Question 1

In the years after the Great Recession of 2008-2009 in the United States:

Accepted Answer

In the years following the Great Recession of 2008-2009, the Federal Reserve maintained low interest rates to stimulate economic growth. Additionally, inflation rates were generally low during this recovery period, making option C the correct choice.

Question 2

The region with the lowest level of government corruption is:

Accepted Answer

Scandinavia is consistently ranked as having the lowest levels of government corruption by organizations such as Transparency International.

Question 3

According to your text, two general economic concerns exist in the minds of the public: performance of the economy and ___________________.

Accepted Answer

distribution of benefits or provision of services

Question 4

Two things that governments can do to create greater equality are:

Accepted Answer

Option B suggests progressive taxation, which means that the wealthy will pay a larger portion of taxes compared to those with lower incomes. This creates a more equal distribution of resources in society. Additionally, subsidies for the poor will provide support and resources to help uplift and improve the living conditions of those who are struggling.

Question 5

A central bank is set up to:

Accepted Answer

A central bank is primarily responsible for controlling a country's monetary policy, which includes regulating interest rates to stabilize the economy. While central banks often work closely with the government, they are not typically responsible for handling government transactions or collecting taxes. They may, however, be responsible for printing currency and managing government assets. The option of redistributing wealth is not typically a primary function of a central bank. Therefore, the best choice is B.

Question 6

"Rent seeking" hurts the economy because:

Accepted Answer

Rent seeking involves seeking income through non-productive means, such as lobbying for government favors or monopolistic practices. This leads to an allocation of resources that is less efficient since resources are directed towards those who have political influence rather than towards those who can make the most productive use of them. This results in a transfer of wealth to the dominant coalition and away from other more productive uses of the resources, which hurts the economy.

Question 7

A reason for the failure of import substitution industrialization in Ghana is:

Accepted Answer

Import substitution industrialization in Ghana failed partly because factory owners exploited the lack of competition, leading to high prices and poor-quality goods, which did not encourage local consumption or industrial growth.

Question 8

Using the example of South Korea, this chapter suggests that negative pressures on government and policy-making from rent-seekers can be neutralized when the local ______________ simply does not support such thinking or behavior.

Accepted Answer

The answer of Using the example of South Korea, this...

Question 9

Baumol's disease focuses on the elasticity of the manufacturing sector as it creates prices for its end-use products.

Accepted Answer

Baumol's disease is not related to the elasticity of the manufacturing sector, but rather the phenomenon where the cost of providing services increases compared to the cost of manufacturing goods, leading to higher costs of services over time.

Question 10

The practice in underdeveloped countries of setting high tariffs to discourage imports and encourage the establishment of factories in their own states that could flourish without foreign competition is referred to as ______________ industrialization.

Accepted Answer

The answer of The practice in underdeveloped countries of setting...

Question 11

The main indicator of economic growth is:

Accepted Answer

Change in real per capita GDP is the most widely used indicator of economic growth as it reflects the overall increase in economic activity and accounts for changes in population and inflation. In contrast, inflation measures the rate of price increases, the performance of the stock market may not necessarily reflect overall economic growth, and the cost of a "market" basket only reflects changes in prices of a specific set of goods and services. Total GDP can also be an indicator of economic growth, but it does not account for changes in population and inflation, which is why real per capita GDP is a better indicator.

Question 12

The pressure from rising wages in manufacturing spills over to wages for service workers and in turn raises the cost of services. This linkage is called ________________________.

Accepted Answer

The answer of The pressure from rising wages in manufacturing...

Question 13

Two factors that improve unemployment, inflation, and economic growth simultaneously are:

Accepted Answer

Education and technological innovation can lead to increased productivity and efficiency, which in turn can lead to economic growth. Additionally, an educated workforce can attract businesses to invest in a country, creating jobs and reducing unemployment. Technological innovation can also lead to the creation of new industries and jobs. Finally, education can lead to higher incomes, which can help reduce inflation by increasing demand for goods and services.

Question 14

The state of the economy is a major factor in the evaluation of a government and ALL governments require revenue.

Accepted Answer

Revenue is needed by all governments to fund their activities and services. The state of the economy affects the amount of revenue a government can collect, which is why it is an important factor in evaluating a government's performance.

Question 15

The use of public resources for private gain is called _______________.

Accepted Answer

The answer of The use of public resources for private...

Question 16

A government that uses tax money to buy support is engaging in ___________.

Accepted Answer

The answer of A government that uses tax money to...

Question 17

A general rise in prices, indicating that the currency is worth less than it used to be, is called:

Accepted Answer

Inflation is the general rise in prices, indicating that the currency is worth less than it used to be. Interest refers to the cost of borrowing money, while profit and revenue refer to income earned by a company or individual. PPP (Purchasing Power Parity) is a measure of how much goods and services can be purchased with a given amount of currency in different countries.

Question 18

A transfer of money that does not relate to production is called _________.

Accepted Answer

The answer of A transfer of money that does not...

Question 19

The relationship between interest rates and unemployment in the short run is:

Accepted Answer

In the short run, when interest rates go up, borrowing becomes more expensive and consumers and businesses tend to spend less. This decline in economic activity often leads to a decrease in employment opportunities, causing unemployment to rise. Therefore, A is the correct choice.

Question 20

The ________________ of a government controls interest rates, manages transactions, oversees private financial institutions, and the ebb and flow of monetary reserves.

Accepted Answer

The answer of The ________________ of a government controls interest...

Quiz 5: Economic Policy of the State