Question 1

The federal cigarette tax is an example of a ________ policy.

Accepted Answer

A)  constituent 
B)  causal 
C)  deterministic 
D)  fiscal 
E)  monetary

Question 2

The ________ is the total amount of money owed to lenders by the U.S. government.

Accepted Answer

A)  national shortfall 
B)  budget gap 
C)  budget surplus 
D)  national deficit 
E)  national debt

Question 3

Which amendment to the U.S. Constitution empowered Congress to tax personal income?

Accepted Answer

A)  Thirteenth 
B)  Fourteenth 
C)  Fifteenth 
D)  Sixteenth 
E)  Seventeenth

Question 4

Since World War II, the U.S. government has spent ________ the typical western European country on social welfare policies, nationalized health care, and public education, both on a per capita basis and as a percentage of gross domestic product.

Accepted Answer

A)  less money than 
B)  more money than 
C)  about the same amount of money as 
D)  substantially more money than 
E)  less time developing strategies than

Question 5

________ is an economic philosophy that advocates the government not intervene in the economy and leave market forces to influence the economic behavior of individuals and firms.

Accepted Answer

A)  Laissez-faire 
B)  Keynesianism 
C)  Socialism 
D)  Individualism 
E)  Communism

Question 6

Because people with lower incomes spend a greater portion of their money on it, sales tax is considered ________.

Accepted Answer

A)  regressive 
B)  progressive 
C)  unfair 
D)  inherited 
E)  conservative

Question 7

The city of Brentwood maintains a small pavilion in its Central Park with a barbeque grill. Anyone may reserve the pavilion for an event, but the pavilion can only accommodate one event at a time. Brentwood's pavilion is a ________ good.

Accepted Answer

A)  social 
B)  club 
C)  common 
D)  public 
E)  private

Question 8

A tax is ________ if it places a greater financial burden on the wealthy.

Accepted Answer

A)  regressive 
B)  inductive 
C)  plenary 
D)  plenipotentiary 
E)  progressive

Question 9

By law, the ________ is required to submit a budget to Congress by the first Monday in February.

Accepted Answer

A)  Speaker of the House 
B)  secretary of the Treasury 
C)  director of the Congressional Budget Office 
D)  chair of the Senate Budget Committee 
E)  president

Question 10

What are private goods, club goods, common goods, and public goods? How are these different types of goods similar? How are they different? Give an example of each. Why are the distinctions among different types of goods important for designing public policies?

Accepted Answer

The answer of What are private goods, club goods, common...

Question 11

Compared to other modern democratic countries, government intervention in the United States' economy is ________ consequential.

Accepted Answer

A)  less pervasive and 
B)  equally pervasive and 
C)  more pervasive and 
D)  less pervasive but more 
E)  more pervasive but less

Question 12

If spending reflects priorities, the main priorities in the United States are ________.

Accepted Answer

A)  defense and the elderly 
B)  defense and veterans 
C)  veterans and education 
D)  safety net programs and defense 
E)  Medicaid and defense

Question 13

The city of Boston puts on a large fireworks display on the Charles River each Independence Day. The city does not charge admission to the event, and the promenade along the river is large enough to accommodate all the spectators who arrive for the show. Boston's fireworks display is a ________ good.

Accepted Answer

A)  social 
B)  club 
C)  public 
D)  common 
E)  private

Question 14

Governments can ________ interest rates to make it ________ for businesses and consumers to borrow money for investments and purchases.

Accepted Answer

A)  raise; easier 
B)  freeze; harder 
C)  freeze; impossible 
D)  lower; harder 
E)  lower; easier

Question 15

________ is a possible result of low unemployment because wages become higher and thus the cost of goods increases.

Accepted Answer

A)  Inflation 
B)  Deflation 
C)  Monetary policy 
D)  Regulatory policy 
E)  Equilibrium

Question 16

By and large, banks are regulated at the ________ level through the ________ system.

Accepted Answer

A)  local; Local Banking 
B)  state; State Reserve 
C)  national; Federal Reserve 
D)  national; Federal Banking 
E)  state; State Banking

Question 17

Which refers to a policy that involves the supply of money in the economy?

Accepted Answer

A)  monetary policy 
B)  redistributive policy 
C)  regulatory policy 
D)  fiscal policy 
E)  distributive policy

Question 18

Which refers to the declining purchasing power of a unit of currency?

Accepted Answer

A)  inflation 
B)  stagnation 
C)  stagflation 
D)  conflation 
E)  deflation

Question 19

When you and your friends enjoy loud music at a party late at night, your neighbors also experience that noise and may not appreciate it. Your enjoyment of a benefit-music played loudly-affects others who consider it a cost. This spillover is an example of a/an ________.

Accepted Answer

A)  common good 
B)  public good 
C)  club good 
D)  contaminant 
E)  externality

Question 20

Since 1917, ________ taxes have been the chief source of revenue for the U.S. government.

Accepted Answer

A)  property 
B)  sales 
C)  import 
D)  export 
E)  income

Exam 15: Economic Policy