AP GOV Chapter 17 – Flashcards
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1) 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) a central government determines production and price levels. C) private individuals act according to market principles and enhance the general welfare, with no government involvement. D) individuals and corporations share ownership of the principal means of production, and profits are distributed equally. E) all individuals have an equal chance of owning the principal means of production, often in the form of stock ownership.
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A) individuals and corporations own the principal means of production, through which
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2) A mixed political economy is one in which A) both agricultural and manufacturing sectors are active. B) the government, while not commanding the economy, is still deeply involved in economic decisions. C) the government controls some, but not all, sectors of the economy. D) inflation and unemployment are uncorrelated. E) the government consults with corporate directors on the nature and magnitude of government regulation.
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B) the government, while not commanding the economy, is still deeply involved in economic decisions.
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3) Capitalism is A) an advanced system of stock management. B) an economic system in which individuals and corporations own the principal means of production. C) an economic system in which public agencies manage fundamental aspects of monetary policy. D) an economic system in which the government owns the means of production. E) an economic system based on the Federal Reserve.
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B) an economic system in which individuals and corporations own the principal means of production.
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4) Conservatives complain about A) the size of the public sector. B) excessive regulation of the private sector. C) the oppressive scope of government. D) all of the above E) new legislation limiting corporate power.
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D) all of the above
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5) The consumer price index measures A) the change what various incomes can buy. B) the change in the amount of taxes paid by individuals. C) the change in the cost of buying a fixed basket of good and services. D) the change in income, controlling for periods of unemployment. E) the change in the prime lending rate.
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C) the change in the cost of buying a fixed basket of good and services.
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6) Hundreds, if not thousands, of studies by political scientists have concluded that voters A) ignore the economic consequences of government policies. B) vote for candidates who promise the most. C) vote solely on the basis of partisanship alone. D) vote for the candidate who will benefit the voter?s financial condition the most. E) vote against their personal financial interests.
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D) vote for the candidate who will benefit the voter?s financial condition the most.
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7) Which of the following statements is TRUE about America?s political parties and relatively high inflation? A) Neither the Democrats nor the Republicans are willing to accept relatively high inflation. B) The Democrats are more willing to accept relatively high inflation than the Republicans. C) Both the Democrats and the Republicans are willing to accept relatively high inflation. D) The Republicans are more willing to accept relatively high inflation than the Democrats. E) Studies have found no correlation between a given political party and its acceptance of high inflation rates.
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B) The Democrats are more willing to accept relatively high inflation than the Republicans.
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8) Union members, minority group members, and the poor are more likely to vote ________ than higher income people are. A) Republican (due to greater concern about unemployment) B) Democratic (due to greater concern about both unemployment and inflation) C) Democratic (due to greater concern about unemployment) D) Democratic (due to greater concern about inflation) E) Republican (due to greater concern about inflation)
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C) Democratic (due to greater concern about unemployment)
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9) Business owners, managers, and professional people are more likely to vote ________ than lower income people are. A) Republican (due to greater concern about inflation) B) Democratic (due to greater concern about unemployment) C) Democratic (due to greater concern about inflation) D) Republican (due to greater concern about both inflation and unemployment) E) Republican (due to greater concern about unemployment)
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A) Republican (due to greater concern about inflation)
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10) The Republican party is more concerned than the Democrats about A) crime and health problems that are linked to unemployment. B) high interest rates. C) inflation than unemployment. D) staving off a recession. E) raising the consumer price index.
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C) inflation than unemployment.
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11) The nation?s unemployment rate is determined by A) monthly changes in income tax withholdings monitored by the Internal Revenue Service. B) a monthly random survey of the population. C) randomly selected payroll audits by Federal Reserve Board analysts. D) monthly reports by the unemployment department of each state. E) monthly reports filed by all employers regarding the number of their employees
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B) a monthly random survey of the population.
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12) The ________ conducts a huge statistical survey of the population monthly to measure the nation?s unemployment rate. A) Federal Reserve Board B) Council of Economic Advisors C) Bureau of Labor Statistics D) Census Bureau E) Office of Management and the Budget
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C) Bureau of Labor Statistics
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13) The official unemployment rate underestimates unemployment because it leaves out A) discouraged workers. B) students. C) housewives. D) the high-tech sector. E) the homeless.
