Question 1

A fiscal policy solution to inflation would be to

Accepted Answer

A) increase government spending. 
B) lower tariffs and other barriers to trade. 
C) decreasing government spending. 
D) raise the discount rate. 
E) decrease the tax rate. 
A) increase government spending. 
B) lower tariffs and other barriers to trade. 
C) decreasing government spending. 
D) raise the discount rate. 
E) decrease the tax rate. C

Question 2

Define the term monetary policy,and describe three ways the Fed implements monetary policy.

Accepted Answer

Monetary policy is based on manipulation of the amount of money in circulation.Monetarists believe in tightening or loosening the money supply as a way of slowing or invigorating the economy.Economist Milton Friedman was a proponent of monetarism.Control of the money supply rests with the Federal Reserve System,or the Fed for short.The Fed can influence monetary policy by lowering or raising the interest charged when member banks borrow money from their regional Federal Reserve bank,by raising or lowering the percentage of money members banks must hold in reserve,and by buying selling of government securities.

Question 3

Democrats in Washington have usually responded to high levels of unemployment with

Accepted Answer

A) reduced government spending. 
B) increased government spending. 
C) increased government taxes. 
D) decreased government taxes. 
E) decreased government regulation. 
A) reduced government spending. 
B) increased government spending. 
C) increased government taxes. 
D) decreased government taxes. 
E) decreased government regulation. B

Question 4

Which of the following statements is true?

Accepted Answer

A) The national debt was eliminated in 1998. 
B) Demand-side policy cannot be used to slow down an economy. 
C) Demand-side stimulation typically provides more immediate help to low-income citizens more than does supply-side stimulation. 
D) The highest budget deficit in U.S.history was $59 billion. 
E) Demand-side policy suggests that government spending should increase more during and economic recession than an economic depression. 
A) The national debt was eliminated in 1998. 
B) Demand-side policy cannot be used to slow down an economy. 
C) Demand-side stimulation typically provides more immediate help to low-income citizens more than does supply-side stimulation. 
D) The highest budget deficit in U.S.history was $59 billion. 
E) Demand-side policy suggests that government spending should increase more during and economic recession than an economic depression.

Question 5

Keynesian economics emphasizes ________ as a means of curtailing economic downturns.

Accepted Answer

A) reduced taxes 
B) increased government spending 
C) decreased regulation 
D) decreased inflation 
E) increased taxes 
A) reduced taxes 
B) increased government spending 
C) decreased regulation 
D) decreased inflation 
E) increased taxes

Question 6

Government benefits for business include all of the following EXCEPT

Accepted Answer

A) loan guarantees and direct loans. 
B) corporate tax breaks. 
C) a national transportation system. 
D) minimum-wage laws. 
E) a national education system. 
A) loan guarantees and direct loans. 
B) corporate tax breaks. 
C) a national transportation system. 
D) minimum-wage laws. 
E) a national education system.

Question 7

The Federal Reserve plays a large part in establishing ________ policy.

Accepted Answer

A) monetary 
B) military 
C) fiscal 
D) budgetary 
E) security 
A) monetary 
B) military 
C) fiscal 
D) budgetary 
E) security

Question 8

The Great Recession,which began in 2008,was precipitated primarily because the federal government was too lax in regulating

Accepted Answer

A) computer technology. 
B) the buying and selling of stocks. 
C) interest rates charged to banks. 
D) subprime mortgages. 
E) the buying and selling of junk bonds. 
A) computer technology. 
B) the buying and selling of stocks. 
C) interest rates charged to banks. 
D) subprime mortgages. 
E) the buying and selling of junk bonds.

Question 9

The highest rate of inflation (13 percent)since World War II occurred in ________.

Accepted Answer

A) 1955 
B) 1963 
C) 1979 
D) 1991 
E) 2002 
A) 1955 
B) 1963 
C) 1979 
D) 1991 
E) 2002

Question 10

Which of the following government agencies regulates various aspects of business operations?

Accepted Answer

A) Federal Trade Commission 
B) Interstate Commerce Commission 
C) Consumer Financial Protection Bureau 
D) all of these: the Federal Trade Commission; the Interstate Commerce Commission; and the Antitrust Division of the Justice Department 
E) None of these answers is correct. 
A) Federal Trade Commission 
B) Interstate Commerce Commission 
C) Consumer Financial Protection Bureau 
D) all of these: the Federal Trade Commission; the Interstate Commerce Commission; and the Antitrust Division of the Justice Department 
E) None of these answers is correct.

Question 11

Advocates of deregulation are primarily concerned with

Accepted Answer

A) efficiency. 
B) equity. 
C) externalities. 
D) public safety. 
E) political expediency. 
A) efficiency. 
B) equity. 
C) externalities. 
D) public safety. 
E) political expediency.

