) Franklin Roosevelt
B) George H. W. Bush
C) George W. Bush
D) Barack Obama
E) Ronald Reagan

Question 17

If all other factors were equal, which of following is the most important step one can take in the quest for the American dream?

A) buying a home
B) having a strong work ethic
C) staying loyal to an employer
D) starting a business
E) getting at least a college degree

Question 18

Which event led to the end of balanced budgets and the onset of deficit spending?

A) the War of 1812
B) the Mexican-American War
C) the Civil War
D) World War I
E) the Great Depression

Question 19

What type of economy is the U.S. economy?

A) pure capitalist economy
B) regulated capitalist economy
C) limited capitalist economy
D) limited mercantilist economy
E) regulated mercantilist economy

Question 20

Which of the following statements about monetarism is accurate?

A) It argues for the deregulation of the money supply.
B) It believes that too much money in circulation leads to high inflation.
C) It believes that too much money in circulation creates deflationary pressures on the economy.
D) It is based on the belief that discretionary spending by the government is necessary for a healthy economy.
E) It advocates cutting taxes and deregulating business to stimulate the economy.

Question 21

The deadline for Congress to complete budget reconciliation, the annual process of rewriting authorization legislation to comply with the concurrent budget resolution, is

A) May 15.
B) June 15.
C) July 15.
D) August 1.
E) August 15.

Question 22

Which of the following is income adjusted for inflation so that it can be compared across years?

A) per capita income
B) average income
C) real income
D) household income
E) median household income

Question 23

Which of the following programs is among those defined as mandatory spending obligations?

A) Social Security
B) Medicare
C) Medicaid
D) national debt payments
E) All these answers are correct.

Question 24

All of the following are considered nonsecurity discretionary expenditures EXCEPT

A) justice.
B) energy.
C) environment.
D) international affairs.
E) transportation.

Question 25

Which of the following is the income level in the middle of all household incomes?

A) per capita income
B) average income
C) real income
D) household income
E) median household income

Question 26

Which of the following is the total pretax earnings of all residents over the age of 15 living in a home?

A) per capita income
B) average income
C) real income
D) household income
E) median household income

Question 27

During the summer of 2011, a political debate over the need to decrease deficit spending centered on the need of Congress and the president to

A) sequester spending.
B) increase the debt ceiling.
C) control inflationary monetary spending.
D) spend the budget surplus.
E) approve a continuing resolution.

Question 28

Which of the following is/are among the criteria used by the United Nations to comparatively assess global living standards in the Human Development Index (HDI)?

A) a long and healthy life, educational opportunities, and decent standard of living
B) access to food, clothing, and shelter
C) living, fuel, and transportation costs
D) physical health, income levels, and educational access
E) access to adequate medical care, food, and shelter

Question 29

When is the president required by law to submit the executive budget to Congress?

A) first Monday in January
B) first Monday in February
C) first Monday in March
D) first Monday in April
E) first Monday in May

Question 30

Which of these terms describes the percentage of the population with income below the nationally designated poverty level?

A) poverty level
B) poverty rate
C) poverty threshold
D) poverty mark
E) poverty median

Question 31

How many appropriations bills must Congress approve by the end of June to fund the national government each fiscal year?

A) 6
B) 10
C) 12
D) 16
E) 26

Question 32

What type of tax takes a larger percentage of lower income earners' income and a smaller percentage of the income of those who earn more?

A) progressive tax
B) proportional tax
C) regressive tax
D) direct tax
E) indirect tax

Question 33

Which of these agencies monitors the implementation of the previous fiscal year's budget?

A) Office of Management and Budget (OMB)
B) House Budget Committee
C) Senate Budget Committee
D) Congressional Budget Office (CBO)
E) Government Accountability Office (GAO)

Question 34

Which of the following provides the largest share of tax revenue in the FY 2013 budget?

A) social insurance receipts
B) individual income tax
C) corporate tax
D) excise taxes
E) estate and gift taxes

Question 35

Through its power to grant tax expenditures, the national government provides financial support to which of the following groups?

A) homeowners
B) individual taxpayers
C) businesses, colleges, and universities
D) state and local governments
E) All these answers are correct.

