Deck 13: Introduction to Public Policy

Question 1

The institution established by Congress in the early twentieth century to implement monetary policy is the:

A) Third Bank of the United States.
B) Federal Reserve Bank of the United States.
C) Federal Deposit Insurance Corporation.
D) Federal Reserve System.

Answer 1

D

Question 2

Although sometimes a seeming adversary of business and industry when acting in a regulatory role, and often disliked by the private sector for its taxes and regulations, government is nonetheless essential to the functioning of a market economy because:

A) when it works, government provides the law and order, predictability, and accountability that market economies need to survive and thrive.
B) only government can create a labor force.
C) governments are best able to give businesses access to capital that they need.
D) only the public sector can finance all the infrastructure and facilities that private sector organizations need.

Answer 2

A

Question 3

Although the networks and infrastructure that keep the Internet humming are often products of private industry, its origins lie in networks developed by the American federal government, largely in connection with national defense, as well as research.Today, of course, most of the country's fastest-growing businesses are Internet companies. From what you have read, how unusual was this digital development in relation to how provision of public goods has supported business and technological development over time?

A) Highly unusual, since public goods usually just help individuals, and not businesses, get from place to place, or communicate, more efficiently
B) Somewhat unusual, since private industry has most often handled such large development on its own
C) Not at all unusual, since the federal government has repeatedly helped build or support markets through pubic goods and service provision over time
D) Highly unusual, since the military has been reluctant to share technological innovations due to national security concerns

Answer 3

C

Question 4

Although Alexander Hamilton developed policies to promote industry at the beginning of the American republic's history, it was not until _______________, that the federal government began playing a central role in promoting economic growth.

A) the Civil War, which brought commerce to a halt in large swaths of the country for years
B) the late nineteenth century, when small farmers and business people began clamoring for regulation
C) the twentieth century, especially with the Great Depression and the New Deal programs created to battle it
D) the 1970s, when runaway inflation and a stagnant economy threatened American economic stability

Question 5

Congressional attempts to plan for the economic effects of taxing and spending are known as:

A) fiscal policy planning.
B) open-market operations.
C) progressive taxing and spending.
D) pecuniary policy planning.

Question 6

Beginning in 1971, the federal government tried to _______________ by implementing strict controls over what wages people could be paid for their work, what rent their real estate could bring, and what interest they could get on their money.

A) bring socialism to the United States
B) institute a new form of monetary policy
C) fight inflation (a consistent rise in the general level prices)
D) promote more market efficiency

Question 7

A public policy is a law, rule, statute, regulation, or order that:

A) is crafted to meet only the social or economic ends of a number of public officials.
B) expresses the government's goals.
C) must serve the public interest, if it is to be accepted.
D) must be acceptable to all Americans, if it is to last.

Question 8

Who controls the Federal Reserve System?

A) Largely the president, with the Council of Economic Advisers and the Senate playing advisory roles
B) Presidents, who have the power to change system policies through executive orders and control of its board members and chair
C) The system's chair and board, who are appointed by presidents (with Senate confirmation), but who make decisions independently
D) Institutional members, although presidents can have some influence over them through appointed chairs and board members

Question 9

The federal government put millions of people back to work during the Great Depression by:

A) breaking up monopolies, subsidizing thousands of new businesses, and expanding credit through monetary policy.
B) the skillful use of monetary policy, along with tax cuts aimed at economic expansion.
C) the skillful use of fiscal policy in order to help employers and expand educational opportunities.
D) having them work with newly created agencies to construct bridges, walkways, and buildings that can still be seen across the country today.

Question 10

The Federal Reserve has the power to change the interest rate at which banks lend money to each other through a process called:

A) open-market operations.
B) adjustment of the discount rate.
C) adjustment of reserve requirements.
D) adjustment of the federal funds rate.

Question 11

The federal Social Security Act of 1935 created _________________, jointly administered by the federal and state governments, designed to help workers whose jobs have been terminated through no fault of their own.It does so by providing payments to these workers for a short time.

A) the Earned Income Tax Credit (EITC)
B) an individual job subsidy program
C) a fully paid worker training program
D) an unemployment insurance program

Question 12

The federal government measures the performance of the American economy, excluding income from foreign investments, at any given time through its measure of:

A) gross national product (GNP), which takes in the market value of all goods manufactured in the United States.
B) gross domestic product (GDP), which includes the market value of all goods and services produced in the United States.
C) per capita income, which is the average income for all Americans, with adjustments for inflation and taxation.
D) mean family income, which is the average income for all American households, with adjustments for inflation and taxation.

