Question 1

Which of the following is the best description of the changing expectations of government's role in the economy since the 1930s?

Accepted Answer

A)   People hold the government responsible for a healthy economy.
B)   People demand that the government provide health insurance.
C)   People expect that the government will engage in deficit spending for the public welfare.
D)   People expect the government to print more money in times of inflation.
E)   People expect the government to stay completely out of the economy.

Question 2

How did the Federal Reserve respond to the terrorist attacks of 9/11?

Accepted Answer

A)   It cut interest rates to promote increased investment and spending.
B)   To relieve fear,it required that Wall Street be open for business throughout the emergency.
C)   The Federal Reserve demanded,and received,a seat on the National Security Council.
D)   All of the above were responses by the Federal Reserve to 9/11.
E)   It did not do anything;that was the problem.

Question 3

Less than one-quarter of the federal budget consists of mandatory spending priorities.

Accepted Answer

A) True 
 B)False

Question 4

All tariffs in the United States have been eliminated since the Great Depression.

Accepted Answer

A) True 
 B)False

Question 5

The idea that the government can stimulate a slow economy by increasing public spending or cutting taxes is called

Accepted Answer

A)   laissez-faire economics.
B)   Keynesianism.
C)   social democracy.
D)   rational choice theory.
E)   monetarism.

Question 6

______ were the centerpiece of George W.Bush's economic policy.

Accepted Answer

A)   Protective tariffs
B)   Tax cuts
C)   Antiglobalization measures
D)   Agriculture subsidies
E)   Categorical grants

Question 7

Which of the following was not a result of the 2009 Copenhagen Summit?

Accepted Answer

A)   The meeting ended with no legally binding agreement between countries and no deadline set to reach one.
B)   The meeting ended with a legally binding agreement between countries to limit greenhouse emissions across the world.
C)   Wealthy nations agreed to provide annual funds to developing nations to help them integrate clean technology.
D)   The meeting marked the first time the developing world,including major polluters such as China,committed to reducing their carbon output.
E)   The meeting failed to set a global target for reducing greenhouse emissions.

Question 8

Federal environmental protection laws were first established in the 1890s.

Accepted Answer

A) True 
 B)False

Question 9

Vehicle safety is one of the chief responsibilities of the Department of

Accepted Answer

A)   Transportation.
B)   Consumer Safety.
C)   Commerce.
D)   the Interior.
E)   Health and Human Services.

Question 10

Which of the following statements about the relationship between government and capitalism is false?

Accepted Answer

A)   Government makes it possible for markets to function efficiently.
B)   Government rule-making means that people no longer need to rely on personal trust when conducting business.
C)   Before the Progressive era,the marketplace was untouched by government interference.
D)   Markets break down in nations that have weak governments.
E)   There is much disagreement among the public and politicians over the extent of the role the government should play in the economy.

Question 11

Adam Smith's theory of ______ argues that many individual economic transactions come together to create a greater good for all.

Accepted Answer

A)   rational expectations
B)   the prisoner's dilemma
C)   the invisible hand
D)   trickle-down economics
E)   collective action

Question 12

Keynesian economics argues that government involvement in economic regulation is an unwarranted restriction on individual liberty.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not a benefit to government provided by contracting?

Accepted Answer

A)   Government can acquire services or products at a cheaper rate than if government were to produce them itself.
B)   Government can use its contracting power to encourage desirable behavior among those businesses that have contracts with the government.
C)   Government can use contracting to encourage industries,universities,and other organizations to engage in valuable research.
D)   Government can use contracting to help build up certain segments of the economy.
E)   Government officials almost always use contracting to award businesses and corporations that donated substantial amounts of money to their political campaigns.

Question 14

What is the reserve requirement?

Accepted Answer

A)   the requirement that the federal government have at least 10 percent of the federal deficit on hand in liquid assets at all times
B)   the rule that every bank must have a certain amount of cash and negotiable securities on hand at all times
C)   the demand that there should never be more money circulating in print or computer accounts than there is gold in the U.S.Bank
D)   the requirement that the Federal Reserve Board limit the deficit to 10 percent of the gross domestic product
E)   the interest rate on loans between banks that the Federal Reserve Board influences by affecting the supply of money available

Question 15

What did Congress see as the principal cause of the economic recession that began in 2008?

