Deck 17: The Economy, Government, and Economic Challenges Facing the United States

Question 1

The role of government in the economy is:

A) indirect and hidden.
B) both direct and indirect.
C) direct and obvious.
D) obscure and covert.

Answer 1

B

Question 2

The U.S. Social Security system paid out almost immediately the money it took in. Thus, it was not funded:

A) like a bank.
B) like insurance.
C) like an investment company.
D) like a profit corporation.

Answer 2

B

Question 3

The effects of a firm's actions or decisions that negatively affect others but that the firm does not consider when undertaking the action are called:

A) externalities.
B) manifest consequences.
C) the cost of doing business.
D) ancillaries.

Answer 3

A

Question 4

Fluctuations in aggregate output are often called:

A) business cycles.
B) steady states.
C) events.
D) developments.

Question 5

Collective consumption goods more efficiently supplied by government than by individuals are sometimes called:

A) commodities.
B) public goods.
C) collective holdings.
D) national treasures.

Question 6

Every year, the U.S. federal, state, and local governments together collect over _______________ in taxes.

A) $4 trillion
B) $6 trillion
C) $15 billion
D) $85 billion

Question 7

The Keynesian Revolution introduced the concept that government:

A) should not intervene in the economy.
B) must resist the desire to stabilize the economy.
C) should not be concerned with unemployment figures.
D) can and should play a stabilizing role in the economy.

Question 8

The policy of using the government budget surplus or deficit to control the level of spending in the economy is called:

A) monetary policy.
B) foreign policy.
C) fiscal policy.
D) general policy.

Question 9

Regulations that impose significant costs but do not provide the funds to pay these costs are called:

A) economic inducements.
B) unfunded mandates.
C) economic stimulators.
D) hidden benefits.

Question 10

According to the U.S. Department of Commerce (2008), which receives the highest percent of federal outlay?

A) Medicare
B) Social Security
C) health
D) defense

Question 11

The first comprehensive government-administered social insurance system was enacted in:

A) France.
B) Canada.
C) Sweden.
D) Germany.

Question 12

From 1929 to 1932, U.S. industrial production and national income:

A) rose by 33 percent.
B) dropped by about half.
C) increased by 25 percent.
D) dropped by about 90 percent.

Question 13

Because of government's large indirect role, we call our economic system a pragmatic market economy rather than a(n):

A) hybrid economy.
B) unplanned economy.
C) free market economy.
D) planned economy.

Question 14

According to the U.S. Department of Commerce (2012), which receives the highest percent of local outlay?

A) Medicare
B) Social Security
C) health
D) education and public welfare

Question 15

Large-scale regulations have brought about a reaction on the part of some people supporting the doctrine of:

A) socialism.
B) laissez-faire.
C) reinvestment.
D) anti-trust laws.

Question 16

Which of the following is NOT a way the U.S. directly influences the distribution of income?

A) a progressive income tax system
B) low-income tax credits
C) licensing of certain professions
D) entitlement programs that favor the poor

Question 17

The need for government stabilization policies through regulation comes from the tendency for the aggregate economy to:

A) remain the same.
B) fluctuate.
C) self regulate.
D) maintain equilibrium.

Question 18

What is an example of how the government directs the flow of profits toward corporations and away from consumers?

A) the extension of patent rights
B) price controls
C) regulations on safety and quality
D) price fixing

Question 19

The fiscal policy rule of thumb allows that some government budget deficits can be useful in stimulating the economy out of a:

A) slump.
B) recession.
C) depression.
D) boom

Question 20

Macroeconomic policies of government concern:

A) individuals.
B) only large states.
C) only general welfare as a whole.
D) only some parts of the larger economy.

Question 21

Social Security was called an insurance plan but actually does not meet that definition.

Question 22

The passing of a law that required all public buildings to be accessible to all individuals was an example of laissez-faire economic involvement.

Question 23

To maintain its dominance in a globalized economy, and the higher wages that go with that dominance, the United States will have to maintain:

A) a technological edge.
B) a larger work-force.
C) outsourcing.
D) a high standard of living.

Question 24

In ten to twenty years, the Social Security system will be supporting many more retirees than it does now, while at the same time having many fewer contributors per retiree.

Question 25

Money has value because the Fed:

A) backs its notes with silver.
B) backs its notes with gold.
C) issues notes in any amount in unlimited quantities.
D) issues only a limited quantity of its notes.

Question 26

In our free enterprise system, the government has no control over economic activities in the private sector.

Question 27

The majority of federal revenue comes from Social Security.

Question 28

The government passing a law that requires drivers to be licensed is an example of the indirect influence of the economy.

Question 29

Social Security is a pay-as-you-go system that depends on how many people are paying into it.

Question 30

At one time in the history of the U.S. progressive income tax system, the top federal tax on high- income individuals was over 90 percent.

Question 31

Each year, the federal and state governments spend over $3 and $1 trillion respectively to fund their activities.

Question 32

The U.S. debt is made up of the nation's:

A) accumulated tribute.
B) accumulated deficits.
C) estimated gains in foreign exchange.
D) accumulated profits.

Question 33

The largest government expenditure program is the Social Security system.

Question 34

One of the most controversial forms of government involvement in the economy is through microeconomics.

Question 35

Government's direct role in the economy involves its control of the laws that specify what individuals and businesses can and cannot do.

Question 36

If a firm is too big to fail, economists argue it is too big to be regulated.

Question 37

In the early- to mid-2000s, the Social Security system ratio had about 1 person drawing out for every 20 people paying in.

Question 38

Credit and the financial sector are the equivalent to an economy's:

A) brain.
B) veins.
C) lungs.
D) heart.

Question 39

Monetary policy does NOT affect:

A) the level of income directly.
B) interest rates.
C) credit availability.
D) inflation.

Question 40

The Copyright Term Extension Act of 1998 is often called the "Ronald McDonald Protection Act."

Question 41

The amount of money the federal government spends on interest payments for its debts has diminished because it has significantly reduced the national debt in the last decade.

Question 42

In 2009, the U.S. government ran a $1.4 trillion deficit.

Question 43

A depression is a period of drastic decline in an economy.

Question 44

In the 1970s, the government instituted many security programs and took a greater role in maintaining the level of employment and in stabilizing the economy.

Question 45

Describe the problem facing the U.S. Social Security system.

Question 46

How is global warming an economic issue? What are economic answers to the problem of global warming and what are criticisms of our current solution? Why must solutions to global warming occur at a global level?

Question 47

What is the government's direct role in the economy? How do federal and state governments spend their budgets? What are the three sources from which governments receive funding?

Question 48

A general fiscal policy is that if total spending in the economy is too low, the government should run a budget surplus.

Question 49

Contractionary monetary policy makes credit harder to get, raises interest rates, and has a downward effect on the level of income.

Question 50

The U.S. is in the globalization crisis today because it violated what is called the economic law of one price.

Question 51

The Keynesian view helped create the field of macroeconomics.

Question 52

What is the fiscal crisis facing the United States? What will the government have to do to solve it? Describe how the phrase "no free lunch" applies to the possible solutions of our fiscal crisis.

Question 53

Over the years, the U.S. government has spent about half of the time in a budget surplus and half in a budget deficit.

Question 54

What is fiscal policy? What is monetary policy? Why are these two policies called primary macroeconomic policies? How does monetary policy differ from fiscal policy?

Question 55

Economics alone provides a relatively easy answer to economic issues in the United States and there is little to be done politically.