Economy: Chapter 15 – Flashcards
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Supporters of supply-side economics believe . . . government should be used as a tool to increase demand for goods. demand for goods increases when prices rise. taxes have a strong negative influence on economic output. tax cuts have little impact on worker productivity.
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taxes have a strong negative influence on economic output.
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The federal government's use of taxing and spending to keep the economy stable: Treasury bill productive capacity revenue effect fiscal policy
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fiscal policy
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All are characteristics of classical economics except: a free market economy. the law of supply and demand. the idea of achieving market equilibrium. a significant role for government in the running of the economy.
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a significant role for government in the running of the economy.
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An example of expansionary fiscal policy would be . . . cutting taxes. cutting government spending. cutting production of consumer goods. cutting prices of consumer goods.
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cutting taxes.
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In contrast with classical economics, Keynesian economics . . . reduces the role of government. takes a broader view of the economy. relies more heavily on the laws of supply and demand. more strongly emphasizes the importance of individual businesses to the overall health of the economy.
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takes a broader view of the economy.
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A type of short-term bond that must be repaid within a year or less: Treasury bill monetary note monetary mortgage fiscal bond
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Treasury bill
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The maximum output that an economy can sustain over a period of time: demand cap productive capacity supply cap manufacturer's index
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productive capacity
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The purpose of expansionary fiscal policy is to . . . increase output. prevent hyperinflation. slow the growth of the GDP. increase the separation between government and private industry.
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increase output.
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An example of contractionary fiscal policy would be . . . cutting taxes. decreasing government spending. increasing production of consumer goods. expanding the government's role in regulating private industry.
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decreasing government spending.
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The national debt rose during Ronald Reagan's term as president for all these reasons except: Select the one that did not occur. tax cuts. the costs of running a war. increased funding for defense spending. an unexpected economic downturn.
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the costs of running a war.
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Every hour, the federal government spends about ____________ . $200 thousand. $20 million. $200 million. $20 billion.
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$200 million.
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What government document authorizes specific spending—how much each agency will receive and how much will be spent on programs? federal budget appropriation bill accounts payable Treasury report
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federal budget
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All are problems associated with high national debt except that it . . . reduces funds available for businesses to invest. makes it harder for the government to fund projects. makes investing in treasury bonds, notes, and bills very risky. can slow the growth of the GDP.
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makes investing in treasury bonds, notes, and bills very risky.
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The federal budget is put together . . . every other year. by Congress and the White House. to report to Congress on the preceding year's expenditures. in order to reimburse state governments for costs of federally funded programs.
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by Congress and the White House.
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Keynesian economics failed to deal successfully with . . . World War II. the Great Depression. high inflation during the 1970s. low unemployment rate during the 1960s.
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high inflation during the 1970s.
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All are reasons why it is difficult to put a balanced fiscal policy into practice except: Select the one that does not get in the way of implementing a balanced fiscal policy. the need for discretionary spending. political pressures for reelection. difficulty of predicting future economic performance. difficulty of coordinating the needs of many different agencies.
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the need for discretionary spending.
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The idea that every one dollar change in fiscal policy creates a greater than one dollar change in the national income: supply-side index productive capacity multiplier effect equilibrium effect
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multiplier effect
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An accurate statement about achieving a balanced budget would be: . . . in 1995, Congress passed a constitutional amendment that requires a balanced budget. most states require a balanced budget for state spending. by the end of the twentieth century, the federal government had paid off most of its debts and had achieved a balanced budget. classical economists believe that a balanced budget is not in the best interest of the economy.
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most states require a balanced budget for state spending.
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When revenues exceed (are greater than) expenditures, . . . there is a budget deficit. there is a budget surplus. the government has to borrow money at higher interest rates. the government has to cut spending.
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there is a budget surplus.
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When a person buys a United States Savings Bond, they . . . loan money to the government. borrow money from a savings and loan association. donate money for special government projects. pay for their child's college education.
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loan money to the government.
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All these people are well-known classical economists except: Adam Smith. David Ricardo. John Maynard Keynes. Thomas Malthus.
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John Maynard Keynes.
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An example of an automatic stabilizer is ____________ . taxes. inflation. interest rates. U.S. savings bonds.
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taxes.
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A written document indicating the amount of money the government expects to receive for a certain year and authorizing the amount of money the government can spend that year: Treasury bill OMB index federal budget supply-side statement
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federal budget
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The Office of Management and Budget (OMB) . . . is part of the legislative branch of government. is responsible for deciding how much money each government agency receives in the budget. is a privately funded agency responsible for overseeing the preparation of the federal budget. is the office that has the final power to approve or disapprove of the federal budget proposed by Congress.
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is responsible for deciding how much money each government agency receives in the budget.
