Budget, Bureaucracy, Economic Policy-Making Name: MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1. Taxing, spending, and borrowing decisions by Congress and the president are known collectively as A) econometrics. B) fiscal policy. C) supply-side economics. D) laissez faire. E) monetary policy. 2. The General Services Administration and the National Aeronautical and Space Administration are examples of A) independent regulatory agencies. B) independent executive agencies. C) presidential administrative agencies. D) Cabinet departments. E) government corporations. 3. When Congress passes regulatory legislation for which it has established goals, it then A) assigns responsibility for administration to regulatory agencies and responsibility for enforcement to the courts. B) grants power to regulatory agencies to develop guidelines and enforce compliance. C) establishes the guidelines that regulatory agencies must implement. D) authorizes the president to use his administrative discretion to implement the legislation. E) grants interest groups the power to develop the rules governing the new policy. 4. Which of the following statements is TRUE about America s political parties and relatively high inflation? A) The Democrats are more willing to accept relatively high inflation than the Republicans. B) Studies have found no correlation between a given political party and its acceptance of high inflation rates. C) The Republicans are more willing to accept relatively high inflation than the Democrats. D) Both the Democrats and the Republicans are willing to accept relatively high inflation. E) Neither the Democrats nor the Republicans are willing to accept relatively high inflation. 5. To limit bureaucratic discretion and make its instructions clearer, Congress can A) deregulate. B) threaten to cut an agency s budget. C) reregulate. D) write new and more detailed legislation. E) hold congressional hearings. 6. Which of the following would be included in a plum book? A) Senate committee chairs B) Cabinet secretaries C) postal carriers D) doctors at a Veteran s Administration hospital E) the phone numbers of a Congress member s sex partners 7. Amtrak and the United States Postal Service are examples of A) executive commercial agencies. B) government corporations. C) independent regulatory agencies. D) independent executive agencies. E) Cabinet departments. 8. Social Security payments are an example of a(n) A) controllable expenditure. B) increment. C) entitlement. D) indexing. E) apportionment. 9. An uncontrollable expenditure in the federal budget is defined as A) expenditures exceeding revenues so as to require borrowing to cover the difference. B) one in which more money must be appropriated to handle a national crises. C) an annual incremental increase in the cost of a program. D) the government s allowance for meeting budget requests. E) an expenditure that is required by current law or a previous government obligation to people automatically eligible for some benefit.
10. Which of the following is NOT a method a president can use to control the bureaucracy? A) appoint people to head an agency who share the president s goals and strategies B) tinker with an agency s recommended budget C) request a congressional oversight hearing D) rewrite statutes to make instructions clearer as to how policies are intended E) issue executive orders or more informal requests 11. The principle that the government should not meddle with the economy is known as A) caveat emptor B) laissez faire C) Keynesian economic theory. D) conservatism. E) monetarism. 12. The Keynesian economic theory argues that government s role in an economic depression should be to A) increase supply. B) reduce demand. C) increase the total money supply with lower interest rates. D) lower taxes. E) increase demand. 13. Tax expenditures tend to most benefit A) middle- and upper-income people and corporations. B) lower-income people and the poor. C) lower-middle class people and small businesses. D) the government. E) state and local governments and school districts. 14. As a percentage of the total work force, federal government employment is A) rapidly becoming greater than employment in the private sector. B) declining. C) rising. D) greater than state and local government employment. E) stabilizing. 15. The federal government s budget is A) a line by line accounting of tax expenditures that is required annually by the Constitution. B) a list of the ways in which the government has spent its money. C) a technical document intended to ensure that tax revenues will be sufficient to meet expenditures. D) a policy statement that allocates burdens and benefits by attaching price tags to policy goals. E) an accounting tool that permits the government to keep track of its assets and liabilities. 16. An economic theory called monetarism holds that A) government should stimulate economic growth by injecting large amounts of money into the economy by keeping interest rates low. B) government spending can help the economy weather its normal ups and downs, even if it means running up a debt. C) the supply of money is the key to the nation s health, and having too much cash and credit in circulation stimulates inflation. D) government should not meddle with the economy. E) stimulating supply through lower taxes is the key to economic health. 17. Until the late-nineteenth century, most government employees got their jobs through A) the patronage system. B) hereditary preferences. C) a lottery system. D) the merit principle E) civil service testing. 18. Once a policy decision has been made, such as by passing a legislative act or issuing an executive order, the bureaucracy is responsible for A) its implementation. B) funding it. C) its ratification. D) judging its merits. E) its deregulation. 19. Which of the following is NOT associated with incremental budgeting? A) The budget for any given agency tends to grow a bit every year. B) Agencies often pad their budgets a little bit. C) An agency or program must prove it still merits its very existence every year. D) Most of the budget debate and attention is over an increase in the agency s funding. E) Agencies and programs tend to safely assume they will receive at least what they had last year.