Question 12

The Tennessee Valley Authority is

Accepted Answer

A) an electricity industry owned by the United States. 
B) a private industry regulated by the United States. 
C) a private electricity industry exempt from government regulation. 
D) a private environmental organization that receives federal funding. 
E) a private environmental organization with power to regulate industry. 
A) an electricity industry owned by the United States. 
B) a private industry regulated by the United States. 
C) a private electricity industry exempt from government regulation. 
D) a private environmental organization that receives federal funding. 
E) a private environmental organization with power to regulate industry.

Question 13

In The Wealth of Nations (1776),Adam Smith made all of the following arguments for laissez-faire capitalism,EXCEPT

Accepted Answer

A) the desire for profit is the invisible hand that guides a capitalist system. 
B) the government should not be allowed any role whatsoever in the economy. 
C) private firms should be left alone to make their production and distribution decisions. 
D) firms will produce a good when there is a demand for it. 
E) certain areas of the economy were better run by government agencies. 
A) the desire for profit is the invisible hand that guides a capitalist system. 
B) the government should not be allowed any role whatsoever in the economy. 
C) private firms should be left alone to make their production and distribution decisions. 
D) firms will produce a good when there is a demand for it. 
E) certain areas of the economy were better run by government agencies.

Question 14

What did Congress do in 1995 to reduce overregulation?

Accepted Answer

A) It cut funding for regulatory agencies like the EPA and Securities and Exchange Commission. 
B) It passed the Airlines Deregulation Act,which eliminated government-set airfares and the requirement that airlines provide service to smaller-sized cities. 
C) It restricted the president's ability to directly request administrative regulations from agency heads. 
D) It cut the budget of the Food and Drug Administration. 
E) It enacted legislation that prohibits administrators in some instances from issuing a regulation unless they can show that its benefits outweigh its costs. 
A) It cut funding for regulatory agencies like the EPA and Securities and Exchange Commission. 
B) It passed the Airlines Deregulation Act,which eliminated government-set airfares and the requirement that airlines provide service to smaller-sized cities. 
C) It restricted the president's ability to directly request administrative regulations from agency heads. 
D) It cut the budget of the Food and Drug Administration. 
E) It enacted legislation that prohibits administrators in some instances from issuing a regulation unless they can show that its benefits outweigh its costs.

Question 15

Judged in the context of the full range of public policies,the government in the United States has been

Accepted Answer

A) equally hostile to the interests of business and labor. 
B) equally supportive of the interests of business and labor. 
C) substantially more supportive of business than labor. 
D) substantially more supportive of labor than business. 
E) substantially more supportive of left-wing radicals than conservatives. 
A) equally hostile to the interests of business and labor. 
B) equally supportive of the interests of business and labor. 
C) substantially more supportive of business than labor. 
D) substantially more supportive of labor than business. 
E) substantially more supportive of left-wing radicals than conservatives.

Question 16

The creation of the Food and Drug Administration and the passage of the Securities and Exchange Act were intended to

Accepted Answer

A) promote equity in the economy. 
B) eliminate the problem of externalities in the economy. 
C) destroy the legal foundation of the business trust. 
D) promote efficiency in the economy. 
E) None of these answers is correct. 
A) promote equity in the economy. 
B) eliminate the problem of externalities in the economy. 
C) destroy the legal foundation of the business trust. 
D) promote efficiency in the economy. 
E) None of these answers is correct.

Question 17

The tax cuts pushed by President George W.Bush while in office were premised largely on

Accepted Answer

A) demand-side economics. 
B) supply-side economics. 
C) helping the lowest-income Americans. 
D) monetary policy. 
E) Keynesian economics. 
A) demand-side economics. 
B) supply-side economics. 
C) helping the lowest-income Americans. 
D) monetary policy. 
E) Keynesian economics.

Question 18

About how much of annual federal spending goes to pay interest on the national debt?

Accepted Answer

A) $30 million 
B) $300 million 
C) $30 billion 
D) $300 billion 
E) $900 billion 
A) $30 million 
B) $300 million 
C) $30 billion 
D) $300 billion 
E) $900 billion

Question 19

If the economic problem is low productivity and high unemployment,the fiscal policy action on the demand side would be to

Accepted Answer

A) increase taxes. 
B) cut business taxes. 
C) increase spending. 
D) decrease spending. 
E) None of these answers is correct. 
A) increase taxes. 
B) cut business taxes. 
C) increase spending. 
D) decrease spending. 
E) None of these answers is correct.