Accepted Answer

A)   too much government spending on social welfare programs
B)   not enough government spending on social welfare programs
C)   the high prices Americans pay for health care and health insurance
D)   excessive risk taking by investors
E)   too much government regulation on risk-trading (or "derivatives") markets

Question 16

The important monetarist Milton Friedman argued that government regulation is an important way to fine-tune the economy.

Accepted Answer

A) True 
 B)False

Question 17

Classic laissez-faire theory argues all of the following except that

Accepted Answer

A)   government monopolies depress economic growth.
B)   people's selfishness can promote the public good.
C)   a truly efficient government allows private enterprise to provide all government services.
D)   economic competition unleashes growth and innovation.
E)   government should stay out of the private sector except when providing a select number of public goods.

Question 18

Which of the following is not a function of the Securities and Exchange Commission?

Accepted Answer

A)   It requires companies to disclose information about the stocks and bonds that they are selling.
B)   It informs buyers of investment risks.
C)   It protects the confidentiality of all sales of stocks and bonds.
D)   It protects investors against fraud.
E)   It helps the government promote reliable access to new investments through its regulation of financial markets.

Question 19

The federal government's role in providing electricity to rural areas is an example of the fact that

Accepted Answer

A)   government often supplies public goods that are too big or risky for private actors to tackle.
B)   private businesses are always more efficient at providing public goods and services than government actors.
C)   government never gives up control of an industry once they have started to regulate it.
D)   state governments are not allowed under the Constitution to engage in any activity related to the provision of public goods.
E)   the federal government has rarely undertaken projects to produce public goods.

Question 20

Which statement is the key argument of John Maynard Keynes?

Accepted Answer

A)   Government can pull an economy out of a recession by stimulating demand and creating a cycle of increased production and jobs.
B)   Government regulations during economic depressions must be lifted because they destroy the already slim profit margin.
C)   The economy of size shows that monopolies are the most efficient way to distribute goods throughout a national marketplace.
D)   A well-functioning economy need never experience an economic downturn.
E)   Government can rectify a falling economy by regulating the money supply.

Exam 16: Government and the Economy

Vehicle safety is one of the chief responsibilities of the Department of

Correct AnswerverifiedShow Answer

The federal government's role in providing electricity to rural areas is an example of the fact that

Correct AnswerverifiedShow Answer

What is the reserve requirement?

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Keynesian economics argues that government involvement in economic regulation is an unwarranted restriction on individual liberty.

Correct AnswerverifiedShow Answer

The important monetarist Milton Friedman argued that government regulation is an important way to fine-tune the economy.

Correct AnswerverifiedShow Answer

The idea that the government can stimulate a slow economy by increasing public spending or cutting taxes is called

Correct AnswerverifiedShow Answer

Less than one-quarter of the federal budget consists of mandatory spending priorities.

Correct AnswerverifiedShow Answer

Which of the following is the best description of the changing expectations of government's role in the economy since the 1930s?

Correct AnswerverifiedShow Answer

What did Congress see as the principal cause of the economic recession that began in 2008?

Correct AnswerverifiedShow Answer

Adam Smith's theory of ______ argues that many individual economic transactions come together to create a greater good for all.

Correct AnswerverifiedShow Answer

Which of the following statements about the relationship between government and capitalism is false?

Correct AnswerverifiedShow Answer

Federal environmental protection laws were first established in the 1890s.

Correct AnswerverifiedShow Answer

Which statement is the key argument of John Maynard Keynes?

Correct AnswerverifiedShow Answer

Classic laissez-faire theory argues all of the following except that

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Which of the following is not a benefit to government provided by contracting?

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______ were the centerpiece of George W.Bush's economic policy.

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Which of the following was not a result of the 2009 Copenhagen Summit?

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All tariffs in the United States have been eliminated since the Great Depression.

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How did the Federal Reserve respond to the terrorist attacks of 9/11?

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Which of the following is not a function of the Securities and Exchange Commission?

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