20. Medicare A) is the most expensive of all the welfare programs, providing basic medical care for the poor. B) provides both hospital and physician coverage to the elderly. C) is administered separately from the social security system. D) is given only to those who do not have private insurance. E) provides only hospital coverage to the poor. 21. The Congressional Budget and Impoundment Act of 1974 requires that A) Congress develop a budget on the basis of the president s budget, through coordinated efforts of the CBO and OMB. B) Congress agree on a budget according to a fixed schedule, with target figures for the total budget size. C) the presidential impound those moneys appropriated by Congress which exceed federal revenues. D) Congress develop a budget by adding up the requests of all the government agencies. E) Congress impound that portion of the president s budget in excess of government revenues. 22. Which of the following is NOT currently one of the major sources of federal revenue? A) social insurance taxes B) personal income taxes C) excise taxes D) borrowing E) corporate income taxes 23. The nation s unemployment rate is determined by A) monthly reports by the unemployment department of each state. B) monthly changes in income tax withholdings monitored by the Internal Revenue Service. C) monthly reports filed by all employers regarding the number of their employees. D) a monthly random survey of the population. E) randomly selected payroll audits by Federal Reserve Board analysts. 24. Those civil service employees who are in constant contact with the public (often a hostile one) and have considerable discretion are known as A) routinizers. B) General Schedule foot soldiers. C) the Senior Executive Service. D) street-level bureaucrats. E) civil servants. 25. As a whole, the permanent bureaucracy is A) overwhelmingly African American, female, and not so well-paid. B) a reflection of participatory politics, since most government workers are hired through the patronage system. C) better paid than are similar jobs in the private sector. D) more broadly representative of the American people than legislators, judges, or presidential appointees. E) nearly all white, male, and well-paid. 26. The heads of executive agencies send their budget requests to the A) Office of Management and Budget. B) president. C) Congressional Budget Office. D) Congressional tax committees. E) Treasury Department. 27. President Reagan s economic policies emphasized A) supply-side economics in which tax cuts and deregulation are designed to free funds for savings and investment. B) industrial policy which targeted high tech industries for government assistance in helping them develop and compete in international markets. C) first balancing the budget and then cutting taxes. D) the application of Keynesian economic theory to stimulate or slow the economy through lowering or raising taxes. E) balanced budgeting through across-the-board cuts in all categories of government spending. 28. The authority of administrative actors to select among various responses to a given problem is called A) policy implementation. B) administrative discretion. C) the merit principle. D) the definition of alternatives. E) selective management.
29. Congress attempts to bind itself to a total expenditure level that should form the bottom line of all federal spending for all programs by passing A) a budget reconciliation. B) a budget resolution. C) an authorization bill. D) an appropriations bill. E) a zero-based binding resolution. 30. A capitalist economic system is one in which A) individuals and corporations own the principal means of production, through which they seek to earn profits. B) all individuals have an equal chance of owning the principal means of production, often in the form of stock ownership. C) individuals and corporations share ownership of the principal means of production, and profits are distributed equally. D) a central government determines production and price levels. E) private individuals act according to market principles and enhance the general welfare, with no government involvement. 31. According to monetarists, making too much money available to borrow my lead to A) economic belt-tightening. B) inflation. C) recession. D) too little credit. E) widespread bankruptcies. 32. Which of the following statements about bureaucracies is FALSE? A) Nothing better illustrates the complexity of modern government than its massive bureaucracies. B) Bureaucracies are scarcely hinted at in the Constitution. C) How to manage and control bureaucracies is a central problem of democratic government. D) Each bureaucratic agency is created by the president. E) Bureaucratic power extends to every corner of American economic and social life. 33. The purpose of antitrust legislation is to A) promote the rights of unions. B) foster industrial growth through such measures as tariffs and quotas to keep out foreign competition. C) ensure competition and prevent monopolies. D) prevent foreign investors from owning majority interests in American companies. E) stop the growth of multinational corporations. 34. From the mid-1960 s to the early 1980 s, the biggest change in government spending was the A) elimination of tax expenditures. B) growth of new budgeting techniques such as zero-based budgeting. C) increase in social service expenditures and decline in defense spending. D) prevent foreign investors from owning majority interests in American companies. E) stop the growth of multinational corporations. 35. According to proponents of supply-side economics, A) cutting taxes leads to more incentive to save, work harder, and create more jobs. B) increasing the supply of goods available for consumption lowers prices and reduces the inflation rate. C) increasing government spending provides an incentive to invest in business expansion. D) borrowing money decreases the risk of unemployment and recession. E) decreasing the supply of money reduces the federal deficit. 36. Right-to-work laws are supported by A) union members, but not necessarily organized unions. B) illegal immigrants. C) business management. D) both organized labor unions and management. E) organized labor unions. 37. The Office of Management and Budget parcels out money to government agencies and is accountable to A) the secretary of the treasury. B) the president. C) Congress. D) the Internal Revenue Service. E) the Congressional Budget Office. 38. Social Security taxes are A) paid for by employees only. B) levied and collected by state governments. C) taxes paid on Social Security benefits. D) paid for by employers only. E) paid for by employees and employers.