Question 13

A voluntary agreement between two or more private persons that facilitates the exchange of property or services, and which is given weight when it can be legally enforced, is called a:

A) policy.
B) barter or exchange.
C) market standard.
D) contract.

Question 14

In 2010, Congress passed tougher financial regulations in response to harsh criticism of the Securities and Exchange Commission (SEC) for what analysts charged was ____________________ prior to the recessionary years of 2008-2009.

A) the SEC's driving the financial sector to near collapse through overregulation
B) weak SEC oversight of its financial sector
C) the SEC's allowing new monopolies to develop in the banking and finance sectors
D) failing to enforce provisions of a reform bill, passed a few years earlier,

Question 15

Market standards that are often provided by governments, such as weights and measures, are important to the functioning of a market economy because:

A) most people would find it difficult to figure out measures or recognize what common agricultural goods such as a tomato were otherwise worth.
B) society would quickly fall into chaos without standards of every sort, from scientific to moral standards.
C) they help people understand what they are bargaining for.
D) they help people recognize the value of public goods.

Question 16

The federal government's annual taxing and spending decisions are important to the American economy because:

A) they directly and almost instantaneously affect Federal Reserve decisions about the discount rate.
B) decisions about how much to tax and spend affect the overall health of the economy.
C) they can directly increase or reduce the risks that banks run in making loans to consumers and businesses.
D) poor decisions or unintended consequences can keep the Federal Reserve from effectively fighting inflation when it must.

Question 17

The ____________________, created after the stock market crash of 1929, requires companies to disclose information about any stocks and bonds they are selling, as well as inform buyers of investment risks and protect investors against fraud.

A) Federal Reserve System
B) Works Progress Administration
C) Council of Economic Advisers
D) Securities and Exchange Commission

Question 18

Monetary policy, of the sort typically handled by a country's central bank or banking system, involves:

A) printing money whenever there is a need for it, and sending it to banks.
B) raising and lowering the price of goods in the market.
C) managing a country's economy through the supply of money and credit.
D) recommending that governments lower or raise annual deficits and debt in response to market changes.

Question 19

The Federal Reserve has the power to directly increase or restrict the amount of money available to consumers to spend or invest through:

A) open-market operations, whereby the Fed buys and sells government securities.
B) federal funds adjustment, which involves interest rates charged by one bank to another.
C) adjustment of the reserve requirement, which is the amount of cash and securities that every bank must have available.
D) the discount rate, which is the interest it charges on the loans it extends to member banks.

Question 20

Why might government's defining, recognizing, and protecting property of every sort, from real estate and land to intellectual property, be so essential to the functioning of a market economy?

A) Because without such government action, democracy would cease to function
B) Because governments rely on property taxes to function, and then properly regulate the marketplace
C) Because property ownership claims are meaningless without legal recognition and enforcement
D) Because without government, societies would have no means of adopting standard weights and measures

Question 21

Medicare and Social Security, which are social programs that people pay for through what are legally referred to as tax "contributions" (even though those contributions are mandatory), are known as _____________ programs.

A) confiscatory entitlement
B) contributory
C) mandatory welfare
D) discretionary

Question 22

The proportion of the federal budget devoted to mandatory spending is:

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

Question 23

Public-assistance programs, such as Temporary Assistance for Needy Families (TANF) and Medicaid, which provide benefits to people based on their need rather than taxes paid by them, are often popularly referred to as "welfare" programs.To federal government analysts, however, they are referred to as __________________ social programs.

A) discretionary entitlement
B) mandatory entitlement
C) tax expenditure
D) noncontributory

Question 24

In 2017, nearly 70 percent of the federal budget consisted of spending items that could not be controlled through the regular congressional budget process, such as payments for social programs.With this much of the budget dedicated to continuing obligations, it means that Congress ________________.

