Exam ch 16 PRACTICE 2014 1. The most important tool the government has for directing the economy is a. its control over trade racy. b. its control over government subsidies. c. its control over labor laws. d. its control over the money supply and interest rates. e. its control over investment practices.. 2. This program is available to seniors no matter what their income: a. Medicaid b. food stamps c. Medicare d. unemployment benefits e. private insurance 3. Upon taking office in 2009, which of the following did President Obama advocate to deal with the economic crisis? a. dropping interest rates b. raising interest rates c. lowering taxes d. reducing taxes e. increasing government spending 4. Monetarists use to manage the growth of the money supply in the United States. a. Total currency in circulation plus checking accounts b. Total currency in circulation plus money-market accounts c. an inflationary index d. interest rates 5. When it comes to fighting unemployment and fighting inflation, Republicans are more likely to prioritize: a. lowering taxes b. focusing on underemployment rates c. increasing taxes d. the battle against inflation e. keeping unemployment low 6. A tax is one in the burden falls relatively more heavily on low-income groups than on wealthy taxpayers. a. progressive b. proportional c. recession d. deprivation e. regressive 7. What is the source for the money in the Social Security Trust Fund? a. sales taxes b. progressive taxes c. payroll taxes d. property taxes e. income taxes 8. Among which of the following groups is poverty most common? a. unmarried women with children b. inner-city residents c. African-Americans d. children e. older Americans
9. The declining poverty rate of the elderly and other poor Americans is largely due to a. Social Security and Medicare programs b. supply-side economics c. progressive taxation d. the feminization of poverty e. stimulus packages 10. What is the long-term concern regarding the Social Security Trust Fund? a. insufficient funds to cover retirees b. excess supply of Treasury bonds c. intergenerational betrayal d. insufficient number of old people 11. If the Federal Reserve wanted to slow the rate of economic growth, it would most likely. a. lower interest rates b. encourage the president to raise taxes c. increase the money supply d. increase interest rates e. encourage the president to lower taxes 12. The unemployment rate is best understood as. a. the percentage of Americans seeking work who are unable to find it b. the rate at which Americans lose their jobs c. the percentage of Americans who are out of work d. the rate of government spending in unemployment benefits e. the percentage of available jobs per 60,000 households 13. In an economic slowdown, Keynesian economic policy would advocate. a. increasing government spending b. increasing the money supply c. decreasing inflation d. raising interest rates e. increasing the unemployment rate 14. When it comes to fighting unemployment and fighting inflation, Democrats are more likely to stress the importance of. a. keeping unemployment low b. fighting the battle against inflation c. focusing on underemployment rates d. increasing taxes e. lowering taxes f. import and export policies 15. Keynesians in Congress would support increasing as a means to address high levels of unemployment. a. taxes b. bonds c. saving d. spending e. reserve requirements 16. The government spends more money on transfer payments for the poor than on transfer payments for other citizens.
17. Laissez-faire economics suggests that the role of government in the economy should be which of the following? a. expansive in times of war and economic crisis b. minimal or nonexistent c. emphasized by using taxing and spending to affect economic growth d. restricted to only regulating manufacturing sectors e. limited to regulating the financial sector 18. Which of the following is the major reason why the future of the Social Security Trust Fund is thought to he in financial trouble? a. Social Security taxes have been cut. b. The majority of Americans oppose the program c. The ratio of retired people to contributing workers d. Congress has no control over the Social Security program. e. None of the above. 19. If the Fed were to have raised interest rates in the months leading up to the 2012 presidential election, what might have been the expected outcome? a. the economic growth rate would have weakened b. unemployment would have bottomed out c. inflation would have increased twofold d. inflation would have been lowered e. the economic growth rate would have become stronger 20. Who is responsible for making monetary policy in the United States? a. the Federal Reserve b. the International Monetary Fund c. the president d. the Department of the Treasury e. Congress 21. Federal income taxes are progressive. 22. More than Europeans, Americans believe that the poor can escape poverty if they work hard enough. 23. An economic theory holding that the supply of money is the key to a nation's economic health and that too much cash and credit in circulation produces inflation is called. a. fiscalism b. Reaganomics c. monetarism d. Keynesian e. supply-side economics 24. How does American social welfare policy compare to that of other established democracies? a. The population of the United States is so much larger than that of any other established democracy that no legitimate comparison can be made. b. Americans have a much lower tax rate than most democratic nations, and social welfare benefits are consequently not as generous in the United States. c. The United States is truly a "welfare state" by European standards. d. American tax rates are much higher than those of other democratic nations, but the social welfare benefits are higher as well. e. Social welfare programs are about the same in the United States as in other democratic countries.