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A) discouraged workers.
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14) In the 2004 presidential election, people who thought their families were doing better off voted A) 2 to 1 for George W. Bush. B) 4 to 1 for George W. Bush. C) 10 to 1 for George W. Bush. D) 4 to 1 for John Kerry. E) 2 to 1 for John Kerry.
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B) 4 to 1 for George W. Bush.
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15) Inflation was generally highest during the A) 1930s. B) 1970s. C) 1960s. D) 1980s. E) 1990s
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B) 1970s.
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16) The principle that the government should not meddle with the economy is known as A) Keynesian economic theory. B) caveat emptor. C) monetarism. D) laissez faire. E) conservatism.
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D) laissez faire.
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17) When the stock market crash of 1929 sent unemployment soaring, President Herbert Hoover A) embraced Keynesian economic theory. B) experimented with dozens of new federal policies and work projects to put the economy back on track. C) pushed a massive tax cut through Congress to stimulate the economy. D) clung to the laissez-faire economic theory. E) put strict wage, price, and production controls into effect nationwide
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D) clung to the laissez-faire economic theory. D) clung to the laissez-faire economic theory.
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18) Laissez faire is the A) principle that government should not meddle with the economy. B) term for a negative balance of trade, meaning imports exceed exports. C) belief that government, and particularly presidents, have virtually no influence over the economy because whatever mechanisms the government might use to affect economic growth are far too weak to change the individual, daily market decisions of 260 million Americans. D) theory that government spending can help the economy weather its normal ups and downs, even if it means going into debt. E) difference between the nation?s unemployment rate and inflation rate.
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A) principle that government should not meddle with the economy.
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19) Who is the current chair of the Federal Reserve Board? A) Alan Greenspan B) Ben Bernanke C) Mike Emmons D) Ralph Nader E) Robert Wagner
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B) Ben Bernanke
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20) ________ is the manipulation of the supply of money and credit in private hands to promote the nation?s economic health. A) Keynesianism B) Laissez faire C) Fiscal policy D) Monetary policy E) Supply-side policy
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D) Monetary policy
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21) 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) stimulating supply through lower taxes is the key to economic health. 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) government spending can help the economy weather its normal ups and downs, even if it means running up a debt.
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C) the supply of money is the key to the nation?s health, and having too much cash and credit in circulation stimulates inflation.
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22) Monetarists want to A) use government spending and job programs during economic downturns to inject money into the economy. B) reduce taxes in order to stimulate the growth of the money supply. C) hold the growth in money supply to equal the rise in the gross national product after inflation. D) tie the value of the dollar to the value of gold, thus increasing and stabilizing the money supply. E) keep the government?s hands off the economy
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C) hold the growth in money supply to equal the rise in the gross national product after inflation.
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23) Monetary policy is directly regulated by A) the United States Mint. B) the Federal Reserve System. C) Congress and the President. D) the Department of Commerce. E) the Treasury Department.
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B) the Federal Reserve System.
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24) The Federal Reserve System is governed by A) a seven-member Board of Governors appointed by the President and confirmed by the Senate. B) the director of the Internal Revenue Service. C) a twelve-member Board of Governors chosen by local bankers in each of the twelve Federal Reserve districts. D) the President?s Council of Economic Advisors. E) the Secretary of the Treasury, whose name appears on all currency.
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A) a seven-member Board of Governors appointed by the President and confirmed by the Senate.
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25) A supporter of laissez-faire policy would oppose A) supply-side economics. B) a strict separation between government and business. C) governmental intervention in the economy. D) reducing governmental economic regulation. E) reducing government subsidies of failing businesses.
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C) governmental intervention in the economy.
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26) Since the New Deal, A) policymakers have made it part of their regular business to seek to control the economy. B) the federal government has become less involved in economic policy. C) the principle of laissez faire has dominated economic policy. D) economic issues have become less politicized. E) Keynesian economics has replaced supply-side theory in American fiscal policy
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A) policymakers have made it part of their regular business to seek to control the economy.
