Multiple Choice Questions
1.) What would you generally favor if you support laissez-faire economic policies?
a. a reduction in the amount of economic regulation by the federal government
b. an increase in the level of taxes assessed by state governments
c. an increase in the amount of economic regulation by the state governments
d. an increase in the tariffs assessed on goods imported into the United States
2.) Which of the following would indicate that the economy is experiencing inflation?
a. The cost of groceries is increasing.
b. Goods are becoming less expensive.
c. The federal government is lowering tax rates.
d. The Federal Reserve is increasing the money supply.
3.) Which of the following is an example of monetary policy?
a. decreasing federal spending
b. increasing food and drug regulations
c. increasing income taxes on wealthy Americans
d. the Federal Reserve Board lowering interest rates
4.) What is the main goal of fiscal policy?
a. affect how much money is available to foreign governments for investment
b. use taxes and government spending to help stimulate or slow down the economy
c. determine how much interest the government will pay on the federal debt
d. stimulate the economy by increasing the number of imports into the United States
5.) Which of the following do Republicans tend to support?
a. Supply-Side Economics
b. Keynesian Economics
6.) Which of the following do Democrats tend to support?
a. Supply-Side Economics
b. Keynesian Economics
7.) Libertarians tend to agree with conservatives on:
a.) Economic Issues
b.) Social Issues
8.) The name for government spending that is required by law.
a.) Discretionary
b.) Mandatory
c.) Budget
d.) Expenditure
9.) Which of the following does Keynesian economic policy hold to be true?
a. Increasing tax rates will stimulate the economy.
b. Government spending should focus primarily on social welfare.
c. The key task for fiscal policy is to stimulate the supply of goods.
d. Government should take the responsibility to stimulate the economy when it is lagging.
10.) When banks offer lower interest rates, people will purchase fewer homes and cars.
a.) True
b.) False
11.) Which of the following is the largest entitlement program in the United States?
a.) Medicare
b.) Social Security
c.) Medicaid
d.) Food Stamps
12.) What distinguishes a means-tested program from a social insurance program?
a. A means-tested program extends benefits based on age categories, while a social insurance program provides benefits based on immediate need.
b. A means-tested program only extends benefits to the elderly, while a social insurance program extends benefits to everybody.
c. A social insurance program extends benefits only to the working poor, while a means-tested program extends benefits to everyone, regardless of social class.
d. A social insurance program provides benefits to those who have paid into the program, while a means-tested program provides benefits based on demonstrated need.
13.) What type of federal program is Medicaid?
a. discretionary
b. means-tested
c. social insurance
d. reserve requirement
14.) Which of these statements best describes the possible effect of efforts by the Federal Reserve Board to lower interest rates?
a. They can lead to lower capital gains tax rates.
b. They can lead to higher unemployment in years of budget deficits.
c. They can spur economic growth by increasing the cost of money for business.
d. They can spur economic growth by increasing the available money supply.
15.) What federal program is designed to provide medical insurance for the very poor in the United States?
a. Medicaid
b. Medicare
c. Food Stamps
d. Obamacare
16.) Who is primarily responsible for making monetary policy in the United States?
a. Congress
b. the president
c. the Department of the Treasury
d. the Federal Reserve Board
17.) Which tax is one by which the government takes a greater share of the income of the rich than of the poor?
a. progressive
b. proportional
c. regressive
d. flat
18.) What is the main purpose of monetary policy?
a. to control the supply of money and credit
b. to control the amount of public debt sold to foreign states
c. to control the interest rates on money lent to foreign states
d. to equalize income disparity among citizens
19.) What is inflation?
a. the pace at which gross domestic product expands
b. the speed with which the money supply expands
c. the rate at which prices for goods and services increase
d. increasing federal taxes
20.) Which of the following entities is responsible for influencing interest rates in the United States?
a. the Congress
b. the Congressional Budget Office
c. the Executive Office of the President
d. the Federal Reserve Board
ANSWER KEY
A
A
D
B
A
B
A
B
D
B
B
D
B
D
A
D
A
A
C
D
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