Deck 15: Economic Policy

Question 1

In the United States, the welfare system is periodically reformed to ensure that the people affected have a substantial level of comfort and assistance.

Answer 1

False

Question 2

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

Answer 2

True

Question 3

The gross domestic product (GDP) is the market value of the goods and services produced in the economy, including foreign-sources income and investments.

Answer 3

False

Question 4

Markets always produce efficient outcomes.

Question 5

Government makes a market economy possible.

Question 6

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

Question 7

A devastating form of market failure that occurs when speculative buying drives up the price of goods is called an explosion.

Question 8

An individual who owns his or her car and insures it usually pays all the costs associated with running it.

Question 9

If a member of the Porcelain Enamel Association agrees to produce a certain type of enamel according to the trade association's specifications that member can be sued if he or she cuts corners and evades those standards.

Question 10

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

Question 11

Many market standards are developed by private-sector trade associations.

Question 12

Many sectors of agriculture receive federal subsidies.

Question 13

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

Question 14

When the national government uses its powers to provide a public good, it does so in a manner that is equally advantageous to all parties.

Question 15

According to Keynesian principles, public investment is an important source of growth in the American economy.

Question 16

Laws of exchange have deemed certain kinds of exchanges off-limits.

Question 17

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

Question 18

A public good is a good that is provided for the government by citizens.

Question 19

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 over retiring on the low income that they will get from welfare.

Question 20

The government tries to promote economic stability by regulating competition.

Question 21

Protecting the environment generally promotes the economic goals of policy makers.

Question 22

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

Question 23

The 2010 Dodd-Frank financial reform bill created an agency to protect financial consumers from banks and other financial institutions.

Question 24

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

Question 25

Republicans are more likely to support military spending.

Question 26

In the United States, wealthy Americans have the same amount of political influence as other Americans.

Question 27

The national government gives grants-in-aid directly to individuals to build their businesses.

Question 28

The federal government spends more on Social Security than it does on national defense.

Question 29

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 30

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

Question 31

The income tax was added to the Constitution with the Twenty-Seventh Amendment.

Question 32

Republicans and Democrats tend to have the same federal budgetary priorities.

Question 33

Democrats are more likely to support education spending.

Question 34

The American income tax system is regressive overall.

Question 35

Wealthier Americans tend to have more progressive views on economic issues than the rest of the population.

Question 36

The cost and availability of credit in the United States are manipulated by changing the federal funds rate.

Question 37

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

Question 38

In the nineteenth century, the federal government received most of its revenue from tariffs.

Question 39

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

Question 40

The government holds the view that consumers are responsible to protect themselves and does little in terms of consumer protection.

Question 41

Why does the United States adjust the welfare system to allow certain benefits to persist for only certain periods of time?

A)Humans are fundamentally entitled to only a certain amount of government benefits.
B)Welfare service provision is easier to administer over shorter time periods.
C)Limited allowance of benefits minimizes the provision of public goods.
D)Limitations create incentives that make people prefer working to the low income they get from welfare.

Question 42

Trespass laws exemplify a type of law that gives concrete meaning to what constitutes

A)property.
B)sovereignty.
C)responsibility.
D)accountability.

Question 43

Wealthy Americans are much less likely to support progressive income taxes and social welfare programs.

Question 44

Universal compulsory education is an example of government efforts to

A)enforce contracts.
B)create a labor force.
C)set market standards.
D)ensure law and order.

Question 45

The 2010 Supreme Court case Citizens United v. FEC increased the lobbying power of business groups.

Question 46

During the 2008 financial crisis, which program bought failing loans and purchased stock in American automobile companies?

A)Social Security
B)TRICARE
C)Market Access Program
D)Troubled Assets Relief Program

Question 47

A city decides that its economy would improve dramatically if its harbor were deeper. What is the city providing if it pays to dredge (deepen) the harbor?

A)a public good
B)free riding
C)swamp-draining
D)pork barrel

Question 48

What is the term for a law, rule, statute, or edict that expresses the government's goals and often incorporates rewards and punishments to promote their attainment?

A)executive order
B)public policy
C)preamble
D)popular mandate

Question 49

Which term describes a good that may be enjoyed by anyone after it is provided and may not be denied to anyone after it is provided?

A)public liability
B)public good
C)externality
D)solid good

Question 50

The differences between the private and social costs of economic behavior are known as

A)setbacks.
B)variances.
C)deviations
D)externalities.

Question 51

Why are market standards so important to a functioning market economy?

A)They require contract enforcement.
B)They define property rights.
C)They help people understand what they are bargaining for.
D)They help people recognize the value of public goods.

Question 52

Poorhouses and vagrancy laws are examples of government efforts to

A)enforce contracts.
B)create a labor force.
C)set market standards.
D)provide public goods.

Question 53

The costs of driving a gas-guzzling car also include the widely distributed impact of smog and the effects of carbon monoxide emissions, which economists refer to as negative

A)dispersions.
B)dissipations.
C)externalities.
D)market standards.

Question 54

What is the first feature inherent in the very idea of government?

A)law and order
B)rules for liability
C)creation of a labor force
D)maintenance of a market structure

Question 55

Individuals or firms engaging in private behavior that has negative social consequences are said to be creating

A)externalities.
B)intangible costs.
C)unfunded mandates.
D)fungible expenditures.