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27) The economic theory that considers the supply of money as the key to the nation?s economic health is A) supply-side economics. B) currency-reserve theory. C) monetarism. D) Keynesian economic theory. E) laissez-faire capitalism.
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C) monetarism.
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28) Monetarists emphasize that economic conditions are related to A) the level of government deficit spending. B) the value of the dollar in global currency markets. C) declining productivity. D) how much money government spends. E) the supply of money
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E) the supply of money
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29) The main agency for making monetary policy is the A) Office of Management and Budget. B) United States Treasury. C) Federal Reserve Board. D) Congressional Budget Office. E) Council of Economic Advisors.
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C) Federal Reserve Board.
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30) The Federal Reserve Board is intended to be A) formally under the control of Congress. B) half Democrat and half Republican. C) replaced by each new president. D) formally under the control of the president. E) independent of partisan politics.
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E) independent of partisan politics.
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32) An example of the use of monetary policy is A) instituting a freeze on prices. B) requiring banks to keep more money on reserve. C) subsidizing farmers. D) making low-interest, long-term loans to college students. E) all of the above
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B) requiring banks to keep more money on reserve.
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33) According to monetarists, making too much money available to borrow may lead to A) widespread bankruptcies. B) economic belt-tightening. C) inflation. D) recession. E) too little credit.
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C) inflation.
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34) Members of the Federal Reserve System?s Board of Governors A) are subject to replacement by each new president. B) are given 14-year terms designed to insulate them from political pressures. C) can be fired by the president at any time. D) are career civil-servants, neither appointed nor fired by presidents. E) merely carry out policy decided by the Treasury Department.
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B) are given 14-year terms designed to insulate them from political pressures.
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35) The Federal Reserve System?s Board of Governors sets discount rates at a higher level A) to assist incumbent presidents near election time. B) thus lowering the cost of money and stimulating borrowing. C) to combat high unemployment. D) to increase the amount of money in circulation. E) to decrease the amount of money in circulation
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E) to decrease the amount of money in circulation
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36) Which of the following is NOT one of the measures used by the Fed to control the money supply? A) It sets discount rates for the money that banks can borrow from the Federal Reserve. B) It can buy and sell government securities in the market, thereby either expanding or contracting the money supply. C) It sets reserve requirements that determine the amount of money that banks must keep in reserve at all times. D) It dictates the minimum prime lending rate by commercial banks. E) none of the above
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D) It dictates the minimum prime lending rate by commercial banks.
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37) Which of the following is NOT influenced in a major way by the actions of the Fed? A) money supply B) inflation C) commercial interest rates D) the minimum wage E) the unemployment rate
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D) the minimum wage
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38) Fiscal policy is A) taxing, spending, and borrowing decisions shaped mostly by Congress and the president. B) the manipulation of interest rates by the government to affect economic growth rates. C) based on the principle that government should not meddle with the economy. D) the manipulation of the supply of money and credit in private hands. E) the reduction of taxes in order to stimulate the economy
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A) taxing, spending, and borrowing decisions shaped mostly by Congress and the president.
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39) Taxing, spending, and borrowing decisions by Congress and the president are known collectively as A) fiscal policy. B) econometrics. C) supply-side economics. D) monetary policy. E) laissez faire.
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A) fiscal policy.
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40) The most important political action in setting monetary policy is A) Congress. B) secretary of the treasury. C) the president. D) the Federal Reserve. E) International Monetary Fund
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D) the Federal Reserve.
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An important tool in fiscal policy is the A) control of interest rates. B) level of government spending as indicated in the budget. C) use of price supports. D) amount of money banks must keep on deposit. E) all of the above
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B) level of government spending as indicated in the budget.
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Taxing, spending, and borrowing policies of the federal government are called A) fiscal policy. B) tax expenditure policy. C) apportionment policy. D) supply-side economics. E) monetarism.
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A) fiscal policy.