A) has no proper procedures available to let it fulfill its budgetary responsibilities
B) has delegated far too much control over the federal budget to presidents
C) is fine with being a gigantic insurance company with a sideline business in national security, as long as it makes constituents happy
D) does not have much discretionary spending available, leaving it less able to meet demand for new public goods and services or to fund new initiatives

Question 25

In 1996, Congress abolished Aid to Families with Dependent Children, a long-running program that provided benefits to families with low or no income, and replaced it with a more restrictive, state block grants-based benefits program called:

A) the Earned Income Tax Credit (EITC).
B) Supplemental Security Income (SSI).
C) Temporary Aid to Families with Dependent Children (TAFDC).
D) Temporary Assistance to Needy Families (TANF).

Question 26

Sales taxes, other "consumption" taxes on items including liquor and gasoline, and federal Social Security contributions are called regressive taxes because:

A) only backwards governments depend on them for revenue.
B) the less money you make, the higher the percentage of your income that goes toward paying these taxes.
C) the more you make, the higher the percentage of your income that goes toward paying these taxes.
D) they tend to be less favored by political progressives-that is, left-leaning Democrats or independent party supporters.

Question 27

The government can force a large business to break up into smaller companies if it can show that the business ________________, as it did with the telephone company AT&T and its affiliated regional Bell System companies in the 1980s, through antitrust regulation.

A) has established a monopoly over certain goods or services
B) has regularly engaged in unfair trading practices
C) represents a threat to public safety, due to high pricing for a vital communications service
D) has colluded with other companies in its market to keep prices high

Question 28

A federal program that provides uniform minimum monthly benefits to people with little to no income who are elderly, blind, or disabled is:

A) Medicaid.
B) Supplemental Security Income (SSI).
C) Medicare.
D) Social Security.

Question 29

Although it continues to be popular, the Social Security system is certain to face increasing demographic pressure over time as members of the Baby Boom generation continue retiring, because:

A) Congress has not appropriately saved the monies that most Baby Boomers paid into the system.
B) the national debt will have to be paid off before all Baby Boomers can receive Social Security benefits.
C) the ratio between workers paying Social Security contribution taxes and retirees will continue to decline.
D) increasing numbers of current workers are choosing not to make Social Security contributions.

Question 30

In the early years of the American republic, the federal government tried to support domestic markets by restricting imported goods through tariffs, which are:

A) taxes on imports, thereby raising their prices and discouraging their entry into domestic markets.
B) a form of consumption or sale taxes, ones that discourage importer entry into domestic markets.
C) a type of government subsidy that governments of developing countries use to keep importers from harming their fledging economies.
D) taxes on goods shipped to other countries, used as a means of discouraging them in order to keep the supply of goods and, thus, prices in check.

Question 31

While the federal government has long given companies and individuals tax deductions or deferrals for economic development purposes, state and local governments have, since at least the 1980s, tried to attract new jobs and amenities through similar means.Professional sports teams, shopping center developers, manufacturers, and the film and television industries have all benefited from the provisions that many analysts call "tax expenditures" and supporters call "tax incentives." Why could such measures be called either of the above?

A) They are ultimately not monies that go to the government, but they should have.
B) They represent monies that ultimately do not go to governments, but are otherwise considered mandatory spending measures.
C) They provide monies to encourage a particular activity, but ultimately they do not count as government spending.
D) They do not count as mandatory spending, but are instead counted as discretionary spending for governmental accounting purposes.

Question 32

__________________ refers to government actions or plans, such as taxing or spending measures, that are created with balancing or equalizing a population's distribution of income in mind.

A) Policy redistribution
B) Policy socialism
C) Policy progressivism
D) Tax expenditure development

Question 33

Programs like Social Security are referred to as "entitlement programs" because:

A) people who receive benefits under the programs have repeatedly acted like they are owed monies by the government.
B) the people who use the term think Social Security beneficiaries are fully deserving of them.
C) they guarantee-that is, entitle-benefits to certain groups of people, based on categories established by federal law.
D) people often sue to receive them, showing that they feel entitled to the monies.

Question 34

Noncontributory programs, such as Medicaid, are implemented in part through means testing, meaning that:

A) potential benefit recipients have their eligibility determined through a process involving proof of income and need.
B) the programs are administered by the states, which all have strict eligibility rules.
C) the programs' generosity differs from place to place, given a federal formula involving recipient incomes and local cost of living.
D) potential benefit recipients must prove only that they live below the poverty line.

Question 35

Most spending on social welfare programs in the United States goes to programs for:

A) poor people.
B) middle-class people of all ages.
C) the elderly.
D) low-income working people.

