US Gov APDC Ch 17

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Inflation is best understood as the rate at which
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Prices for goods and services increase
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What do economists use gross domestic product to measure?
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The total value of goods and services produced in the economy.
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In the nineteenth century, industrialization worsened the effects of natural __________.
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Business Cycles
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Laissez-faire economics holds which of the following to be true?
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The government should not take an active role in the eceonomy.
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Which of the following is true with respect to the Keynesia economic policy?
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Keynesian exonomic policy relies on taxation and expenditures by government to control inflation and unemployment.
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The size of the national debt is
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Rising
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Which of the following is true about Social Security?
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It is a retirmement benefit program for citizens.
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What is the source for the money in the Social Security Trust Fund?
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Payroll taxes
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One of the biggest concerns surrounding the Social Security Trust Fund is that
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there will not be enough money to pay future retirees
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Which of the following strategies does monetary policy dictate in inflationary periods?
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The Federal Reserve should raise interest rates
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What is a government program called that provides benefits to all citizens who meat elegibility requirements?
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An entitlement program.
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The total market value of all goods and services produced in an area during a year is termed which of the following?
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Gross Domestic Product
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Which of the following constitutes the largest portion of the federal budget?
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Mandatory spending
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Medicare is what type of federal program?
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Social insurance
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What is the primary tool that monetary policy uses to affect the overall economy?
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Interest rates
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Which of the following entities is responsible for setting interest rates in the United States?
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Federal Reserve Board
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Which of the following terms describes U.S. economic policy during the nineteenth century?
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Laissez-faire
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What is the main purpose of monetary policy?
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To affect how much money is available to businesses and banks.
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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.
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What distinguishes a means-tested program from a social insurance program?
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A social insurance program provides benefits based upon lifetime contributions, while a means tested program provides benefits based upon demonstrated need.
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Why are some safety net programs referred to as entitlements?
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Because benefits are distributed automatically to citizens who qualify, based on a set of guidelines.
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Which of the following helps explain the difficulty in solving the long-term debt problem in the United States?
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The rise of extreme partisanship in recent years has made compromise in this area highly unlikely
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What is the purpose of deregulation in the American political economy?
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Deregulation seeks to increase the barriers to economic productivity.
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Regulatory legislation at the start of the twentieth century primarily dealt with __________.
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Labor unions
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The primary purpose of the Troubled Assets Relief Program (TARP) was to __________.
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Bail out the banking sector
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The annual shortfall between federal revenues and expenditures is known as which of the following?
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The budget deficit
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If the Federal Reserve wanted to slow the rate of economic growth, it would most likely __________.
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Increase interest rates
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In general, a recession does which of these?
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Generates a response by the federal government
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Which of the following is true regarding mandatory spending policies?
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They are designed to help states avoid having a budget surplus.
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In a(n) __________ state, the government takes an active role in guiding and regulating the private economy.
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Interventionist
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U.S. monetary policy involves which of the following?
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Interest rates and the money supply
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Which of the following statements regarding the role of the Federal Government in the economy is correct?
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Presidential election outcomes are heavily influenced by the health of the economy.
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Which of these statements best characterizes the effects of the recent economic crisis?
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The overall influence of the federal government in the economy has increased.
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If the Federal Reserve Board needed curb inflation, it would most likely __________.
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Raise interest rates
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Lowering the discount rate would have which of the following effects?
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It would encourage banks to borrow more and to extend more loans at lower rates.
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An entitlement program provides benefits to __________.
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Citizens who meet eligibility criteria
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Which of the following provides the greatest source of revenue for the federal government?
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Income taxes
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In an economic slowdown, Keynesian policy would advocate…
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Increasing government spending.
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Upon taking office in 2009, which of the following did President Obama advocate to deal with the economic crisis?
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Increasing government spending
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If Congress adopts a policy to make cars more fuel efficient, they have adopted a __________.
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Regulatory policy
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Which of the following would indicate that the economy is experiencing inflation?
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Interest rates are increasing.
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Which of these is most consistent with the philosophy of Keynesianism?
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Government provision of the 2008 federal stimulus package
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Which of the following is accurate with regard to the national debt?
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The national debt as a percentage of GDP has drastically increased in recent years?
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Which of the following most accurately describes the recent financial crisis in the United States?
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A severe recession
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If you support laissez-faire economic policies, you would generally favor…
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A reduction in the amount of economic regulation by the government.
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Which of the following would be considered a regulatory policy?
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A food safety policy
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Which of the following is an example of monetary policy?
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Lowering interest rates
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If the Federal Reserve wanted to increase lending by banks, what would it do to reserve requirements?
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Lower the reserve requirements for banks
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Why might some businesses lobby for increased regulation by the federal government?
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To protect themselves from domestic and foreign competitors.
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Which of the following best characterizes the federal budget process?
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Complicated
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Which of these statements best describes the influence of interest rate adjustments by the Federal Reserve?
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They can spur economic growth by increasing the available money supply.
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What is the purpose of government regulation of the economy?
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To minimize the effects of negative externalities
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What is the long-term concern about social Security Trust Fund?
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There will be too few workers contributing to support the increasing number of retirees.
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Which of the following was the biggest contributor to the economic crisis that began in 2008?
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Deregulation of the investment banking industry
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If a government wanted to use monetary policy to increase economic growth, which of the following steps should be taken?
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Decrease interest rates to increase the amount of money in supply.
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According to Table 17.1, the largest number of Americans benefit from which means-tested program?
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Supplemental Nutrition Assistance Program
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Which of the following is a possible solution to the long-term problem of solvency in the Social Security Program?
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Increase the minimum retirement age
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If you subscribe to Keynesian economic policies, you are most concerned with __________.
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Unemployment
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Dregulation of which of the following industries was probably the biggest factor contributing to the economic crisis that began in 2008?
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The investment banking industry.
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Why is monetary policy often the preferred way to address an economic crisis?
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Because it is both easy to implement and has fewer long-term consequences than deficit spending

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