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Keynesian economic theory argues for A) the government keeping its hands off the economy. B) stimulating the economy through manipulating the nation?s money supply. C) stimulating the economy through massive tax cuts and reducing the size of the national government. D) stimulating the economy through government spending programs. E) government wage and price controls to control inflation.
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D) stimulating the economy through government spending programs.
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) ________ encourages government to create jobs for people during times of severe unemployment in order to get money into the hands of consumers and stimulate the entire economy. A) Supply-side economics B) Industrial policy C) Laissez faire D) Monetary policy theory E) Keynesian economic theory
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E) Keynesian economic theory
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The Keynesian economic theory argues that government?s role in an economic depression should be to A) reduce demand. B) lower taxes. C) increase demand. D) increase supply. E) increase the total money supply with lower interest rates.
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C) increase demand.
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A believer in Keynesian economic theory would stress that A) government should avoid involvement in the economy. B) the Federal Reserve Board should be abolished. C) government should stabilize the economy through its spending policies. D) government spending should be reduced when unemployment rises. E) the dollar should be convertible to gold on demand, thus tying its value to gold and stabilizing its value.
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C) government should stabilize the economy through its spending policies.
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The economic theory that would argue that government can spend its way out of a depression by stimulating the economy through spending is A) Keynesianism. B) Marxism. C) Reaganomics. D) monetarism. E) red ink economics
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A) Keynesianism.
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Jumping into the business of consumer protection in the 1960s and 1970s, the ________ made new rules about product labeling, exaggerated product claims, and the use of celebrities in advertising. A) Federal Trade Commission B) Consumer Products Safety Commission C) Food and Drug Administration D) Clayton Antitrust Act E) Consumer Protection Agency
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A) Federal Trade Commission
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________, supported by President Reagan, was encouraged by the economist Arthur Laffer. A) Deficit spending B) Supply-side economics C) Keynesian economic theory D) A strict laissez-faire system E) Monetarism
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B) Supply-side economics
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According to proponents of supply-side economics, A) increasing government spending provides an incentive to invest in business expansion. B) decreasing the supply of money reduces the federal deficit. C) borrowing money decreases the risk of unemployment and recession. D) cutting taxes leads to more incentive to save, work harder, and create more jobs. E) increasing the supply of goods available for consumption lowers prices and reduces the inflation rate.
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D) cutting taxes leads to more incentive to save, work harder, and create more jobs.
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President Reagan?s economic policies emphasized A) balanced budgeting through across-the-board cuts in all categories of government spending. B) the application of Keynesian economic theory to stimulate or slow the economy through lowering or raising taxes. C) supply-side economics in which tax cuts and deregulation are designed to free funds for savings and investment. D) industrial policy which targeted high tech industries for government assistance in helping them develop and compete in international markets. E) first balancing the budget and then cutting taxes.
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C) supply-side economics in which tax cuts and deregulation are designed to free funds for savings and investment.
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George W. Bush?s tax cuts in 2001 were based on A) stagflation. B) the Federal funds rate. C) supply-side economics. D) Keynesian economics. E) hyperinflation.
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C) supply-side economics.
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Major corporate corruption scandals in the 1990s A) were largely ignored by Congress. B) were ignored by conservatives. C) have had few economic effects. D) followed an era of corporate concentration. E) resulted in prosecution.
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D) followed an era of corporate concentration.
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Since the 1980s big business was particularly characterized by A) the breakup of many multinational corporations. B) an increase in corporate mergers. C) a decline in foreign competition. D) an increase in government regulation. E) an increase in ethical concerns.
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B) an increase in corporate mergers.
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The Sherman Act of 1890 was passed as ________ measure. A) a tariff reform B) a monetary reform C) a Civil War reparations D) an antitrust E) a pro-labor
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D) an antitrust
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The purpose of antitrust legislation is to A) promote the rights of unions. B) prevent foreign investors from owning majority interests in American companies. C) stop the growth of multinational corporations. D) ensure competition and prevent monopolies. E) foster industrial growth through such measures as tariffs and quotas to keep out foreign competition.
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D) ensure competition and prevent monopolies.
