question

Inflation is best understood as the rate at which

answer

Prices for goods and services increase

question

What do economists use gross domestic product to measure?

answer

The total value of goods and services produced in the economy.

question

In the nineteenth century, industrialization worsened the effects of natural __________.

answer

Business Cycles

question

Laissez-faire economics holds which of the following to be true?

answer

The government should not take an active role in the eceonomy.

question

Which of the following is true with respect to the Keynesia economic policy?

answer

Keynesian exonomic policy relies on taxation and expenditures by government to control inflation and unemployment.

question

The size of the national debt is

answer

Rising

question

Which of the following is true about Social Security?

answer

It is a retirmement benefit program for citizens.

question

What is the source for the money in the Social Security Trust Fund?

answer

Payroll taxes

question

One of the biggest concerns surrounding the Social Security Trust Fund is that

answer

there will not be enough money to pay future retirees

question

Which of the following strategies does monetary policy dictate in inflationary periods?

answer

The Federal Reserve should raise interest rates

question

What is a government program called that provides benefits to all citizens who meat elegibility requirements?

answer

An entitlement program.

question

The total market value of all goods and services produced in an area during a year is termed which of the following?

answer

Gross Domestic Product

question

Which of the following constitutes the largest portion of the federal budget?

answer

Mandatory spending

question

Medicare is what type of federal program?

answer

Social insurance

question

What is the primary tool that monetary policy uses to affect the overall economy?

answer

Interest rates

question

Which of the following entities is responsible for setting interest rates in the United States?

answer

Federal Reserve Board

question

Which of the following terms describes U.S. economic policy during the nineteenth century?

answer

Laissez-faire

question

What is the main purpose of monetary policy?

answer

To affect how much money is available to businesses and banks.

question

The main goal of fiscal policy is

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To use taxes and government spending to help stimulate or slow down economic growth.

question

What distinguishes a means-tested program from a social insurance program?

answer

A social insurance program provides benefits based upon lifetime contributions, while a means tested program provides benefits based upon demonstrated need.

question

Why are some safety net programs referred to as entitlements?

answer

Because benefits are distributed automatically to citizens who qualify, based on a set of guidelines.

question

Which of the following helps explain the difficulty in solving the long-term debt problem in the United States?

answer

The rise of extreme partisanship in recent years has made compromise in this area highly unlikely

question

What is the purpose of deregulation in the American political economy?

answer

Deregulation seeks to increase the barriers to economic productivity.

question

Regulatory legislation at the start of the twentieth century primarily dealt with __________.

answer

Labor unions

question

The primary purpose of the Troubled Assets Relief Program (TARP) was to __________.

answer

Bail out the banking sector

question

The annual shortfall between federal revenues and expenditures is known as which of the following?

answer

The budget deficit

question

If the Federal Reserve wanted to slow the rate of economic growth, it would most likely __________.

answer

Increase interest rates

question

In general, a recession does which of these?

answer

Generates a response by the federal government

question

Which of the following is true regarding mandatory spending policies?

answer

They are designed to help states avoid having a budget surplus.

question

In a(n) __________ state, the government takes an active role in guiding and regulating the private economy.

answer

Interventionist

question

U.S. monetary policy involves which of the following?

answer

Interest rates and the money supply

question

Which of the following statements regarding the role of the Federal Government in the economy is correct?

answer

Presidential election outcomes are heavily influenced by the health of the economy.

question

Which of these statements best characterizes the effects of the recent economic crisis?

answer

The overall influence of the federal government in the economy has increased.

question

If the Federal Reserve Board needed curb inflation, it would most likely __________.

answer

Raise interest rates

question

Lowering the discount rate would have which of the following effects?

answer

It would encourage banks to borrow more and to extend more loans at lower rates.

question

An entitlement program provides benefits to __________.

answer

Citizens who meet eligibility criteria

question

Which of the following provides the greatest source of revenue for the federal government?

answer

Income taxes

question

In an economic slowdown, Keynesian policy would advocate...

answer

Increasing government spending.

question

Upon taking office in 2009, which of the following did President Obama advocate to deal with the economic crisis?

answer

Increasing government spending

question

If Congress adopts a policy to make cars more fuel efficient, they have adopted a __________.

answer

Regulatory policy

question

Which of the following would indicate that the economy is experiencing inflation?

answer

Interest rates are increasing.

question

Which of these is most consistent with the philosophy of Keynesianism?

answer

Government provision of the 2008 federal stimulus package

question

Which of the following is accurate with regard to the national debt?

answer

The national debt as a percentage of GDP has drastically increased in recent years?

question

Which of the following most accurately describes the recent financial crisis in the United States?

answer

A severe recession

question

If you support laissez-faire economic policies, you would generally favor...

answer

A reduction in the amount of economic regulation by the government.

question

Which of the following would be considered a regulatory policy?

answer

A food safety policy

question

Which of the following is an example of monetary policy?

answer

Lowering interest rates

question

If the Federal Reserve wanted to increase lending by banks, what would it do to reserve requirements?

answer

Lower the reserve requirements for banks

question

Why might some businesses lobby for increased regulation by the federal government?

answer

To protect themselves from domestic and foreign competitors.

question

Which of the following best characterizes the federal budget process?

answer

Complicated

question

Which of these statements best describes the influence of interest rate adjustments by the Federal Reserve?

answer

They can spur economic growth by increasing the available money supply.

question

What is the purpose of government regulation of the economy?

answer

To minimize the effects of negative externalities

question

What is the long-term concern about social Security Trust Fund?

answer

There will be too few workers contributing to support the increasing number of retirees.

question

Which of the following was the biggest contributor to the economic crisis that began in 2008?

answer

Deregulation of the investment banking industry

question

If a government wanted to use monetary policy to increase economic growth, which of the following steps should be taken?

answer

Decrease interest rates to increase the amount of money in supply.

question

According to Table 17.1, the largest number of Americans benefit from which means-tested program?

answer

Supplemental Nutrition Assistance Program

question

Which of the following is a possible solution to the long-term problem of solvency in the Social Security Program?

answer

Increase the minimum retirement age

question

If you subscribe to Keynesian economic policies, you are most concerned with __________.

answer

Unemployment

question

Dregulation of which of the following industries was probably the biggest factor contributing to the economic crisis that began in 2008?

answer

The investment banking industry.

question

Why is monetary policy often the preferred way to address an economic crisis?

answer

Because it is both easy to implement and has fewer long-term consequences than deficit spending

US Gov APDC Ch 17 – Flashcards

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