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GOVT 2302: Quiz 13

When the government’s goals are embodied in a law or an order, backed by punishments or rewards, it is best described as:
public policy.
What is the most important way the government affects personal and corporate investments?
promoting investor confidence through policies enforcing stability and regard for the law
Which of the following is not a goal of governmental intervention in the economy?
promoting corporate accountability
The Securities and Exchange Commission was established:
after the stock market crash of 1929.
Which of the following is not a function of the Securities and Exchange Commission?
It protects the confidentiality of all sales of stocks and bonds.
Which of the following are the three basic prerequisites for economic growth?
public investment, innovation, strong workforce
The goal of the Works Progress Administration (WPA) was to:
put unemployed persons to work on public projects.
What event marked the major historical turning point in the relationship between the government and the marketplace?
The Great Depression
What did the Great Depression and World War II do the the public’s expectations regarding employment?
They showed that the government can help to ensure full employment.
When the price level of goods and services increases over several months, it is called:
inflation
Which of the following was not one of the goals of the American Recovery and Reinvestment Act of 2009?
providing for a national health care system
Public policy an be embodied in all of the following forms except:
a petition.
All of the following are strategies to combat inflation except:
increasing the amount of government spending on public works projects.
_____ are given to states and local governments on condition that all expenditures are limited to the problem or group specified by law.
Categorical grants
Which of the following is not a way in which the government promotes business development?
regulations
Which of the following was not a major form of economic promotion by the federal government in the 19th century?
public works projects
Which of the following does the Small Business Administration (SBA) provide?
disaster assistance
Before the 1930s, relations between labor and management in the United States were:
among the most violent in the world.
Vehicle safety is one of the chief responsibilities of the Department of:
Transportation.
Which of the following actions marked a decisive break with the tradition of the federal government promoting compromises between labor and management?
In 1981, Ronald Reagan fired striking air traffic controllers and hired permanent replacements to fill their jobs.
Upton Sinclair’s 1906 expose The Jungle revealed:
the unsanitary practices at meatpacking plants.
During the 1960s, Ralph Nader was influential as:
a consumer advocate.
Which of the following has not been a major goal of the government’s involvement in the economy?
promoting economic equity and fairness for all citizens.
Adam Smith’s theory of _____ argues that many individual economic transactions come together to create a greater good for all.
the invisible hand
Classic laissez-faire theory argues all of the following except that:
A truly efficient government allows private enterprise to provide all government services.
Which of the following is the most important economic value for supporters of laissez-faire?
effiency
Which U.S. president once said, “I am now a Keynesian”?
Richard Nixon
What economic development, according to many critics, has made Keynesian economics less useful?
the rise of international trade
Who among the following advocated for laissez-faire capitalism?
Adam Smith
Those who believe in _____ argue that the government’s role in regulation the economy should be limited to regulating the supply of money.
monetarism
The idea that the government can stimulate a slow economy by increasing public spending or cutting taxes is called:
Keynesianism
Which statement is the key argument of John Maynard Keynes?
Government can pull an economy out of a recession by stimulating demand and creating a cycle of increased production and jobs.
When did Keynesian economic ideas become government practice in the United States?
the 1930s
Something that must be supplied by the government because it cannot be provided by the marketplace is called:
a public good
Who was the most prominent monetarist in the United States?
Milton Friedman
Which of the following best describes the views of Milton Friedman?
Government should let the growth in the money supply match the rate of economic growth.
Which economist is best known for arguing that there is an optimal rate of taxation, and if taxes go above this rate, tax revenues will shrink because economic activity will decline?
Arthur B. Laffer
How did the Federal Reserve respond to the terrorist attacks of 9/11?
It cut interest rates to promote increased investment and spending.
Which of the Founders was most responsible for the establishment of the Bank of the United States?
Alexander Hamilton
_____ is the current chair of the Federal Reserve Board, appointed by George W. Bush in 2005.
Ben Bernanke
Which of the following statements about the Federal Reserve Board (FRB) is false?
The FRB is part of the department of the Treasury.
Open-market operations describes:
the method by which the Federal Reserve buys and sells government securities to increase or decrease the supply of money in the economy.
What is the reserve requirement?
The rule that every bank must have a certain amount of cash and negotiable securities on hand at all times
If the Federal Reserve wants to help boost a sagging economy, which one of the following is the most direct way it can do this?
lower interest rates so that banks can provide more loans at cheaper rate to individuals an businesses
Which of the following is the best example of a public good?
the interstate highway system
The power to raise or lower the tax rate is part of:
fiscal policy
A tax on imported goods is called a:
tariff
Before WWII, _____ of federal revenue was generated from individual income taxes.
less than 15 percent
When people in the lower income brackets pay a larger percentage of their income toward a tax, it is called ______ taxation.
regressive
Sales taxes are _____, and most income taxes are _____.
regressive; progressive
A _____ is an incentive in the tax code for individuals and corporations to invest their money in ways the government desires in exchange for a reduction in tax liabilities.
loophole
_____ were the centerpiece of George W. Bush’s economic policy.
Tax cuts
Why did the Democrats believe that the 2001 tax cuts should only remain permanent for those making less than $250,000 a year?
High income earners (making more than $250,000/year) had benefited disproportionately from economic growth in the early 2000s.
The _____ is determined by the amount government spending exceeds government revenue in a fiscal year.
budget deficit
In order to have reliable information about the costs and impact of economic policies, Congress created the _____.
Congressional Budget Office
Why do many businesses Congress to regulate the economy?
One national regulation is better than the inconsistencies and disparities of different state laws.
Which of the following is not an example of mandatory spending?
defense spending
Approximately what percentage of the federal budget is made up of uncontrollables?
60 percent
_____ policies are designed to eliminate the abuses of powerful _____.
Antitrust; monopolies
What did Congress see as the principle cause of the economic recession that began in 2007?
excessive risk taking by investors
_____ are government grants of cash or other valuable commodities, such as land, used to promote activities desired by the government.
Subsidies
Why have politicians always favored using subsidies to promote certain economic activities?
They can be treated as “benefits” that can be spread widely in response to many demands.
Which of the following is not a benefit to government provided by contracting?
Government officials almost always use contracting to award businesses and corporations that donated substantial amounts of money to their political campaigns.
Which of the following is not one of the concerns politicians have to consider when attempting to pass regulations that seek to protect the environment?
Public opinion, which overwhelmingly favors economic interests over the environment
The United States has ____ percent of the world’s population, and is responsible for _____ percent of its greenhouse gas emissions.
10; 25
Most of the groundbreaking environmental laws were written in the:
1970s
Which of the following statements about relationship between government and capitalism is false?
Before the Progressive era, the marketplace was untouched by government interference.
Setting emissions standards for each industry, while allowing companies to trade “carbon credits” is an approach to environmental policy known as:
cap and trade.
The Kyoto Protocol was designed to:
set binding targets for greenhouse gas emissions to be met by each country.
Which of the following was not a result of the 2009 Copenhagen Summit?
The meeting ended with a legally binding agreement between countries to limit greenhouse emissions across the world.
What year marked the beginning of the Great Depression?
1929
Which of the following is the best description of the changing expectations of the government’s role in the economy since the 1930s?
People hold the government responsible for a health economy.
The most consistently powerful nongovernment actors in determining economic policy are:
business organizations.
Which of the following is not a possible cause of the increase in economic inequality over the past several decades?
the collapse of the domestic high-tech industry
Which of the following was a driving force for the economic growth during the late 19th century?
manufacturing industries
The index of the total output of goods and services produced in a national economy is called the:
gross domestic product (GDP)

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