Question 1

Fiscal policy is a mechanism the government employs to influence the economy. Fiscal policy is based on

Accepted Answer

A)  the idea that a balanced budget is the key to a healthy economy. 
B)  the money supply. 
C)  the government's taxing and spending decisions. 
D)  the importance of maintaining a 12-month (fiscal year) economic cycle. 
E)  the projections of the Federal Reserve Board.

Question 2

Regarding the Kyoto agreement and greenhouse gas emissions, which of the following is true?

Accepted Answer

A)  The United States is the largest single producer of greenhouse emissions in the world, on a per-capita basis. 
B)  President George W. Bush rejected the agreement. 
C)  It was a multinational effort to reduce carbon emissions. 
D)  The burden of addressing the global warming problem will fall unevenly on nations. 
E)  All of these answers are correct.

Question 3

Which is true regarding the nation's environmental policy?

Accepted Answer

A)  The first major steps by the national government to clean up the environment began in the early 1900s. 
B)  A majority of the public is sympathetic to environmentalism. 
C)  The modern environmental movement gained impetus with the publication of Armageddon in 1949. 
D)  In the 1960s, the government began a policy of land conservation through the creation of national parks. 
E)  All of these answers are correct.

Question 4

If the Fed wanted to act to reduce unemployment, it would

Accepted Answer

A)  sell securities. 
B)  raise the reserve rate. 
C)  decrease the interest rate on loans to member banks. 
D)  discourage businesses from expanding. 
E)  encourage people to save more and spend less.

Question 5

The Federal Reserve controls the money supply through all of the following actions EXCEPT

Accepted Answer

A)  raising the cash reserve that member banks are required to deposit with the Federal Reserve. 
B)  raising the interest rate that member banks are charged when they borrow from the Federal Reserve. 
C)  lowering the cash reserve that member banks are required to deposit with the Federal Reserve. 
D)  lowering the interest rate that member banks are charged when they borrow from the Federal Reserve. 
E)  lowering the tax rate on individuals.

Question 6

A ruling by the Food and Drug Administration that a drug is dangerous to use and therefore cannot be marketed is an example of regulation for the purpose of

Accepted Answer

A)  supply-side safety. 
B)  demand-side safety. 
C)  equity. 
D)  efficiency. 
E)  profit.

Question 7

Explain the difference between economic efficiency and economic equity as principles that justify government regulation of the economy.

Accepted Answer

The answer of Explain the difference between economic efficiency and...

Question 8

Describe Adam Smith's laissez-faire model of economics.

Accepted Answer

The answer of Describe Adam Smith's laissez-faire model of economics....

Question 9

Which president's use of government policy as economic stimulus ushered in the modern era of U.S. government fiscal policy?

Accepted Answer

A)  Thomas Jefferson 
B)  Franklin Roosevelt 
C)  Lyndon Johnson 
D)  Woodrow Wilson 
E)  William Clinton

Question 10

The federal government has assumed a permanent, strong role in the economy, contributing to its stability and efficiency, since

Accepted Answer

A)  the 1930s. 
B)  the 1860s. 
C)  the 1960s. 
D)  the 1980s. 
E)  the 2000s.
Essay Questions

Question 11

The creation of the Food and Drug Administration and the passage of the Securities and Exchange Act were intended to

Accepted Answer

A)  promote equity in the economy. 
B)  eliminate the problem of externalities in the economy. 
C)  destroy the legal foundation of the business trust. 
D)  promote efficiency in the economy. 
E)  None of these answers is correct.

Question 12

Define the term fiscal policy and explain how fiscal policy can be used in response to economic conditions.
D. Roosevelt in the 1930s. When there is an economic downturn, government can increase its spending or cut individual taxes as a means of stimulating consumer (demand-side) spending. When the economy is inflationary, the opposite actions can be taken as a way of dampening consumer demand. Fiscal policy can also take a supply-side form, as it did in part during the Reagan and George W. Bush years. Supply-side emphasizes business production and investment. The economy can be stimulated through a reduction in taxes on firms and high-income individuals.

Accepted Answer

The answer of Define the term fiscal policy and explain...

Question 13

In which year was the federal budget deficit the LARGEST?

Accepted Answer

A)  2000 
B)  2004 
C)  2007 
D)  2010 
E)  2013

Question 14

Which of the following is correct about environmental policy?

Accepted Answer

A)  The national forests are subject to a dual use policy of preservation, recreation, and exploitation of the rich natural resources. 
B)  The Environmental Protection Agency was elevated to cabinet status in 1998 by President Clinton and the Republican Congress. 
C)  Environmental regulation has done little to improve air and water quality. 
D)  Policymakers always give more consideration to environmental protection than to economic development when the two conflict. 
E)  None of these answers is correct.

Question 15

The total amount of money the federal government owes to its creditors is the

Accepted Answer

A)  trade deficit. 
B)  budget deficit. 
C)  national debt. 
D)  credit imbalance. 
E)  income disparity.

Question 16

The Federal Reserve System

Accepted Answer

A)  was created in 1933. 
B)  is run by a congressional committee. 
C)  regulates only national banks. 
D)  was created specifically to conduct fiscal policy. 
E)  None of these answers is correct.

Question 17

The Great Recession, which began in 2008, was precipitated primarily because the federal government was too lax in regulating

Accepted Answer

A)  computer technology. 
B)  the buying and selling of stocks. 
C)  interest rates charged to banks. 
D)  subprime mortgages. 
E)  the buying and selling of junk bonds.

Question 18

Judged in the context of the full range of public policies, the government in the United States has been

Accepted Answer

A)  equally hostile to the interests of business and labor. 
B)  equally supportive of the interests of business and labor. 
C)  substantially more supportive of business than labor. 
D)  substantially more supportive of labor than business. 
E)  substantially more supportive of left-wing radicals than conservatives.

Question 19

The tax cuts pushed by President George W. Bush while in office were premised largely on

Accepted Answer

A)  demand-side economics. 
B)  supply-side economics. 
C)  fiscal policy. 
D)  monetary policy. 
E)  Keynesian economics.

Question 20

Democrats in Washington have usually responded to high levels of unemployment with

Accepted Answer

A)  reduced government spending. 
B)  increased government spending. 
C)  increased government taxes. 
D)  decreased government taxes. 
E)  decreased government regulation.

Exam 15: Economic and Environmental Policy: Contributing to Prosperity