Question 1

Money has value because the Fed:

Accepted Answer

A)  backs its notes with silver. 
B)  backs its notes with gold. 
C)  issues notes in any amount in unlimited quantities. 
D)  issues only a limited quantity of its notes. 
A)  backs its notes with silver. 
B)  backs its notes with gold. 
C)  issues notes in any amount in unlimited quantities. 
D)  issues only a limited quantity of its notes. D

Question 2

In our free enterprise system, the government has no control over economic activities in the private sector.

Accepted Answer

A) True 
 B)False  False

Question 3

The U.S. debt is made up of the nation's:

Accepted Answer

A)  accumulated tribute. 
B)  accumulated deficits. 
C)  estimated gains in foreign exchange. 
D)  accumulated profits. 
A)  accumulated tribute. 
B)  accumulated deficits. 
C)  estimated gains in foreign exchange. 
D)  accumulated profits. B

Question 4

Government's direct role in the economy involves its control of the laws that specify what individuals and businesses can and cannot do.

Accepted Answer

A) True 
 B)False

Question 5

The need for government stabilization policies through regulation comes from the tendency for the aggregate economy to:

Accepted Answer

A)  remain the same. 
B)  fluctuate. 
C)  self regulate. 
D)  maintain equilibrium. 
A)  remain the same. 
B)  fluctuate. 
C)  self regulate. 
D)  maintain equilibrium.

Question 6

If a firm is too big to fail, economists argue it is too big to be regulated.

Accepted Answer

A) True 
 B)False

Question 7

Credit and the financial sector are the equivalent to an economy's:

Accepted Answer

A)  brain. 
B)  veins. 
C)  lungs. 
D)  heart. 
A)  brain. 
B)  veins. 
C)  lungs. 
D)  heart.

Question 8

According to the U.S. Department of Commerce (2008), which receives the highest percent of federal outlay?

Accepted Answer

A)  Medicare 
B)  Social Security 
C)  health 
D)  defense 
A)  Medicare 
B)  Social Security 
C)  health 
D)  defense

Question 9

From 1929 to 1932, U.S. industrial production and national income:

Accepted Answer

A)  rose by 33 percent. 
B)  dropped by about half. 
C)  increased by 25 percent. 
D)  dropped by about 90 percent. 
A)  rose by 33 percent. 
B)  dropped by about half. 
C)  increased by 25 percent. 
D)  dropped by about 90 percent.

Question 10

One of the most controversial forms of government involvement in the economy is through microeconomics.

Accepted Answer

A) True 
 B)False

Question 11

Over the years, the U.S. government has spent about half of the time in a budget surplus and half in a budget deficit.

Accepted Answer

A) True 
 B)False

Question 12

Regulations that impose significant costs but do not provide the funds to pay these costs are called:

Accepted Answer

A)  economic inducements. 
B)  unfunded mandates. 
C)  economic stimulators. 
D)  hidden benefits. 
A)  economic inducements. 
B)  unfunded mandates. 
C)  economic stimulators. 
D)  hidden benefits.

Question 13

Contractionary monetary policy makes credit harder to get, raises interest rates, and has a downward effect on the level of income.

Accepted Answer

A) True 
 B)False

Question 14

Monetary policy does NOT affect:

Accepted Answer

A)  the level of income directly. 
B)  interest rates. 
C)  credit availability. 
D)  inflation. 
A)  the level of income directly. 
B)  interest rates. 
C)  credit availability. 
D)  inflation.

Question 15

Because of government's large indirect role, we call our economic system a pragmatic market economy rather than a(n):

Accepted Answer

A)  hybrid economy. 
B)  unplanned economy. 
C)  free market economy. 
D)  planned economy. 
A)  hybrid economy. 
B)  unplanned economy. 
C)  free market economy. 
D)  planned economy.

Question 16

The effects of a firm's actions or decisions that negatively affect others but that the firm does not consider when undertaking the action are called:

Accepted Answer

A)  externalities. 
B)  manifest consequences. 
C)  the cost of doing business. 
D)  ancillaries. 
A)  externalities. 
B)  manifest consequences. 
C)  the cost of doing business. 
D)  ancillaries.

Question 17

Economics alone provides a relatively easy answer to economic issues in the United States and there is little to be done politically.

Accepted Answer

A) True 
 B)False

Question 18

In the 1970s, the government instituted many security programs and took a greater role in maintaining the level of employment and in stabilizing the economy.

Accepted Answer

A) True 
 B)False

Question 19

The largest government expenditure program is the Social Security system.

Accepted Answer

A) True 
 B)False

Question 20

Collective consumption goods more efficiently supplied by government than by individuals are sometimes called:

Accepted Answer

A)  commodities. 
B)  public goods. 
C)  collective holdings. 
D)  national treasures. 
A)  commodities. 
B)  public goods. 
C)  collective holdings. 
D)  national treasures.

Exam 17: The Economy, Government, and Economic Challenges Facing the United States

Money has value because the Fed:

In our free enterprise system, the government has no control over economic activities in the private sector.

The U.S. debt is made up of the nation's:

Government's direct role in the economy involves its control of the laws that specify what individuals and businesses can and cannot do.

The need for government stabilization policies through regulation comes from the tendency for the aggregate economy to:

If a firm is too big to fail, economists argue it is too big to be regulated.

Credit and the financial sector are the equivalent to an economy's:

According to the U.S. Department of Commerce (2008), which receives the highest percent of federal outlay?

From 1929 to 1932, U.S. industrial production and national income:

One of the most controversial forms of government involvement in the economy is through microeconomics.

Over the years, the U.S. government has spent about half of the time in a budget surplus and half in a budget deficit.

Regulations that impose significant costs but do not provide the funds to pay these costs are called:

Contractionary monetary policy makes credit harder to get, raises interest rates, and has a downward effect on the level of income.

Monetary policy does NOT affect:

Because of government's large indirect role, we call our economic system a pragmatic market economy rather than a(n):

The effects of a firm's actions or decisions that negatively affect others but that the firm does not consider when undertaking the action are called:

Economics alone provides a relatively easy answer to economic issues in the United States and there is little to be done politically.

In the 1970s, the government instituted many security programs and took a greater role in maintaining the level of employment and in stabilizing the economy.

The largest government expenditure program is the Social Security system.

Collective consumption goods more efficiently supplied by government than by individuals are sometimes called:

Social Science and Its Method

Human Origins

Origins of Western Society

Society, Culture, and Cultural Change

Geography, Demography, Ecology, and Society

Technology and Society

Psychology, Society, and Culture

The Family

Religion

Education

Social and Economic Stratification

Stratification, Minorities, and Discrimination

The Functions and Forms of Government

Governments of the World

Democratic Government in the United States

The Organization of Economic Activities

International Political Relations

International Economic Relations

The Political Economies of Developing Countries

International Institutions and the Search for Peace

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