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Inflation is best understood as the rate at which __________. |
prices for goods and services increase |
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In the nineteenth century, industrialization worsened the effects of natural __________. |
business cycles |
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Which of the following is true with respect to Keynesian economic policy? |
Keynesian economic policy relies on taxation and expenditures by government to control inflation and unemployment. |
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Which of the following is true about Social Security? |
It is a retirement benefit program for citizens. |
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What is the source for the money in the Social Security Trust Fund? |
payroll taxes |
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What is a government program called that provides benefits to all citizens who meet eligibility requirements? |
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? |
gross domestic product |
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Medicare is what type of federal program? |
social insurance |
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Which of the following entities is responsible for setting interest rates in the United States? |
the Federal Reserve Board |
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What is the main purpose of monetary policy? |
to affect how much money is available to businesses and banks |
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The main goal of fiscal policy is __________. |
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? |
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? |
because benefits are distributed automatically to citizens who qualify, based on a set of guidelines |
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What is the purpose of deregulation in the American political economy? |
Deregulation seeks to increase the barriers to economic productivity. |
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The primary purpose of the Troubled Assets Relief Program (TARP) was to __________. |
bail out the banking sector |
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The annual shortfall between federal revenues and expenditures is known as which of the following? |
the budget deficit |
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If the Federal Reserve wanted to slow the rate of economic growth, it would most likely __________. |
increase interest rates |
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In general, a recession does which of these? |
generates a response by the federal government |
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Which of the following is true regarding mandatory spending policies? |
They create a serious ongoing financial burden on the federal government. |
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In a(n) __________ state, the government takes an active role in guiding and regulating the private economy. |
interventionist |
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U.S. monetary policy involves which of the following? |
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? |
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? |
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 __________. |
raise interest rates |
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Lowering the discount rate would have which of the following effects? |
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 __________. |
citizens who meet eligibility criteria |
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Which of the following provides the greatest source of revenue for the federal government? |
income taxes |
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In an economic slowdown, Keynesian economic policy would advocate __________. |
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? |
increasing government spending |
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If Congress adopts a policy to make cars more fuel efficient, they have adopted a __________. |
regulatory policy |
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Which of the following would indicate that the economy is experiencing inflation? |
Interest rates are increasing. |
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Which of these is most consistent with the philosophy of Keynesianism? |
government provision of the 2008 federal stimulus package |
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Which of the following is accurate with regard to the national debt? |
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? |
a severe recession |
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If you support laissez-faire economic policies, you would generally favor __________. |
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? |
a food safety policy |
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Which of the following is an example of monetary policy? |
lowering interest rates |
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If the Federal Reserve wanted to increase lending by banks, what would it do to reserve requirements? |
Lower the reserve requirements for banks |
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Why might some businesses lobby for increased regulation by the federal government? |
to protect themselves from domestic and foreign competitors |
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Which of the following best characterizes the federal budget process? |
complicated |
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Which of these statements best describes the influence of interest rate adjustments by the Federal Reserve? |
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? |
to minimize the effects of negative externalities |
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What is the long-term concern about the Social Security Trust Fund? |
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? |
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? |
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? |
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? |
Increase the minimum retirement age. |
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If you subscribe to Keynesian economic policies, you are most concerned with __________. |
unemployment |
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Deregulation of which of the following industries was probably the biggest factor contributing to the economic crisis that began in 2008? |
the investment banking industry |
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Why is monetary policy often the preferred way to address an economic crisis? |
because it is both easy to implement and has fewer long-term consequences than deficit spending |
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Which of the following was the biggest contributor to the economic crisis that began in 2008? |
deregulation of the investment banking industry |
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