Question 1

Adam Smith made all of the following arguments for laissez-faire capitalism,EXCEPT

Accepted Answer

A)  the desire for profit is the invisible hand that guides a capitalist system.
B)  the government should not be allowed any role whatsoever in the economy.
C)  private firms should be left alone to make their production and distribution decisions.
D)  firms will try to use as few resources as possible in order to keep their prices low.
E)  certain areas of the economy were better run by government agencies.F) All of the above
G) D) and E)

Question 2

Which of the following statements is true?

Accepted Answer

A)  The national debt was eliminated in 1998.
B)  The chair of the Fed creates the president's budget on an annual basis.
C)  Keynes advocated government spending to counteract an economic downturn.
D)  The highest budget deficit in U.S.history was $59 billion.
E)  The Congressional Budget Office creates the president's budget on an annual basis.F) C) and D)
G) D) and E)

Question 3

The Superfund program is designed to

Accepted Answer

A)  bail out financial institutions that are considered too large to collapse.
B)  provide domestic farmers with subsidies in order to remain competitive in the international marketplace.
C)  provide funds for cleaning up badly polluted sites.
D)  provide the president with emergency funds to deal with major natural disasters.
E)  None of these answers is correct.F) A) and D)
G) B) and D)

Question 4

Which of the following statements BEST describes the relationship today between government and the economy in the United States?

Accepted Answer

A)  The economy is largely self-regulating.
B)  The government subsidizes economic interests but otherwise leaves them to operate as they please.
C)  The government is the driving force in the U.S.economy;business has a secondary role.
D)  The government has an important role in regulating and maintaining the U.S.economy.
E)  The government owns most of the means of production in the United States.F) C) and D)
G) All of the above

Question 5

The term externalities refers to

Accepted Answer

A)  regulations imposed on a firm by government.
B)  a nation that is a trading partner of another nation.
C)  the costs of production that are incurred by society.
D)  tariffs imposed on American goods exported to other countries.
E)  None of these answers is correct.F) A) and B)
G) C) and E)

Question 6

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.F) A) and B)
G) None of the above

Question 7

If the economic problem is low productivity and high unemployment,the fiscal policy action on the demand side would be to

Accepted Answer

A)  increase taxes.
B)  cut business taxes.
C)  increase spending.
D)  decrease spending.
E)  None of these answers is correct.F) A) and E)
G) None of the above

Question 8

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.F) C) and D)
G) B) and D)

Question 9

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.F) B) and E)
G) B) and D)

Question 10

The first national park was created at ________ in 1872.

Accepted Answer

A)  Acadia
B)  Yellowstone
C)  Yosemite
D)  Mammoth Cave
E)  the Grand CanyonF) B) and C)
G) B) and E)

Question 11

Which Republican president said "I am now a Keynesian in economics," which illustrated that the two main parties at that time had much in common?

Accepted Answer

A)  Dwight Eisenhower
B)  Richard Nixon
C)  Gerald Ford
D)  Ronald Reagan
E)  George H.W.BushF) None of the above
G) B) and D)

Question 12

Supply-side economics is based primarily on

Accepted Answer

A)  stimulation of the business (supply) component.
B)  government stimulation of consumer demands.
C)  a repudiation of trickle-down theory.
D)  increases in taxation.
E)  increases in government regulation.F) All of the above
G) A) and B)

Question 13

The era of "new social regulation," which addressed issues such as the environment and worker safety,differed from the previous two eras of regulatory reform in that

Accepted Answer

A)  the Republican Party took the lead in placing additional regulations on business.
B)  the aim was to regulate activities of firms of many types,not just those in a particular industry.
C)  the regulatory agencies were established in a way that prevented the president from having a role in their operations.
D)  the guiding principle was self-regulation-business was given wide leeway in deciding how it would comply with the new requirement.
E)  the guiding principle was overregulation-business would be allowed almost no leeway in deciding how it would comply with new regulations.F) C) and E)
G) C) and D)

Question 14

The MAIN purpose of the Troubled Asset Relief Program was to

Accepted Answer

A)  quickly provide jobs to the unemployed.
B)  shore up shaky financial institutions.
C)  lower the rate of inflation.
D)  demonstrate that only the Fed controlled economic policy.
E)  help out the European economy and boost demand for American exports.F) A) and D)
G) A) and C)

Question 15

The Progressive Era of government regulation focused on

Accepted Answer

A)  strengthening consumer protection by preventing credit agencies from gouging individuals with high levels of debt.
B)  bolstering worker safety by increasing the power of unions and forcing better safety practices on businesses.
C)  increasing environmental protection and strengthening the EPA.
D)  regulating troubled economic sectors,such as banking.
E)  stopping the unfair business practices of the new monopolies,such as the railroads.F) A) and B)
G) A) and E)

Question 16

________ wrote The Silent Spring in 1962.

Accepted Answer

A)  Al Gore
B)  George W.Bush
C)  Greenpeace
D)  Rachel Carson
E)  The Sierra ClubF) C) and E)
G) A) and B)

Question 17

Advocates of deregulation are primarily concerned with

Accepted Answer

A)  efficiency.
B)  equity.
C)  externalities.
D)  public safety.
E)  political expediency.F) A) and E)
G) D) and E)

Question 18

Economic efficiency requires

Accepted Answer

A)  that the free market not be regulated by government.
B)  that the output of goods and services is the highest possible given the amount of input used to produce them.
C)  the economy to be organized around large firms.
D)  economic transactions to be fair to each party.
E)  economic transactions to be equal to each party.F) All of the above
G) A) and D)

Question 19

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.F) A) and B)
G) B) and C)

Question 20

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.F) A) and B)
G) C) and E)

Exam 15: Economic and Environmental Policy: Contributing to Prosperity

The era of "new social regulation," which addressed issues such as the environment and worker safety,differed from the previous two eras of regulatory reform in that

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Adam Smith made all of the following arguments for laissez-faire capitalism,EXCEPT

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

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Which of the following statements is true?

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Economic efficiency requires

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________ wrote The Silent Spring in 1962.

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The MAIN purpose of the Troubled Asset Relief Program was to

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Supply-side economics is based primarily on

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Advocates of deregulation are primarily concerned with

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

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The Superfund program is designed to

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

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If the economic problem is low productivity and high unemployment,the fiscal policy action on the demand side would be to

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The Progressive Era of government regulation focused on

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

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Which is true regarding the nation's environmental policy?

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Which of the following statements BEST describes the relationship today between government and the economy in the United States?

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Which Republican president said "I am now a Keynesian in economics," which illustrated that the two main parties at that time had much in common?

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The term externalities refers to

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The first national park was created at ________ in 1872.

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