Question 20

The Fed is directed by a board of governors whose seven members

Accepted Answer

A) serve for 14 years. 
B) hold office during good behavior,in essence a lifetime appointment. 
C) serve for 4 years. 
D) retain their seat as long as the president who nominated them is in office. 
E) serve for no more than three consecutive 6-year terms. 
A) serve for 14 years. 
B) hold office during good behavior,in essence a lifetime appointment. 
C) serve for 4 years. 
D) retain their seat as long as the president who nominated them is in office. 
E) serve for no more than three consecutive 6-year terms.

A fiscal policy solution to inflation would be to

Define the term monetary policy,and describe three ways the Fed implements monetary policy.

Democrats in Washington have usually responded to high levels of unemployment with

Which of the following statements is true?

Keynesian economics emphasizes ________ as a means of curtailing economic downturns.

Government benefits for business include all of the following EXCEPT

The Federal Reserve plays a large part in establishing ________ policy.

The Great Recession,which began in 2008,was precipitated primarily because the federal government was too lax in regulating

The highest rate of inflation (13 percent)since World War II occurred in ________.

Which of the following government agencies regulates various aspects of business operations?

Advocates of deregulation are primarily concerned with

The Tennessee Valley Authority is

In The Wealth of Nations (1776),Adam Smith made all of the following arguments for laissez-faire capitalism,EXCEPT

What did Congress do in 1995 to reduce overregulation?

Judged in the context of the full range of public policies,the government in the United States has been

The creation of the Food and Drug Administration and the passage of the Securities and Exchange Act were intended to

The tax cuts pushed by President George W.Bush while in office were premised largely on

About how much of annual federal spending goes to pay interest on the national debt?

If the economic problem is low productivity and high unemployment,the fiscal policy action on the demand side would be to

The Fed is directed by a board of governors whose seven members

Political Thinking and Political Culture: Becoming a Responsible Citizen

Constitutional Democracy: Promoting Liberty and Self-Government

Federalism: Forging a Nation

Civil Liberties: Protecting Individual Rights

Equal Rights: Struggling Toward Fairness

Public Opinion and Political Socialization: Shaping the Peoples Voice

Political Participation: Activating the Popular Will

Political Parties,candidates,and Campaigns: Defining the Voters Choice

Interest Groups: Organizing for Influence

The News Media: Communicating Political Images

Congress: Balancing National Goals and Local Interests

The Presidency: Leading the Nation

The Federal Bureaucracy: Administering the Government

The Federal Judicial System: Applying the Law

Income,welfare,and Education Policy: Providing for Personal Security

Foreign Policy: Protecting the American Way

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Exam 15: Economic and Environmental Policy: Contributing to Prosperity

A fiscal policy solution to inflation would be to

Define the term monetary policy,and describe three ways the Fed implements monetary policy.

Democrats in Washington have usually responded to high levels of unemployment with

Which of the following statements is true?

Keynesian economics emphasizes ________ as a means of curtailing economic downturns.

Government benefits for business include all of the following EXCEPT

The Federal Reserve plays a large part in establishing ________ policy.

The Great Recession,which began in 2008,was precipitated primarily because the federal government was too lax in regulating

The highest rate of inflation (13 percent)since World War II occurred in ________.

Which of the following government agencies regulates various aspects of business operations?

Advocates of deregulation are primarily concerned with

The Tennessee Valley Authority is

In The Wealth of Nations (1776),Adam Smith made all of the following arguments for laissez-faire capitalism,EXCEPT

What did Congress do in 1995 to reduce overregulation?

Judged in the context of the full range of public policies,the government in the United States has been

The creation of the Food and Drug Administration and the passage of the Securities and Exchange Act were intended to

The tax cuts pushed by President George W.Bush while in office were premised largely on

About how much of annual federal spending goes to pay interest on the national debt?

If the economic problem is low productivity and high unemployment,the fiscal policy action on the demand side would be to

The Fed is directed by a board of governors whose seven members

Political Thinking and Political Culture: Becoming a Responsible Citizen

Constitutional Democracy: Promoting Liberty and Self-Government

Federalism: Forging a Nation

Civil Liberties: Protecting Individual Rights

Equal Rights: Struggling Toward Fairness

Public Opinion and Political Socialization: Shaping the Peoples Voice

Political Participation: Activating the Popular Will

Political Parties,candidates,and Campaigns: Defining the Voters Choice

Interest Groups: Organizing for Influence

The News Media: Communicating Political Images

Congress: Balancing National Goals and Local Interests

The Presidency: Leading the Nation

The Federal Bureaucracy: Administering the Government

The Federal Judicial System: Applying the Law

Income,welfare,and Education Policy: Providing for Personal Security

Foreign Policy: Protecting the American Way

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