Question 56

Common terminology, uniform weights and measures, and consistent specifications for both quantities and qualities of goods are called

A)trade agreements.
B)contractual terms.
C)capital specifications.
D)market standards.

Question 57

A voluntary agreement between two or more private persons that governs future conduct is called

A)a policy.
B)a market.
C)a contract.
D)an exchange.

Question 58

A contract is meaningless unless it is

A)notarized.
B)a written agreement.
C)enforceable.
D)regulated.

Question 59

The provision of an interstate highway system is considered to be a

A)liability.
B)labor cost.
C)public good.
D)market structure.

Question 60

Laws that structure the conditions under which you can sell your property are called

A)trade agreements.
B)market standards.
C)collective bargaining agreements.
D)laws of exchange.

Question 61

The most important federal agency in regards to the regulation of financial markets is the

A)Office of Management and Budget (OMB).
B)Securities and Exchange Commission (SEC).
C)Independent Regulatory Commission (IRC).
D)Office of Market Management (OMM).

Question 62

A surge in housing prices followed by dramatic decreases in housing prices is an example of

A)collective exploitation.
B)collective engagement.
C)a bubble.
D)a bull market.

Question 63

What is one of the most important ways government can protect welfare and property?

A)by maintaining law and order
B)by granting legal monopolies for the most profitable industries
C)by supporting the unfettered use of credit-default swaps
D)by purchasing shares of stock in all major sectors of the American economy

Question 64

Which term describes a company that provides all the goods and services for a particular market such that competition is nonexistent?

A)simplex
B)unigarchy
C)autogarchy
D)monopoly

Question 65

What are the basic prerequisites of economic growth?

A)strong public investment, technological innovation, and a productive workforce
B)government-established monopolies, strong investment, and technological innovation
C)freedom of religion, technological innovation, and a productive workforce
D)freedom of the press, racial equality, and strong investment

Question 66

The basic prerequisites of economic growth are

A)different in the United States than in any other country.
B)different in the Western world than elsewhere in the world.
C)different in the Middle East than elsewhere in the world.
D)similar everywhere in the world.

Question 67

Which of the following is something the federal government does to promote economic prosperity?

A)allows skilled immigrants to enter to the United States and work
B)encourages high inflation
C)incentivizes workers to retire early
D)drafts teenagers for military service

Question 68

Before the 1930s, what were the attitudes of the federal and state governments toward full employment?

A)Both federal and state governments worked to promote full employment.
B)The federal government worked to promote full employment, but the state governments did not.
C)The state governments worked to promote full employment, but the federal government did not.
D)Neither the federal nor the state governments worked to promote full employment.

Question 69

Why did Congress begin to adopt national business regulations?

A)It wanted to increase the amount of money the government earns from monopolies.
B)It thought government-sponsored monopolies were the best way to provide services to consumers in most industries.
C)It wanted to alleviate the burdens companies faced of adapting to the regulatory inconsistencies across states.
D)It wanted to encourage the development of an automotive industry that would strengthen America's position in the world economy.

Question 70

If businesses were allowed to compete without government regulation, monopolies

A)would be prevented by entrepreneurs starting new businesses.
B)would develop in several market sectors.
C)would provide lower prices than competing firms.
D)would invest heavily in worker training programs.

Question 71

The government is more likely to provide a public good under which of the following conditions?

A)The difference between the private cost and the social cost of economic behavior is minimal.
B)The private cost of some behavior far exceeds the social cost.
C)The private cost of some behavior equals the social cost.
D)No individual or firm is likely to make the good available.

Question 72

The collapse of a major bubble almost always leads to

A)decreases in the price of gold.
B)calls for freedom from government regulation.
C)demands for government intervention.
D)a secondary bubble in the same market.

Question 73

When Microsoft was sued for business practices that allegedly could have made it the only viable provider of certain software, it was accused of trying to form a(n)

A)simplex.
B)oligarchy.
C)autogarchy.
D)monopoly.

Question 74

The market value of the goods and services produced in an economy minus income from foreign investments equals the

A)total national product.
B)gross domestic product.
C)net national worth.
D)net domestic worth.

Question 75

An instance where the market does not produce an efficient outcome is called

A)a market failure.
B)a black Tuesday.
C)an insolvent equilibrium.
D)irrational exuberance.

Question 76

The problem of asymmetrically distributed information, when sellers know something about their product that buyers do not, is recognized as a potential source of

A)monopoly.
B)trade deficit.
C)market failure.
D)contract abrogation.

Question 77

Which term describes a market failure resulting from speculative buying that drives up the price of major commodities to levels exceeding their intrinsic value?

A)collective exploitation
B)collective engagement
C)inflation
D)bubble

Question 78

The market value of the goods and services produced in an economy is the

A)gross national product (GNP).
B)total domestic product (TDP).
C)net national worth.
D)net domestic worth.

Question 79

Which term describes the inefficient allocation of society's economic resources?

A)trade deficit
B)black market
C)market failure
D)inflationary spiral

Question 80

According to Keynesian principles, which of the following actions by the federal government provides a means to spark economic growth?

A)public investment
B)creation of monopolies
C)deregulation
D)decreasing the size of the bureaucracy