Question 1

When the federal government takes in less money than it spends, it runs a ______.

Accepted Answer

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Question 2

Under the monetarist theory, a policy of "easy money" will inevitably lead to increases in the consumer price index.

Accepted Answer

Monetarist theory asserts that the quantity of money in circulation has a direct impact on inflation. According to this theory, increasing the money supply too rapidly can lead to an increase in demand for goods and services, causing prices to rise. Therefore, a policy of easy money, which implies increasing the money supply, can lead to inflation (as measured by the consumer price index).

Question 3

Analyze the benefits versus the risks of monetary policy as described in your textbook.

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Question 4

Compare and contrast economic policy with fiscal policy and explain their role in shaping national economic outcomes.

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Question 5

Under the Congressional Budget and Impoundment Act of 1974, the president's proposed budget must be reviewed first by the Office of Management and Budget (OMB)and next by the Congressional Budget Office (CBO)before being submitted to Congress.

Accepted Answer

The president's proposed budget is first reviewed by the Office of Management and Budget (OMB), but it is then submitted directly to Congress. The Congressional Budget Office (CBO) does not review the president's budget proposal before it is submitted to Congress; instead, the CBO provides independent analyses of budgetary and economic issues to support the Congressional budget process.

Question 6

If the federal government takes in more money than it spends, it runs a ______.

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Question 7

How do entitlement programs pose a threat to the ability of the federal government to use fiscal policy to strengthen the national economy?

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Question 8

The consumer price index (CPI)can be used to measure inflation and deflation.

Accepted Answer

The CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. By tracking changes in the CPI, it is possible to determine whether prices are rising (inflation) or falling (deflation) over time. Therefore, the CPI can be used to measure inflation and deflation.

Question 9

A type of loan repayment plan in which individual student debtors could have their loan payments reduced and eventually forgiven based upon their incomes and ability to pay off their student debts is known as ______.

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Question 10

Why may student loan forgiveness be a "bad policy"? Do you agree or disagree with arguments made in your textbook? Explain your answer.

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Question 11

Fluctuations of economic activity around a long-term trend with periods of expansion and contraction are known as the gross domestic product (GDP).

Accepted Answer

Fluctuations of economic activity around a long-term trend with periods of expansion and contraction are known as the business cycle, not the gross domestic product (GDP). GDP measures the total value of all goods and services produced over a specific time period within a country.

Question 12

Economic tools that are designed to regulate the amount of money in the economy (in circulation and in deposits)are collectively known as ______.

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Question 13

How do you think policy makers should go about balancing the goals of ensuring equality of access to higher education for all Americans while addressing the competing demands for the nation's scarce financial resources?

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Question 14

By the end of 2015, the ______ continued to grow to nearly $19 trillion.

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Question 15

The United States has a pure laissez-faire form of economy.

Accepted Answer

The United States has a mixed economy, which combines elements of both free market capitalism and government intervention.

Quiz 17: Economic Policy