Question 1

Most sales taxes in the United States are considered regressive.

Accepted Answer

A) True 
 B)False

Question 2

The two most common yardsticks for measuring the performance of the economy are trade deficits and the national debt.

Accepted Answer

A) True 
 B)False

Question 3

A loss of tax revenue due to federal laws that provide special tax incentives or benefits to individuals or businesses is known as a(n)

Accepted Answer

A) appropriations limit. 
B) tax expenditure 
C) budget shortfall. 
D) windfall profit. 
E) tax haven. 
A) appropriations limit. 
B) tax expenditure 
C) budget shortfall. 
D) windfall profit. 
E) tax haven.

Question 4

A rise in the general price level (and decrease in dollar value) owing to an increase in the volume of money and credit in relation to available goods is called

Accepted Answer

A) recession. 
B) bankruptcy. 
C) a budget deficit. 
D) unemployment. 
E) inflation. 
A) recession. 
B) bankruptcy. 
C) a budget deficit. 
D) unemployment. 
E) inflation.

Question 5

The federal government has been involved in economic policy since the

Accepted Answer

A) end of the Revolutionary War. 
B) New Deal of the 1930s. 
C) end of the Civil War. 
D) end of World War II. 
E) beginning of the Gulf War. 
A) end of the Revolutionary War. 
B) New Deal of the 1930s. 
C) end of the Civil War. 
D) end of World War II. 
E) beginning of the Gulf War.

Question 6

The _____________________________________ has the responsibility for overseeing the information provided by companies to the public and investors about their stocks.

Accepted Answer

A) Office of the Trade Representative 
B) Office of Management and Budget 
C) Occupational Safety and Health Administration 
D) Securities and Exchange Commission 
E) Congressional Budget Office 
A) Office of the Trade Representative 
B) Office of Management and Budget 
C) Occupational Safety and Health Administration 
D) Securities and Exchange Commission 
E) Congressional Budget Office

Question 7

Which of the following is NOT an industry that has been a major target of deregulation since 1977?

Accepted Answer

A) Trucking 
B) Banking 
C) Education 
D) Telecommunications 
E) Airlines 
A) Trucking 
B) Banking 
C) Education 
D) Telecommunications 
E) Airlines

Question 8

According to the Constitution, ________________ "shall have Power to lay and collect Taxes, Duties, Imposts, and Excises."

Accepted Answer

A) Congress 
B) the president 
C) the states 
D) the department of state 
E) the U.S.trade representative 
A) Congress 
B) the president 
C) the states 
D) the department of state 
E) the U.S.trade representative

Question 9

The spending category that accounts for the largest percentage of the federal budget is

Accepted Answer

A) social programs, such as Social Security. 
B) defense. 
C) interest on the national debt. 
D) transportation needs. 
E) None of the above 
A) social programs, such as Social Security. 
B) defense. 
C) interest on the national debt. 
D) transportation needs. 
E) None of the above

Question 10

Critics of NAFTA worry about all BUT which of the following?

Accepted Answer

A) Mexican antipollution laws are lax. 
B) Mexican workers accept low wages. 
C) Mexican products are inferior. 
D) U.S.companies will move to Mexico. 
E) None of the above 
A) Mexican antipollution laws are lax. 
B) Mexican workers accept low wages. 
C) Mexican products are inferior. 
D) U.S.companies will move to Mexico. 
E) None of the above

Question 11

Raising taxes and cutting spending are examples of monetary policy.

Accepted Answer

A) True 
 B)False

Question 12

In the end, Congress has the last word on the president's budget proposal.

Accepted Answer

A) True 
 B)False

Question 13

A regressive tax is a tax in which poorer people pay a larger share of their income than wealthier people.

Accepted Answer

A) True 
 B)False

Question 14

A(n) _______________ tax is a tax on a specific kind of merchandise, such as tobacco.

Accepted Answer

A) flat 
B) excise 
C) progressive 
D) property 
E) import 
A) flat 
B) excise 
C) progressive 
D) property 
E) import

Question 15

An imbalance in international trade in which the value of imports exceeds the value of exports is called a trade deficit.

Accepted Answer

A) True 
 B)False

Question 16

The national debt refers to the amount of money the federal government gives state governments.

Accepted Answer

A) True 
 B)False

Question 17

What is the primary source of revenue in the government budget?

Accepted Answer

A) Excise taxes 
B) Corporate income taxes 
C) Borrowing 
D) Payroll taxes 
E) Individual income taxes 
A) Excise taxes 
B) Corporate income taxes 
C) Borrowing 
D) Payroll taxes 
E) Individual income taxes

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

If a country exports $100 billion worth of goods and imports $120 billion worth of goods in a given year, that country is said to have a trade deficit.

Accepted Answer

A) True 
 B)False

Question 20

A combination of an increase in the number of workers looking for jobs and a rise in prices is called

Accepted Answer

A) good news. 
B) unemployment. 
C) stagflation. 
D) regulation. 
E) a tariff. 
A) good news. 
B) unemployment. 
C) stagflation. 
D) regulation. 
E) a tariff.

Exam 18: Making Economic Policy

Most sales taxes in the United States are considered regressive.

The two most common yardsticks for measuring the performance of the economy are trade deficits and the national debt.

A loss of tax revenue due to federal laws that provide special tax incentives or benefits to individuals or businesses is known as a(n)

A rise in the general price level (and decrease in dollar value) owing to an increase in the volume of money and credit in relation to available goods is called

The federal government has been involved in economic policy since the

The _____________________________________ has the responsibility for overseeing the information provided by companies to the public and investors about their stocks.

Which of the following is NOT an industry that has been a major target of deregulation since 1977?

According to the Constitution, ________________ "shall have Power to lay and collect Taxes, Duties, Imposts, and Excises."

The spending category that accounts for the largest percentage of the federal budget is

Critics of NAFTA worry about all BUT which of the following?

Raising taxes and cutting spending are examples of monetary policy.

In the end, Congress has the last word on the president's budget proposal.

A regressive tax is a tax in which poorer people pay a larger share of their income than wealthier people.

A(n) _______________ tax is a tax on a specific kind of merchandise, such as tobacco.

An imbalance in international trade in which the value of imports exceeds the value of exports is called a trade deficit.

The national debt refers to the amount of money the federal government gives state governments.

What is the primary source of revenue in the government budget?

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

If a country exports $100 billion worth of goods and imports $120 billion worth of goods in a given year, that country is said to have a trade deficit.

A combination of an increase in the number of workers looking for jobs and a rise in prices is called

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