Question 36

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

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

Question 37

The largest single expansion in contributory programs after 1935 was the establishment in 1965 of this program, which provides medical insurance coverage for elderly persons who are already eligible for Social Security benefits:

A) Medicare.
B) Medicaid.
C) Supplemental Security Income.
D) the Patient Protection Act program.

Question 38

Budgetary spending items that cannot be easily avoided, such as interest payments on the national debt, are called __________ spending.

A) subsidy
B) mandatory
C) discretionary
D) deficit

Question 39

The Supplemental Nutrition Assistant Program (SNAP), which replaced the federal food stamps of earlier times with debit cards that can be used to buy food, is an example of a program that offers __________ benefits to lower-income people.

A) entitlement
B) mandatory
C) universal
D) in-kind

Question 40

A grant of cash or another commodity, such as land, to an individual or organization that is used to promote an activity or action desired by the government is called:

A) a contractual obligation.
B) discretionary spending.
C) a subsidy.
D) an entitlement.

Question 41

Whenever you deposit money into a checking or savings account at a traditional retail bank or other financial institution that advertises the fact that it is a Federal Deposit Insurance Corporation (FDIC) member-and most banks are, in order to remain competitive- you can be certain that:

A) up to $250,000 of any of your deposited money will be insured against bank failure by the FDIC.
B) your bank is a member of the Federal Reserve System, and thus thoroughly regulated and on sound financial footing.
C) any home mortgage lending it does is heavily regulated and insured by the federal government.
D) it is unlikely to ever face a crushing and possibly ruinous demand for credit, given that it is a Federal Reserve member.

Question 42

By delivering social benefits through the tax code (such as with the Earned Income Tax Credit or individual coverage subsidies in the case of the Affordable Care Act), delegating authority to the state governments (such as with Temporary Assistance for Needy Families), and relying on government contractors or the private sector to provide government benefits, policymakers:

A) succeeded in attempts to squelch an ever-increasing abundance of calls for limited government and reductions in federal spending.
B) increased the efficiency of government policy programs by harnessing the power of competition and free-market forces in their policy reform or design efforts.
C) provided more ways to administer, implement, and evaluate social policy programs, and hold them accountable for outcomes.
D) added to the complexity and fragmentation of social programs, and made them harder to administer, implement, evaluate, and hold accountable for outcomes.

Question 43

The federal government became involved in subsidizing the education of college and university students as a result of the 1944 GI Bill, which ____________.

A) created the Pell Grant program
B) offered an array of grants and tax credits to support higher education
C) provided veterans returning from World War II with college and university tuition vouchers
D) provided veterans returning from World War II, and their families, with federal higher education loans

Question 44

A prerequisite for a market economy is a government that maintains competition across the various sectors of the economy.

Question 45

Despite developing an increasing number of social programs over time, since the advent of Social Security in 1935, the United States still has a much less robust welfare state than many other developed democracies.This means, comparatively, that it has ____________.

A) not developed as extensive a set of social programs or benefits
B) a much larger "hidden" welfare state through tax expenditures
C) a higher percentage of its budget dedicated to mandatory spending
D) developed more programs that only benefit middle-class people

Question 46

Popularly known as "Obamacare," this law, __________, was created and designed to ensure that tens of millions of Americans who could not afford health insurance would have access to at least basic coverage.It also expanded Medicaid.

A) the American Health Care Act
B) the Better Care Reconciliation Act
C) the Barack Obama Patient Protection Act
D) the Affordable Care Act

Question 47

The federal government has the power to break up a monopoly.

Question 48

In the United States, the government adjusts the welfare system in cycles to be sure that the support given is uncomfortable enough that people will prefer working to retiring on the low income that they will get from welfare.

Question 49

The government tries to promote economic stability by regulating competition.

Question 50

An effective market economy requires governmental rules for the enforcement of contracts.

Question 51

A consistent increase in the government's intervention in the economy is called inflation.

Question 52

Before the 1930s, neither the federal nor state governments sought to promote full employment.

Question 53

Government makes a market economy possible.

Question 54

Each year the federal government spends more money than it takes in from revenue, as it has since the late 1990s.The difference is added to the _________________, or the total amount of money owed by the U.S.government, which sat at $20 trillion in late 2017.

A) national debt
B) national deficit
C) federal notes receivable
D) federal debt ceiling

Question 55

The federal role in American elementary and secondary education was substantially boosted during the George W.Bush administration with his ____________________ program, which created stronger national testing and school accountability mandates.In 2015, after years of controversy over testing and funding, it was replaced with a more state-friendly program.