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A famous and recent antitrust case pursued by the Clinton administration involved A) Disney Enterprises. B) McDonald?s. C) Microsoft. D) AT&T. E) none of the above
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C) Microsoft.
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Which of the following is NOT true about the Food and Drug Administration? A) It has the responsibility to ascertain the safety and effectiveness of new drugs before approving them for marketing in America. B) It has broad regulatory powers over the manufacturing, contents, marketing, and labeling of food and drugs. C) It has the regulatory power to cap the retail prices of food and drugs and prevent profiteering by food and drug companies. D) Recent budget cuts have left it overburdened and seriously understaffed. E) All of these are true.
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C) It has the regulatory power to cap the retail prices of food and drugs and prevent profiteering by food and drug companies.
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The first major consumer protection policy was the A) Product Safety Act. B) Food and Drug Act. C) Environmental Protection Act. D) Wagner Act. E) Consumer Credit Protection Act.
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B) Food and Drug Act.
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Prior to the New Deal era of the 1930s, the national government A) usually allied itself with business elites to squelch labor unions. B) forbade workers from joining unions. C) actively encouraged workers to join unions. D) guaranteed collective bargaining rights for those workers who formed a viable union. E) set long prison terms for anyone convicted of unionization activity.
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A) usually allied itself with business elites to squelch labor unions.
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The right of American workers to collective bargaining was first guaranteed by the National Labor Relations Act, also known as the ________ Act. A) Taft-Hartley B) Clayton Antitrust C) Wagner D) Roosevelt E) Hawley-Smoot
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C) Wagner
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Which of the following is NOT true of the Wagner Act? A) It gave states the power to adopt right-to-work laws. B) It stated that the right of workers to collective bargaining was guaranteed by the national government. C) It represented a sharp break with the government?s traditional anti-labor stance. D) It barred employers from firing or discriminating against a worker who advocates the possibility of unionizing. E) none of the above
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A) It gave states the power to adopt right-to-work laws.
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An example of the kind of consumer policy that was first adopted in the 1960s and 1970s was A) protection against unfair competition that would artificially raise consumer prices. B) creation of the Federal Trade Commission to regulate fair business practices. C) protection against adulterated food and drugs. D) trust-busting. E) creation of a Product Safety Commission to regulate the safety of items sold to consumers.
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E) creation of a Product Safety Commission to regulate the safety of items sold to consumers.
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The agency responsible for protecting the public against false and misleading advertising is the A) Food and Drug Administration. B) Justice Department. C) Product Safety Commission. D) Federal Communications Commission. E) Federal Trade Commission.
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E) Federal Trade Commission.
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Truth in lending is enforced by the A) National Labor Relations Board. B) Federal Trade Commission. C) Federal Reserve Board. D) Justice Department. E) Product Safety Commission.
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B) Federal Trade Commission.
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The right of workers to collective bargaining is guaranteed by the A) First Amendment. B) United States Constitution. C) National Labor Relations Act. D) Taft-Hartley Act. E) Clayton Antitrust Act.
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C) National Labor Relations Act.
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An employer is forbidden to fire or discriminate against a worker who advocates the possibility of unionizing under a provision of the A) Landrum-Griffin Act. B) Taft-Hartley Act. C) Clayton Act. D) Wagner Act. E) First Amendment.
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D) Wagner Act.
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The Taft-Hartley Act was aimed at A) expanding the rights of organized labor. B) requiring employers to provide basic health insurance for their employees. C) guaranteeing the right to collective bargaining for the first time in United States history. D) establishing a minimum wage. E) limiting certain practices by organized labor.
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E) limiting certain practices by organized labor.
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Right-to-work laws were permitted by the A) Clayton Antitrust Act. B) Wagner Act. C) National Labor Relations Act. D) Taft-Hartley Act. E) Federal Trade Commission.
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D) Taft-Hartley Act.
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Right-to-work laws are supported by A) union members, but not necessarily organized unions. B) illegal immigrants. C) organized labor unions. D) business management. E) both organized labor unions and management.
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D) business management.
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States were given the right to pass right-to-work laws by the A) National Labor Relations Act. B) Supreme Court ruling in Standard Oil v. California. C) Clayton Antitrust Act. D) Taft-Hartley Act. E) Sherman Antitrust Act.
