Question 1

Government can promote trade by ____________________ tariffs and having few or no limits on imports,or can restrict trade by ____________________ tariffs.

Accepted Answer

Government can promote trade by lowering tariffs and having few or no limits on imports, or can restrict trade by raising tariffs.

Question 2

Which refers to the total amount of money owed to lenders by the United States government?

Accepted Answer

The total amount of money owed to lenders by the United States government is known as the national debt. This includes both publicly held debt (owned by individuals, corporations, and foreign governments) and intragovernmental debt (money the government owes to itself, such as Social Security trust funds). The national debt has been a contentious issue in U.S. politics, as some argue that it poses a significant burden on future generations and others advocate for increased government spending to stimulate the economy.

Question 3

By and large,banks are regulated at the ____________________ level through the ____________________.

Accepted Answer

Banks are regulated at the national level in the United States through the Federal Reserve System, which is the central banking system of the country. The Federal Reserve System is responsible for overseeing and regulating banks and financial institutions to maintain stability in the financial system and prevent economic crisis.

Question 4

Which refers to the annual difference between revenues collected by the national government and its outlays?

Accepted Answer

The annual difference between revenues collected by the national government and its outlays is called the national deficit.

Question 5

Which refers to the total amount of goods and services produced in a year within the borders of a country?

Accepted Answer

Gross Domestic Product (GDP) refers to the total amount of goods and services produced in a year within the borders of a country.

Question 6

Inheritance taxes are generally ____________________ because only wealthy people tend to have much to pass on to heirs.

Accepted Answer

Inheritance taxes are generally progressive because they are designed to be based on the value of the inheritance received. Wealthy individuals tend to have more valuable assets to pass on to their heirs, so they end up paying a higher percentage of their inheritance in taxes. This makes the tax more fair and equitable for those with fewer resources.

Question 7

Which is a network of banks chartered by the federal government that loans money to and regulates the activity of commercial banks?

Accepted Answer

The Federal Reserve System is a network of banks chartered by the federal government that regulates the activity of commercial banks and loans money to them. The Department of the Treasury manages the country's money, the Bank of the United States no longer exists, the U.S. Mint produces coins and some commemorative items, and the International Monetary Fund is an international organization that provides loans and financial assistance to countries experiencing economic difficulties.

Question 8

By law,the ____________________ is required to submit a budget to Congress by the first Monday in February.

Accepted Answer

By law, the President is required to submit a budget proposal to Congress by the first Monday in February. This budget proposal is known as the President's Budget, and it outlines the administration's priorities for the upcoming fiscal year, including proposed spending levels and revenue projections. The President's Budget serves as a starting point for Congressional budget negotiations and is an important policy document that helps shape the direction of federal spending and taxation.

Question 9

By law,the Federal Reserve Board is supposed to be ____________________ political pressure,meaning that its decisions ____________________.

Accepted Answer

The Federal Reserve Board is designed to be independent of political pressure, meaning its decisions do not need to be approved by the president or Congress.

Question 10

The federal budget ____________________ to be signed by the president.It is a resolution,which is binding on ____________________ when it makes appropriations decisions.

Accepted Answer

The federal budget does not need to be signed by the president because it is a resolution, not a law. It is binding on Congress when making appropriations decisions.

Question 11

Consumption-based taxes,such as sales taxes,are generally considered to be ____________________ since lower income citizens are most heavily burdened by these taxes.

Accepted Answer

Consumption-based taxes, such as sales taxes, take a larger percentage of income from lower income citizens, making them regressive. This is because lower income citizens spend a higher percentage of their income on necessary goods and services, which are subject to the tax, while higher income citizens spend a smaller percentage of their income on such goods and services. Therefore, consumption-based taxes are generally considered to be regressive.

Question 12

A tax is ____________________ if it places a greater financial burden on the poor.

Accepted Answer

A regressive tax is one that takes a larger percentage of income from those with low incomes, making it a greater burden on the poor.

Question 13

By requiring banks to keep more money in their vaults,the Federal Reserve Board can effectively pull money out of the economy,thereby slowing ____________________.Conversely,by loosening reserve requirements,the Federal Reserve Board can pump more money into the economy,which usually leads to ____________________ interest rates and ___________ access to loans.

Accepted Answer

By increasing reserve requirements, the Federal Reserve reduces the amount of money banks can lend, potentially slowing inflation. Lowering reserve requirements allows banks to lend more, typically resulting in lower interest rates and easier access to loans.

Question 14

The federal cigarette tax is an example of a ______________.

Accepted Answer

The federal cigarette tax is a fiscal policy because it determines how much revenue the government will collect from the sale of cigarettes, and it can be used to influence people's behavior by making cigarettes more expensive. It is not a constituent policy, which focuses on responding to the needs and desires of specific groups of voters, or a causal policy, which aims to solve a specific problem. It is also not a deterministic policy, which relies on predicting future events or outcomes, or a monetary policy, which involves controlling the money supply and interest rates.

Question 15

A tax is ____________________ if it places a greater financial burden on the wealthy.

Accepted Answer

A tax that places a greater financial burden on the wealthy is called a progressive tax. This is because the tax rate increases as the income level of the taxpayer increases. A regressive tax, on the other hand, places a greater burden on the lower-income earners as the tax rate decreases as income level decreases. The other answer choices, inductive, plenary, and plenipotentiary, do not relate to tax systems.

Question 16

Since World War II,the U.S.government has spent ____________________ the typical western European country on social welfare policies,nationalized health care,and public education,both on a per capita basis and as a percentage of gross domestic product.

Accepted Answer

The U.S. has historically spent less on social welfare, nationalized health care, and public education compared to typical Western European countries, both per capita and as a percentage of GDP.

Question 17

Which refers to a government policy that involves taxation or spending?

Accepted Answer

Fiscal policy refers to the government's use of taxation and spending to influence the economy. It involves government revenue and expenditure, budget deficits or surpluses, and debt management. The other options (constituent policy, causal policy, and deterministic policy) do not relate specifically to taxation or spending, while E) monetary policy refers to the central bank's control over the money supply and interest rates.

Question 18

The ____________________ is/are like a blueprint for the entire structure,while ____________ is/are like detailed instructions on how to accomplish each item that makes up the overall structure.

Accepted Answer

The budget serves as a blueprint for the entire financial structure, outlining the overall plan, while appropriations bills provide the detailed instructions on how to allocate funds for each specific item within that plan.

Question 19

The United States spends far more on ____________________ than any other country.

Accepted Answer

The United States spends far more on defense than any other country, with a budget of over $700 billion in 2020.

Question 20

One motivation for crafting and ratifying the Constitution was that the states competed against one another for trade with foreign countries.If states set their own trade policies,they would all face a/an ____________________.

Accepted Answer

The answer is collective-action problem because if each state sets its own trade policy, it creates a situation in which each state will be competing for its own interest and not considering others, which will create collective-action problems as they will need to cooperate to resolve the trade issues.

Quiz 15: Economic Policy

Government can promote trade by tariffs and having few or no limits on imports,or can restrict trade by tariffs.