Deck 17: Economic Policy

Question 1

What is the source for the money in the Social Security Trust Fund?

A) sales taxes on luxury goods and services
B) taxes on wages paid by the employer and employee
C) property taxes
D) estate taxes

Answer 1

B

Question 2

Laissez-faire economics holds which of the following to be true?

A) The government should raise interest rates during a recession.
B) The government should not take an active role in the economy.
C) The government should do everything possible to reduce unemployment.
D) The government should lower interest rates during a recession.

Answer 2

B

Question 3

The annual shortfall when federal revenues are less than expenditures is known as which of the following?

A) the balance of payments
B) the budget deficit
C) the national debt
D) the trade deficit

Answer 3

B

Question 4

Which of the following entities is responsible for setting the discount rate which then influences interest rates in the United States?

A) Congress
B) the Office of Management and Budget
C) the Executive Office of the President
D) the Federal Reserve Board

Question 5

Which of the following is true about Social Security?

A) It provides benefits to retirees.
B) It is a means-tested program.
C) It is only available to the very wealthy.
D) It is supported by property taxes.

Question 6

The total market value of all goods and services produced in an area during a year is termed which of the following?

A) national income quotient
B) gross domestic product
C) maximum national product
D) minimum domestic product

Question 7

What is a government program called that provides benefits to all citizens who meet eligibility requirements?

A) a basic program
B) an entitlement program
C) an envelopment program
D) a recessionary program

Question 8

Inflation is best understood as the rate at which __________.

A) gross domestic product expands
B) prices for goods and services increase
C) the federal government increases taxes to raise revenue
D) the Federal Reserve Board expands the money supply

Question 9

What is a means-tested program?

A) a program that extends benefits based on your age at retirement
B) a program that provides benefits based on demonstrated need
C) a program that extends benefits mostly to those who passed a skills-based test
D) a program that provides benefits based on lifetime contributions

Question 10

Regulatory legislation at the end of the nineteenth century primarily dealt with __________.

A) trusts
B) the environment
C) labor unions
D) technology

Question 11

Unemployment insurance is what type of federal program?

A) non-means-tested
B) means-tested
C) monetary policy
D) fiscal policy

Question 12

Which of the following constitutes the largest portion of the federal budget?

A) Medicare and health
B) food and agriculture
C) military
D) Social Security, unemployment, and labor

Question 13

The primary purpose of the Troubled Assets Relief Program (TARP)was to __________.

A) bail out the auto industry
B) bail out the banking sector
C) reduce the annual budget deficit
D) respond to rising unemployment

Question 14

What is deregulation in the American political economy?

A) an increase in the barriers to economic productivity
B) the elimination of business and environmental regulations
C) the removal of barriers to productivity and growth
D) the removal of barriers to the collection of taxes

Question 15

What are the two main purposes of monetary policy?

A) to lend money to consumers and borrow money from banks
B) to control inflation and limit unemployment
C) to help developing countries and American business interests
D) to equalize income disparity among citizens and lower the cost of goods and services

Question 16

Which of the following is true with respect to Keynesian economic policy?

A) Keynesian economic policy relies on government taxes and adjustments to the money supply to control inflation and unemployment.
B) Keynesian economic policy relies on tax cuts and expenditure increases by government to control inflation and unemployment.
C) Keynesian economic policy uses the money supply to control inflation and unemployment.
D) Keynesian economic policy relies on the generosity of private charities to address the worst effects of economic downturns.

Question 17

The main goal of fiscal policy is __________.

A) to ensure that money is available to state governments for capital projects
B) to pay down the federal debt
C) to increase exports into the United States
D) to stimulate or slow down economic growth

Question 18

Which of the following terms describes U.S.economic policy during much of the nineteenth century?

A) fiscalism
B) Keynesianism
C) laissez-faire
D) monetarism

Question 19

What is a primary tool that monetary policy uses to affect the overall economy?

A) tax rates
B) foreign monetary investment
C) government spending
D) the discount rate

Question 20

What do economists use gross domestic product to measure?

A) the rate of government spending in the economy
B) the rate of tariffs applied to goods imported into the United States
C) the total value added by government expenditures in the economy
D) the total value of goods and services produced in an area

Question 21

U.S.monetary policy involves which of the following?

A) import and export policies
B) the discount rate and the money supply
C) supply-side economics
D) the national debt and the annual deficit

Question 22

An entitlement program provides benefits to __________.

A) all citizens of the United States
B) citizens who have made payroll tax contributions
C) citizens who meet eligibility criteria
D) only the very poor

Question 23

Which of the following is true regarding mandatory government spending policies?