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D) Taft-Hartley Act.
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Right-to-work laws prohibit A) employers from discriminating against legal aliens in their hiring practices. B) discrimination in the work place on the basis of race or gender. C) requirements that workers join a union to hold their jobs. D) employers from hiring illegal aliens. E) the formation of labor unions.
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C) requirements that workers join a union to hold their jobs.
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Government regulation affects businesses like Wal-Mart by A) monitoring stock transactions. B) affection labor practices such as the minimum wage. C) regulating working conditions and labor practices. D) none of the above E) all of the above (excluding D)
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D) none of the above
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Wal-Mart is the world?s largest company.
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True
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Economic conditions profoundly affect voter?s electoral decisions.
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True
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Ample evidence indicates that on election day voters pay less attention to the economic condition of the nation as a whole than they do to their own financial situation.
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False
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The nation?s unemployment rate is calculated based on a random survey conducted every month by the Bureau of Labor Statistics.
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True
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The nation?s unemployment rate is the percentage of Americans who are not employed full-time.
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False
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Each month the Bureau of Labor Statistics conducts a huge survey to determine the unemployment rate.
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True
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Voters typically exaggerate the power that politicians have to influence the economy.
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True
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Keynesian economic theory encourages the government to manipulate monetary policy in order to stimulate the economy
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False
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The second President Bush used supply-side logic to justify his $1.3 trillion, ten-year tax cut of 2001.
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True
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Ronald Reagan embraced supply-side economics in overseeing a massive tax cut early in his administration.
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True
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The World Trade Organization (WTO) is responsible for regulating international trade.
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True
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The United States economy depends on international trade for its survival.
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True
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Corporate giants have internationalized in the period since World War II becoming what are known as ________, with vast holdings in many countries that are often bigger than most governments.
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multinational corporations
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The nation?s ________ is measured monthly by a random survey of the United States population by the Bureau of Labor Statistics, using a massive sample size to assure policymakers of its accuracy
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unemployment rate
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The government uses the monthly measurement known as the ________, to keep tabs on inflation in the economy.
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Consumer Price Index
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When the stock market crash of 1929 sent unemployment soaring, President Herbert Hoover largely clung to the ________ principle that government should not meddle with the economy
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laissez-faire
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The main government agency for making monetary policy is the ________, headed by a seven-member Board of Governors.
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Federal Reserve Board
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________ describes the impact of the federal budgettaxing, spending and borrowingon the economy.
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Fiscal policy
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The English economist ________ made famous the economic theory that government spending, particularly on jobs programs during a depression, could help an economy weather its normal ups and downs.
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John Maynard Keynes
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What are the main principles of Keynesian economic theory?
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that government spending and deficits can help the economy weather its normal ups and downs; proponents advocate using the power of government to stimulate the economy when it is lagging
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________ economics, made famous by the economist Arthur Laffer and embraced by President Reagan during his first year in office, holds that the more the government taxes, the less people work, and thus the lower the government?s total tax revenues.
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Supply-side
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The ________ is responsible for regulating international trade
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World Trade Organization (WTO)
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Starting with the Sherman Act in 1890, the national government has attempted to ensure competition in business and prevent monopolies through ________ legislation.
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antitrust
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What are the primary functions of the Food and Drug Administration?
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broad regulatory powers over the manufacturing, contents, marketing and labeling of food and drugs
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Created in 1972, the ________ has broad powers to ban hazardous products from the market, regulating the safety of items ranging from toys to lawn mowers.
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Consumer Product Safety Commission
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Passed during the New Deal era, the ________ guaranteed workers the right of collective bargaining for the first time, and set rules to protect unions and organizers.
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National Labor Relations (Wagner) Act
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What are the main provisions of the Taft-Hartley Act?
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continued to guarantee unions the right of collective bargaining, but prohibited various unfair practices by unions, gave the president a power to halt major strikes by seeking a court injunction for an 80-day ?cooling off? period, and permitted states to adopt ?right-to-work? laws