39. A major problem for presidents and Congress in controlling bureaucracies is the existence of A) the plum book. B) Supreme Court rulings curbing the scope of their oversight. C) standard operating procedures. D) the incentive system. E) iron triangles. 40. The use of government authority to control or change some practice in the private sector is know as A) public administration. B) oversight. C) regulation. D) executive review. E) socialism. 41. Members of the Federal Reserve System s Board of Governors A) merely carry out policy decided by the Treasury Department. B) can be fired by the president at any time. C) are given 14-year terms designed to insulate them from political pressures. D) are career civil-servants, neither appointed nor fired by presidents. E) are subject to replacement by each new president. 42. Hundreds, if not thousands, of studies by political scientists have concluded that voters A) vote against their personal financial interests. B) vote for candidates who promise the most. C) vote for the candidate who will benefit the voter s financial condition the most. D) ignore the economic consequences of government policies. E) vote solely on the basis of partisanship. 43. Compared to most other countries with developed economies, the national, state, and local governments in the United States tax A) at about the same rate. B) about one and half times as much per capita. C) about four times as heavily. D) less. E) about twice as heavily. 44. The consumer price index measures A) the change in income, controlling for periods of unemployment. B) the change what various incomes can buy. C) the change in the prime lending rate. D) the change in the amount of taxes paid by individuals. E) the change in the cost of buying a fixed basket of goods and services. 45. In order of decreasing amounts, the sources of federal revenue include A) social insurance receipts, corporate income tax, individual income tax, and borrowing. B) corporate income taxes, personal income taxes, borrowing and social insurance taxes. C) individual income tax, social insurance receipts, borrowing and corporate income tax. D) individual income tax, excise tax, corporate income tax, and social insurance receipts. E) borrowing, individual income tax, social insurance receipts, and corporate income tax. 46. The income tax is generally progressive, meaning that A) it is a newer form of taxation than excise and sales taxes. B) it increases incrementally on an annual basis. C) it is better than a flat tax. D) those with more income pay higher rates of tax on their income. E) those with more income pay more in taxes than those with less income. 47. Monetary policy is directly regulated by A) the Federal Reserve System. B) Congress and the President. C) the Department of Commerce. D) the United States Mint. E) the Treasury Department. 48. The government borrows money principally by A) maintaining numerous departmental credit card accounts. B) printing more currency. C) selling bonds. D) obtaining loans from foreign governments.
E) obtaining loans from the Federal Reserve. 49. The parts of the federal bureaucracy with responsibility for different sectors of the economy, and making and enforcing rules designed to protect the public interest, are the A) independent executive agencies. B) Cabinet departments. C) government corporations. D) independent regulatory agencies. E) commercial ministries. 50. Keynesian economic theory argues for A) stimulating the economy through massive tax cuts and reducing the size of the national government. B) government wage and price controls to control inflation. C) stimulating the economy through manipulating the nation s money supply. D) the government keeping its hands off the economy. E) stimulating the economy through government spending programs. 51. Which of the following would be a specific example of an appropriations bill? A) Congress voting to discontinue the federal income tax. B) A bill to continue the space shuttle program for another five years. C) A bill funding the Department of the Interior for the fiscal year. D) A budget resolution passed by both Houses of Congress. E) A bill establishing a national health insurance system. 52. An authorization bill A) authorizes the president to spend specific line-item amounts in the final budget. B) establishes, continues, or changes a discretionary program or an entitlement. C) sets the maximum amount that may be spent for entitlement programs. D) covers only one year at a time. E) provides the funding for discretionary programs. 53. Most of the government is composed of A) elected legislators. B) politicians. C) regulators. D) bureaucrats. E) lawyers. 54. A group of participants in bureaucratic policymaking with technical policy expertise and intellectual and emotional commitment to the issue is called A) an iron triangle. B) a subgovernment. C) a vested cohort. D) a government corporation. 55. A mixed political economy is one in which A) the government controls some, but not all, sectors of the economy. B) both agricultural and manufacturing sectors are active. C) the government consults with corporate directors on the nature and magnitude of government regulations. D) the government, while not commanding the economy, is still deeply involved in economic decisions. E) inflation and unemployment are uncorrelated. 56. One proposed solution to the problem of the proliferation of regulatory agencies and policies has been A) budget cuts. B) the incentive system. C) deproliferation. D) deregulation. E) standard operating procedures. 57. The rationale for the civil service rests on the A) need to separate military institutions from civilian institutions to prevent undue military influence. B) goal of centralizing government employment at the federal level. C) need for job replacements when a new party comes to power. D) desire to create a nonpartisan government service and promotion on the basis of merit. E) General Schedule rating system for patronage appointees.
58. The biggest slice of the federal budget pie belongs to A) education aid. B) health expenditures. C) national defense. D) law enforcement. E) social insurance programs. 59. Constitutional power over taxing and spending is given to A) the courts. B) the president. C) the bureaucracy. D) Congress. E) the Treasury Department. 60. Federal benefits that must be funded by Congress and must be paid to all citizens who meet eligibility criteria are called A) discretionary appropriations. B) continuing appropriations. C) tax expenditures. D) distributed benefits. E) individual entitlements.