A) They are designed to increase the money supply to improve economic growth.
B) They are designed to help states avoid having a budget surplus.
C) They create a serious ongoing financial burden on the federal government.
D) They reduce the overall cost of doing business overseas.

Question 24

Lowering the discount rate would have which of the following effects?

A) It would decrease the overall rate of taxation.
B) It would discourage banks from increasing their borrowing from the Federal Reserve.
C) It would encourage banks to borrow more and to extend more loans at lower rates.
D) It would increase the amount of federal bonds sold to foreign countries.

Question 25

Which of the following is a major reason for government regulation of the economy?

A) to increase the overall level of taxes paid by producers in the economy
B) to increase the general level of educational attainment
C) to eliminate the costs of doing business for corporations
D) to promote economic development

Question 26

Which of the following was a major contributor to the economic crisis that began in 2008?

A) the collapse of the subprime mortgage industry
B) massive cuts in the federal budget deficit
C) increased wage demands by labor unions
D) inflationary policies by the Federal Reserve

Question 27

If the Federal Reserve Board needed to curb inflation,it would most likely __________.

A) raise taxes
B) lower taxes
C) increase government spending
D) raise the discount rate

Question 28

Which of these is most consistent with the philosophy of Keynesianism?

A) increasing the discount rate
B) increasing the debt owned by foreign countries
C) increasing the money supply
D) the 2009 American Recovery and Reinvestment Act

Question 29

Which of the following is accurate with regard to the national debt in the United States?

A) The national debt as a percentage of GDP is about the same in the United States as it is in Japan.
B) The national debt as a percentage of GDP is lower in the United States than it is in any other Western democracy.
C) The national debt as a percentage of GDP is higher in the United States than it is in any other Western democracy.
D) The national debt as a percentage of GDP is about the same as the GDP.

Question 30

If the Federal Reserve wanted to increase lending by banks,what could it do to reserve requirements?

A) Lower the discount rate on bank reserve requirements.
B) Lower the rate of taxation on bank reserve requirements.
C) Lower the reserve requirements for banks.
D) Increase the discount rate on bank reserve requirements.

Question 31

Which of these statements best describes the influence of adjustments to the discount rate made by the Federal Reserve?

A) They always lead to lower rates of marginal taxes.
B) They can lead to higher unemployment in years of budget deficits.
C) They can spur economic growth by increasing the cost of money for business.
D) They can spur economic growth by increasing the available money supply.

Question 32

In general,a recession does which of these?

A) contributes to higher unemployment rates
B) lasts at least a year
C) leads to a decrease in the national debt
D) reduces the cost of goods and services

Question 33

Which of the following is an example of monetary policy?

A) decreasing federal spending
B) lowering state property and sales taxes
C) increasing taxes on wealthy Americans
D) lowering the discount rate

Question 34

Upon taking office in 2009,which of the following did President Obama advocate to deal with the economic crisis?

A) increasing the interest rates
B) increasing government spending
C) lowering taxes
D) reducing taxes

Question 35

If the Federal Reserve wanted to slow the rate of economic growth,it would most likely __________.

A) lower the discount rate
B) increase the discount rate
C) encourage the president to lower taxes
D) increase the unemployment rate

Question 36

If you support laissez-faire economic policies,you would generally favor __________.

A) a reduction in the amount of economic regulation by the government
B) an increase in the level of taxes assessed by state governments
C) an increase in the collective bargaining rights for labor unions
D) an increase in the tariffs assessed on goods imported into the United States

Question 37

In an economic slowdown,Keynesian economic policy would advocate __________.

A) increasing inflation
B) increasing government spending
C) decreasing the money supply
D) increasing the unemployment rate

Question 38

Which of the following is a concern about the viability of Social Security?

A) The rate of Social Security payroll taxes will continue to decrease.
B) The number of current retirees contributing to the fund will continue to decrease.
C) The working poor will not have access to Social Security after 2030.
D) There will be too few workers contributing to support the increasing number of retirees.

Question 39

In a(n)__________ state,the government takes an active role in guiding and regulating the private economy.

A) capitalist
B) democratic
C) interventionist
D) laissez-faire

Question 40

Which of the following provides the greatest source of revenue for the federal government?

A) individual income taxes
B) corporate income taxes
C) payroll taxes
D) excise taxes

Question 41

The Temporary Assistance for Needy Families program (TANF)requires that mothers provide information about a child's father to receive full benefits.

Question 42

The U.S.Constitution prohibits the use of taxing and spending to influence the national economy.

Question 43

Which of the following is a possible solution to the problem of long-term solvency in the Social Security program?