Question 36

When must both the House and Senate agree to the concurrent budget resolution each fiscal year?

A) March 1
B) March 15
C) April 1
D) April 15
E) May 1

Question 37

What type of tax takes a larger percentage of wealthier taxpayers' income and a smaller percentage of the income of those who earn less?

A) progressive tax
B) proportional tax
C) regressive tax
D) direct tax
E) indirect tax

Question 38

What date signals the beginning of the national government's fiscal year (FY)?

A) January 1
B) April 1
C) July 1
D) August 1
E) October 1

Question 39

What type of tax takes the same percentage of each taxpayer's income?

A) progressive tax
B) proportional tax
C) regressive tax
D) direct tax
E) indirect tax

Question 40

Which governmental body has the constitutionally delegated power of the purse?

A) president
B) judiciary
C) Congress
D) federal reserve
E) department of the treasury

Question 41

Describe the features of business regulation and social regulation in the U.S. economy today.

Question 42

Congress and which president established the Federal Reserve System in 1913?

A) William McKinley
B) Theodore Roosevelt
C) Woodrow Wilson
D) Calvin Coolidge
E) Herbert Hoover

Question 43

After World War II, the United States and its international partners have pursued which type of trade policy?

A) subsidy-based
B) protectionist
C) limited protectionist
D) regional free trade
E) free trade

Question 44

What organization, which came into existence in 1995, continues the free trade advocacy of the General Agreement on Tariffs and Trade?

A) the North American Free Trade Organization
B) the World Trade Organization
C) the United Nations
D) the International Trade Organization
E) the North American Treaty Organization

Question 45

Social regulatory policy

A) is fully funded by the government.
B) increases the cost of doing business.
C) does not have an economic impact, unlike business regulation.
D) deals exclusively with issues of public health.
E) aims to preserve competition in the marketplace.

Question 46

Discuss the course and identify benefits of the pursuit of free trade policy by the United States after World War II.

Question 47

Identify the factors necessary for people to live the American dream today.

Question 48

Which of the following was not among the basic objectives established by the General Agreement on Tariffs and Trade (GATT)?

A) nondiscrimination in trade matters
B) elimination of regulatory barriers to trade
C) imposition of nontariff trade barriers
D) negotiation of trade conflicts with one another
E) removal of special taxes on imported goods

Question 49

Within the budgetary process, what is a continuing resolution, and by when must it be approved?

Question 50

Outline the key features of Keynesian economic theory.

Question 51

Which of the following is the newest of the business-regulating government agencies that was established to help protect consumers of banking and financial industries?

A) Interstate Commerce Commission (ICC)
B) Federal Trade Commission (FTC)
C) Consumer Financial Protection Bureau (CFPB)
D) Congressional Budget Office (CBO)
E) Securities and Exchange Commission (SEC)

Question 52

Which of the following was/were established as part of the Fair Labor Standards Act of 1938?

A) standards for a legal workweek
B) overtime pay
C) minimum wages
D) limits on child labor
E) standards for a legal workweek, overtime pay, minimum wages, recordkeeping of hours, and child labor limits

Question 53

Outline the theories of monetarism and identify monetarists' ideal level of inflation.

Question 54

All of the following are responsibilities of today's Fed EXCEPT

A) enacting regulations for the purpose of decreasing the national debt.
B) setting monetary policy aimed at price stability.
C) maintaining the stability of financial markets.
D) providing financial services to depository institutions.
E) supervising and regulating banking institutions.

Question 55

All of the following are tools used by the Fed for setting monetary policy EXCEPT

A) lowering the reserve requirement.
B) authorizing a government spending sequester.
C) lowering the discount rate.
D) selling Treasury Securities to decrease the money supply.
E) increasing the reserve requirement and discount rate.

Question 56

What is the CPI, and what is it used for by the national government?

Question 57

Compare and contrast the two forms of discretionary spending programs.

Question 58

Explain the main features and arguments of supply-side economics.

Question 59

Discuss the difference between a pure capitalist economy and a regulated capitalist economy.

Question 60

To navigate the global economy, each country has its own ________, a collection of tax laws and regulations to support its international commerce.

A) business regulations
B) trade barriers
C) tariffs
D) subsidies
E) trade policy