Question 1

Which one of the following is an example of mandatory spending in the federal budget?

Accepted Answer

A)   funding for the national park and forest systems
B)   national security expenditures for the Department of Homeland Security
C)   an entitlement program such as Social Security
D)   funding for the National Aeronautics and Space Administration (NAS
A)

Question 2

Which one of the following statements is accurate?

Accepted Answer

A)   Members of Congress first obtained the institutional capacity to deal with the president in an equal manner in 1921.
B)   Members of Congress first obtained the institutional capacity to deal with the president in an equal manner in 1974.
C)   Members of Congress no longer have the power of the purse.
D)   The president is no longer a relevant player in budgetary matters.

Question 3

According to the monetarist theory of macroeconomic policy,

Accepted Answer

A)   prices drop when there is too much money chasing too few goods.
B)   inflation should be avoided at all costs for the overall good of the economy.
C)   interest rates should be kept low at all times to encourage investment.
D)   a recession can result when there is not enough money in the system.

Question 4

Budgetary spending that is required by law is called mandatory spending.

Accepted Answer

A) True 
 B)False

Question 5

Economist Arthur Laffer, who developed the Laffer Curve, believed that if taxes are raised drastically

Accepted Answer

A)   people will work less because too much of their income will go to the government.
B)   people will work more because they need to offset money going to the government.
C)   people will demand more from government for their hard work, making government bigger and even more expensive.
D)   more people will become unemployed and collect unemployment benefits.

Question 6

Payroll taxes are regressive.

Accepted Answer

A) True 
 B)False

Question 7

When there is too much money flowing and too few goods, it is likely to lead to ________.

Accepted Answer

A)   tax cuts
B)   a rise in taxes
C)   an interest rate cut
D)   inflation

Question 8

Which one of the following positive trade-offs do people usually associate with free trade?

Accepted Answer

A)   lower interest rates
B)   stock market increase
C)   lower prices on consumer goods
D)   the need for less border security

Question 9

Which one of the following is an example of a negative externality?

Accepted Answer

A)   power plants producing pollution as a side effect of energy production
B)   Apple selling computers to Chinese consumers
C)   the Fed buying assets to try to encourage the American economy out of a recession
D)   investing in schools so that citizens are more productive

Question 10

Supporters of the Federal Reserve System argue that it allows the president to have final influence and control over the nation's economic policies.

Accepted Answer

A) True 
 B)False

Question 11

During the Reagan presidency, taxes and spending fell as a share of the overall economy. What was the result?

Accepted Answer

A)   budget surpluses that gradually helped pay off the federal debt
B)   a balanced federal budget by the end of Reagan's presidency
C)   no major changes in the nation's annual deficits or overall debt
D)   continued budget deficits and a significant increase in the nation's federal debt

Question 12

While debating the budget, members of Congress often seek advice from an independent agency called the ________.

Accepted Answer

A)   Congressional Reserve Board
B)   Congressional Budget Office
C)   Congressional Office of Management and Budget
D)   National Budget Office

Question 13

Explain the political tension between those who advocate for economic growth and those who prioritize environmental protection.

Accepted Answer

Grazing rights,environmental policy,and ...

Question 14

Which one of the following statements is accurate?

Accepted Answer

A)   There is more income inequality today in Europe than 100 years ago.
B)   There is more income inequality today in the United States than in Europe.
C)   The top 10 percent of wage earners today in Europe control 10 percent of the wealth.
D)   The top 10 percent of wage earners today in the United States control 50 percent of the wealth.

Question 15

What are the trade-offs in economic policy?

Accepted Answer

A trade-off in economic policy occurs wh...

Question 16

The ________ is the total accumulation of money borrowed by the government.

Accepted Answer

A)   budget deficit
B)   federal debt
C)   budget surplus
D)   federal balance sheet

Question 17

Why are monopolies a problem sometimes?

Accepted Answer

A)   They present a barrier to free trade between nations.
B)   They are typically wasteful and inefficient with their resources.
C)   They force people to buy products they do not want.
D)   A business can raise prices without fear of losing customers to competitors.

Question 18

When Congress and the president agree on federal budgets that run significant deficits over many years, what are the likely economic consequences?

Accepted Answer

A)   Wages rise for workers, leading to inflation.
B)   The nation depletes its reserve supply of gold and precious metals.
C)   Taxes are likely to increase and become more regressive, exacerbating income inequality.
D)   Interest rates might have to increase to attract investors to buy government bonds and securities.

Question 19

The Office of Management and Budget (OMB) has the power to restrict how much money Congress is allowed to spend each fiscal year.

Accepted Answer

A) True 
 B)False

Question 20

The Office of Management and Budget (OMB)  plays an important role in the federal budget-making process because it

Accepted Answer

A)   manages the United States' current account.
B)   provides the Federal Reserve with economic data.
C)   is responsible for creating economic data for the entire executive branch.
D)   is ultimately responsible for putting together the president's budget.

Exam 15: Economic Policy

The Office of Management and Budget (OMB) plays an important role in the federal budget-making process because it

Correct AnswerverifiedShow Answer

Supporters of the Federal Reserve System argue that it allows the president to have final influence and control over the nation's economic policies.

Correct AnswerverifiedShow Answer

Budgetary spending that is required by law is called mandatory spending.

Correct AnswerverifiedShow Answer

Payroll taxes are regressive.

Correct AnswerverifiedShow Answer

Which one of the following is an example of a negative externality?

Correct AnswerverifiedShow Answer

Which one of the following statements is accurate?

Correct AnswerverifiedShow Answer

While debating the budget, members of Congress often seek advice from an independent agency called the ________.

Correct AnswerverifiedShow Answer

Why are monopolies a problem sometimes?

Correct AnswerverifiedShow Answer

Explain the political tension between those who advocate for economic growth and those who prioritize environmental protection.

Correct AnswerverifiedGrazing rights,environmental policy,and ...View AnswerShow Answer

Which one of the following is an example of mandatory spending in the federal budget?

Correct AnswerverifiedShow Answer

Which one of the following positive trade-offs do people usually associate with free trade?

Correct AnswerverifiedShow Answer

The Office of Management and Budget (OMB) has the power to restrict how much money Congress is allowed to spend each fiscal year.

Correct AnswerverifiedShow Answer

What are the trade-offs in economic policy?

Correct AnswerverifiedA trade-off in economic policy occurs wh...View AnswerShow Answer

The ________ is the total accumulation of money borrowed by the government.

Correct AnswerverifiedShow Answer

Economist Arthur Laffer, who developed the Laffer Curve, believed that if taxes are raised drastically

Correct AnswerverifiedShow Answer

According to the monetarist theory of macroeconomic policy,

Correct AnswerverifiedShow Answer

When there is too much money flowing and too few goods, it is likely to lead to ________.

Correct AnswerverifiedShow Answer

When Congress and the president agree on federal budgets that run significant deficits over many years, what are the likely economic consequences?

Correct AnswerverifiedShow Answer

During the Reagan presidency, taxes and spending fell as a share of the overall economy. What was the result?

Correct AnswerverifiedShow Answer

Which one of the following statements is accurate?

Correct AnswerverifiedShow Answer

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Grazing rights,environmental policy,and ...
View Answer

Correct Answer
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A trade-off in economic policy occurs wh...
View Answer

Correct Answer
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