A) increasing the Social Security taxes withheld from employees
B) decreasing the states' financial contribution
C) decreasing the minimum retirement age
D) ensuring that there are fewer workers per retiree

Question 44

Keynesians would likely approve of the recent government stimulus package passed by Congress to deal with the recent economic crisis.

Question 45

In responding to the 2008 recession,the federal government relied solely on fiscal policy to restart economic growth.

Question 46

The money supply is determined by fiscal policy.

Question 47

Which statement most closely reflects a laissez-faire attitude?

A) The federal government should bail out large corporations whose collapse would jeopardize the U.S. economy.
B) The federal government should work with state governments to help small business owners learn how to manage their finances.
C) The federal government should provide loans to assist business owners with environmental cleanup.
D) The federal government should not intervene, trusting in the market to balance itself.

Question 48

Since the economic crisis that began in 2008,the national debt has gradually declined.

Question 49

The national debt is the yearly difference between government revenues and the deficit.

Question 50

Deregulation of which of the following industries was a major contributor to the collapse of the subprime mortgage industry?

A) the airline industry
B) the energy industry
C) the banking industry
D) the medical technology industry

Question 51

Keynesian economic policies promote deficit spending in order to reduce __________ and stimulate the economy.

A) exports
B) imports
C) inflation
D) unemployment

Question 52

The largest number of Americans benefit from which means-tested income security program?

A) Social Security
B) Supplemental Nutrition Assistance Program
C) Supplemental Security Income
D) Temporary Assistance for Needy Families

Question 53

Monetary policy uses the money supply to affect growth in the U.S.economy.

Question 54

The 2008 federal bailout of the financial industry is generally referred to as TANF.

Question 55

Congress has the primary responsibility for setting the discount rate.

Question 56

What do Medicare,Medicaid,and Social Security have in common?

A) They are all health care programs.
B) They are all entitlement programs.
C) They are all programs that only the elderly are eligible for.
D) They all provide food stamps to people in poverty.

Question 57

Supplemental Security Income is available to illegal immigrants.

Question 58

Which of the following is a disadvantage of addressing an economic downturn through fiscal policy?

A) Fiscal policy results in layoffs of government employees.
B) Deficit spending has long-term consequences.
C) It frequently results in tax increases.
D) It tends to benefit the wealthy more than the poor and the working class.

Question 59

If a government wanted to use monetary policy to increase economic growth,which of the following steps should be taken?

A) Decrease the discount rate to increase the amount of money in supply.
B) Increase the amount of foreign currency kept on reserve in U.S. banks.
C) Increase the amount of public revenue available for investment by raising taxes.
D) Increase the government spending on public works projects.

Question 60

All U.S.citizens are guaranteed to receive Medicaid when they retire,regardless of their level of income.

Question 61

Social Security is a(n)__________ program because it provides benefits to all qualifying individuals.

Question 62

The two primary tools of monetary policy are regulating the nation's supply of money and setting the __________.

Question 63

A __________ program is an entitlement program that distributes benefits on the basis of demonstrated need.

Question 64

__________ is a reduction in market controls in favor of market-based competition.

Question 65

The federal government uses fiscal policy when it decreases __________ in an attempt to spur spending and stimulate the economy.

Question 66

Keynesians in Congress would support increasing __________ as a means to address high levels of unemployment.

Question 67

What is fiscal policy?

Question 68

The money supply __________ when the Federal Reserve Board increases the discount rate.

Question 69

The American Recovery and Reinvestment Act was a combination of tax cuts and spending increases,both of which are hallmarks of __________ policy.

Question 70

The large-scale,monopolistic businesses that dominated industries such as oil,sugar,whiskey,and meatpacking in the late 1800s are known as __________.

Question 71

The federal government relies on a(n)__________ tax paid by employers to fund unemployment insurance.

Question 72

The __________ is the difference between annual government expenditures and revenues.

Question 73

What is the difference between budget deficits and the national debt? Assess which is harder to overcome.

Question 74

In 2008,Congress passed __________ to help stabilize banks and the financial industry.

Question 75

In 1913,Congress created the __________ to regulate the national banking system and provide for flexibility in the money supply.

Question 76

One reason for the increase in health care costs is the aging population in the United States.

Question 77

What was the purpose of TARP,and how was it designed to work?

Question 78

Deregulation of the banking industry contributed to the collapse of the mortgage industry,which contributed to the economic downturn that began in 2008.

Question 79

Social Security is an entitlement program.

Question 80

Social Security is a pension program that collects and invests contributions from workers and then returns these funds with interest to retirees.