Question 1

Which of the following is an example of mandatory spending?

Accepted Answer

A) Defense spending 
B) Spending on Social Security 
C) Foreign aid 
D) Infrastructure projects 
E) Research on renewable energy sources 
A) Defense spending 
B) Spending on Social Security 
C) Foreign aid 
D) Infrastructure projects 
E) Research on renewable energy sources

Question 2

The Constitution places all taxing, borrowing, and spending powers in the hands of Congress and the legislative branch.

Accepted Answer

A) True 
 B)False

Question 3

_______________ refers to attempts to manage the economy by controlling the money supply and thus interest rates.

Accepted Answer

A) Monetary policy 
B) Bank policy 
C) Fiscal policy 
D) Inflation policy 
E) Regulatory policy 
A) Monetary policy 
B) Bank policy 
C) Fiscal policy 
D) Inflation policy 
E) Regulatory policy

Question 4

The U.S.government levies excise taxes on real estate.

Accepted Answer

A) True 
 B)False

Question 5

____________________ refers to a company with a labor agreement under which union membership is a condition of employment.

Accepted Answer

A) Closed shop 
B) Monopoly 
C) Trust 
D) Right to work 
E) Worker protection 
A) Closed shop 
B) Monopoly 
C) Trust 
D) Right to work 
E) Worker protection

Question 6

Most federal government spending is discretionary.

Accepted Answer

A) True 
 B)False

Question 7

The economic theory that opposes governmental interference in economic affairs beyond what is necessary to protect life and property is known as

Accepted Answer

A) trickle-down theory. 
B) protectionism. 
C) laissez-faire economics. 
D) socialism. 
E) Keynesianism. 
A) trickle-down theory. 
B) protectionism. 
C) laissez-faire economics. 
D) socialism. 
E) Keynesianism.

Question 8

Paying agricultural subsidies to domestic farmers and imposing tariffs on imported steel are policies more consistent with a free trade position.

Accepted Answer

A) True 
 B)False

Question 9

The _____________________________________ was created by Congress to enforce the Clean Air and Water Acts passed in the early 1970s.

Accepted Answer

A) Department of the Interior 
B) Environmental Protection Agency 
C) Occupational Safety and Health Administration 
D) Greenpeace Committee 
E) Global Warming Commission 
A) Department of the Interior 
B) Environmental Protection Agency 
C) Occupational Safety and Health Administration 
D) Greenpeace Committee 
E) Global Warming Commission

Question 10

Defense spending is an example of mandatory spending.

Accepted Answer

A) True 
 B)False

Question 11

Inflation is a rise in the general level of prices.

Accepted Answer

A) True 
 B)False

Question 12

Raising taxes and cutting spending are examples of monetary policy.

Accepted Answer

A) True 
 B)False

Question 13

In 2008, the United States experienced significantly rising prices at the same time that many people were out of work.This is an example of

Accepted Answer

A) socialism. 
B) regulation. 
C) depression. 
D) expansion. 
E) stagflation. 
A) socialism. 
B) regulation. 
C) depression. 
D) expansion. 
E) stagflation.

Question 14

Expansion is the first stage of the business cycle.

Accepted Answer

A) True 
 B)False

Question 15

Unemployment refers to the number of Americans who are out of work but actively looking for a job.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a way in which the Federal Reserve System can influence the economy?

Accepted Answer

A) Raising income taxes 
B) Cutting government spending on Social Security and Medicare 
C) Directly changing the mortgage rate that private lenders charge borrowers for home loans 
D) Entering trade agreements with foreign countries 
E) Changing interest rates banks must pay for borrowing money 
A) Raising income taxes 
B) Cutting government spending on Social Security and Medicare 
C) Directly changing the mortgage rate that private lenders charge borrowers for home loans 
D) Entering trade agreements with foreign countries 
E) Changing interest rates banks must pay for borrowing money

Question 17

A _______________ tax is a tax whereby people with lower incomes pay a higher fraction of their income than people with higher incomes.

Accepted Answer

A) liberal 
B) flat 
C) regressive 
D) socialist 
E) progressive 
A) liberal 
B) flat 
C) regressive 
D) socialist 
E) progressive

Question 18

Before Congress enacted the Budget and Accounting Act of 1921, each executive agency dealt with Congress on its own, requesting that the legislature appropriate funds for its activities with little or no presidential coordination.

Accepted Answer

A) True 
 B)False

Question 19

A value-added tax is a tax on increased value of a product at each stage of production and distribution rather than just at the point of sale.

Accepted Answer

A) True 
 B)False

Question 20

Approximately _________ % of the federal government revenue for 2008 came from individual income taxes.

Accepted Answer

A) 95 
B) 20 
C) 80 
D) 40 
E) 5 
A) 95 
B) 20 
C) 80 
D) 40 
E) 5

Exam 18: Making Economic Policy

Which of the following is an example of mandatory spending?

The Constitution places all taxing, borrowing, and spending powers in the hands of Congress and the legislative branch.

_______________ refers to attempts to manage the economy by controlling the money supply and thus interest rates.

The U.S.government levies excise taxes on real estate.

____________________ refers to a company with a labor agreement under which union membership is a condition of employment.

Most federal government spending is discretionary.

The economic theory that opposes governmental interference in economic affairs beyond what is necessary to protect life and property is known as

Paying agricultural subsidies to domestic farmers and imposing tariffs on imported steel are policies more consistent with a free trade position.

The _____________________________________ was created by Congress to enforce the Clean Air and Water Acts passed in the early 1970s.

Defense spending is an example of mandatory spending.

Inflation is a rise in the general level of prices.

Raising taxes and cutting spending are examples of monetary policy.

In 2008, the United States experienced significantly rising prices at the same time that many people were out of work.This is an example of

Expansion is the first stage of the business cycle.

Unemployment refers to the number of Americans who are out of work but actively looking for a job.

Which of the following is a way in which the Federal Reserve System can influence the economy?

A _______________ tax is a tax whereby people with lower incomes pay a higher fraction of their income than people with higher incomes.

Before Congress enacted the Budget and Accounting Act of 1921, each executive agency dealt with Congress on its own, requesting that the legislature appropriate funds for its activities with little or no presidential coordination.

A value-added tax is a tax on increased value of a product at each stage of production and distribution rather than just at the point of sale.

Approximately _________ % of the federal government revenue for 2008 came from individual income taxes.

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