25. The measures the change in the cost of buying a fixed "basket" of goods and services. a. UTS b. inflation units c. CPI d. inflationary index 26. The federal government uses fiscal policy when it raises. a. interest rates in general b. the money supply c. interest rates on Treasury Bills d. taxes 27. Inflation has risen sharply during three periods since 1970 due to a. the consumer price index b. soaring prices for energy c. unemployment rates d. underemployment rates e. the Fed 28. What has expanded the scope of government in the last several decades? a. the Federal Reserve System b. rising energy costs c. inflation d. the growth in social welfare spending e. progressive taxation 29. Inflation is best understood as the rate at which. a. prices for goods and services decrease b. the Federal Reserve Board expands the money supply c. the federal government increases taxes to raise revenue d. gross domestic product expands e. prices for goods and services increase 30. Which aspect of social welfare spending is the United States less generous with than most European nations? a. health care b. child care c. unemployment compensation d. maintaining living standards for the elderly e. all of the above 31. are benefits given by the government directly to individuals, such as Social Security payments, food stamp, or low-interest college loans. a. Income distribution credits b. TANF credits c. Earned Income Tax Credits d. Transfer payments e. Stimulus packages 32. Which of the following is characterized as an entitlement program? a. Medicaid b. Medicare c. Supplemental Security Income d. Children s Health Insurance Program e. food stamps
33. Why are some safety net programs referred to as entitlements? a. because benefits are distributed automatically to citizens who qualify b. because they are benefits that one earns by working, and thus the person is entitled to them c. because they are benefits funded through the Title 9 section of the 1965 Civil Rights Act d. because they are benefits available only to the working poor in the United States e. because they are benefits that are distributed on a case-by-case basis to select citizens in extreme 34. One of the reasons that politicians tread carefully around the issue of Social Security is because elderly Americans have higher voter turnout rates. 35. Which of the following most accurately describes the recent financial crisis in the United States? a. a depression b. an inflationary cycle c. a mild recession d. a full employment cycle e. a severe recession 36. The main goal of fiscal policy is a. to affect how much money is available to state governments for capital projects b. to determine how much interest the government will pay on the federal debt c. to affect how much money is available to foreign governments for investment and its cost d. to stimulate the economy by increasing the number of exports into the United States e. to use taxes and government spending to help stimulate or slow down economic growth 37. Which of the following is a possible solution to the long-term problem of solvency in the Social Security program? a. increase the minimum retirement age b. lower the payroll tax contribution c. eliminate the prescription drug program for seniors d. lower the minimum retirement age e. increase the states' financial contribution 38. How accurate were President Obama's predictions of the impact of the 2009 stimulus plan? a. Fairly accurate; the unemployment rate dropped to the level expected, but it just took a bit longer than predicted. b. Extremely accurate; the unemployment rate dropped as expected. c. Somewhat accurate: unemployment peaked at a much higher rate than expected, but it decreased to predicted rates by the time of the 2012 elections. d. Extremely inaccurate: unemployment peaked at a much higher rate than expected, it decreased much more slowly than predicted, and it still hasn't reached the rate that was predicted. e. Not very accurate: unemployment peaked at a much higher rate than expected. 39. Which of the following entities is responsible for setting interest rates in the United States? a. the Executive Office of the President b. the Federal Reserve Board c. the Congressional Budget Office d. the Congress 40. Which of the following statements regarding the role of the federal government in the economy is correct? a. Economic regulation of industry is the sole responsibility of the secretary of the treasury. b. Most Americans would prefer an economy completely free of any federal regulations. c. Since the Great Recession, the scope of federal activity in the economy has contracted. d. Presidential election outcomes are heavily influenced by the health of the economy. e. The U.S. Constitution restricts direct regulation of the economy to state governments. f. need
41. Which of the following is true about Social Security? a. It is considered a means-tested program. b. It is only available to the very wealthy. c. It is a form of accident insurance. d. It is a retirement benefit program for citizens. e. It is entirely supported by property taxes. 42. What does the consumer price index measure? a. the underemployment rate b. income distribution c. inflation d. the gross national product e. monetary supply 43. programs have had a positive effect on the health and income of older Americans, who receive more and better medical treatment as a result of Medicare. a. intergenerational b. post-generational c. means-tested d. stimulus e. entitlement 44. What federal program is designed to provide medical insurance for the poor in the United States? a. Obamacare b. Medicaid c. social security d. Medicare e. social insurance 45. A tax is one by which the government takes a greater share of the income of the rich than of the poor. a. deprivation b. transfer c. proportional d. regressive e. progressive 46. Keynesian economic theory has as a central idea that the a. government should not interfere with business practices. b. government should decentralize economic policymaking. c. government should take an activist role in managing the economy, d. government should manage interest rates in economic policymaking. e. government should erect tariff barriers to protect the economy, f. the Office of Management and Budget 47. U.S. monetary policy involves which of the following? a. interest rates and the money supply b. the public/national debt and the annual deficit c. NAFTA and the balance of trade with Canada d. supply-side economics