A) National Education Standards & School Choice
B) No Child Left Behind
C) Every Student Succeeds
D) National Defense Education Act

Question 56

The gross domestic product (GDP) is the market value of the goods and services produced in the economy.

Question 57

Pell Grants, which help pay for the higher education tuition costs of low-to-moderate-income families, cover about 30 percent of the cost of a typical university education today, compared to about 80 percent in the 1970s.What is behind the decrease?

A) Congress has refused to dedicate more spending to the program over time.
B) There has been a dramatic increase in student housing costs, especially for those living in dormitories.
C) More students have sought and received grants in recent years, even as Congress has kept the program's funding level flat.
D) The size of the federal grants has not kept up with rising tuition prices.

Question 58

Because nearly all social policies are redistributive-that is, they take money from one group and give it to another-they are hard to pass.If a proposed social policy that would provide benefits to a large group of people is adopted:

A) it tends to stick around for a few years, before being torn to pieces through incremental legislation and executive orders, unless it helps the wealthiest Americans.
B) corporate-funded independent expenditure groups will carry out long-term, extensive marketing campaigns to have it repealed.
C) it generally tends to stick around on the statute books, even when opponents continue to decry it.
D) Congress will have to wait until an economic crisis hits to defund the social policy.

Question 59

For many decades following the presidency of Andrew Jackson, the United States had no central bank and thus no means of implementing national monetary policy due largely to opposition from:

A) Federalist leaders who sought to keep control in the hands of private, state-chartered banks.
B) monied elites who largely profited from an unstructured system, despite the occasional, ruinous financial panic.
C) followers of Jackson, who won the presidency by railing against urban financial elites.
D) agricultural interests, who feared being dominated by urban, industrial capitalists.

Question 60

When the economy began a downturn in 2007, one that rapidly worsened when the global financial system came to the brink of collapse in 2008, the Federal Reserve significantly lowered the ______________ in order to boost the economy, eventually lowering it to nearly rock bottom before pushing it upwards again in 2018.

A) federal funds rate (i.e., the interest rate charged by one bank to another)
B) discount rate (i.e., the interest it charges on loans it extends to member banks)
C) reserve requirement (i.e., the amount of cash and securities that every bank must have to cover withdrawals)
D) open-market rate (i.e., the interest it charges on loans it extends to member banks)

Question 61

If there were no Social Security, half of all senior citizens would be living below the poverty line (BPL).

Question 62

Unlike Social Security, Medicare is a means-tested program.

Question 63

In the first two decades of the twenty-first century, about 40 percent of farms in the United States received subsidies.

Question 64

The national government administers the TANF program.

Question 65

The power of government to set conditions on companies seeking to sell goods or services to government agencies is called contracting power.

Question 66

Social Security is a contributory program.

Question 67

During the 1970s and early 1980s, inflation was one of America's most vexing problems.

Question 68

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

Question 69

Protecting the environment generally complements the economic goals of policymakers.

Question 70

The federal government's first independent regulatory commission, the Interstate Commerce Commission (ICC), was designed to control the monopolistic practices of railroads.

Question 71

Under the current Medicare system, the national government exercises very tight control over the quality of the services and the level of fees that health care providers charge.

Question 72

Governmental programs are usually touted by their proponents as serving the public interest, except when Americans are deeply divided on an issue.

Question 73

In 2018, President Trump pledged to support a consumer protection agency established by Congress after the 2008-2009 financial crisis, and to strengthen its ability to oversee consumer lending and credit card issuer practices.

Question 74

The Federal Reserve can affect the total amount of credit available in the United States.

Question 75

A system of 12 banks in the United States that facilitates exchanges of cash, checks, and credit, as well as regulating member banks, is called the Bank of the United States.

Question 76

The American income tax is a regressive tax.

Question 77

In the early 1970s, President Richard Nixon proposed a universal comprehensive health insurance plan that was considerably more generous and government-controlled than the Affordable Care Act (ACA).

Question 78

Subsidies were the dominant form of public policy of the national government and the state and local governments throughout the nineteenth century.

Question 79

To increase the supply of money available to consumers, the Federal Reserve sells government securities.

Question 80

Most states set TANF payments high enough to bring families well above the federal poverty line.