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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 stockmarket 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?

Great Depression

What did the Great Depression and World War II do to the public's expectations regarding employment?

They showed that the government could help to ensure full employment

When the price level of goods and services increases over several months, it is called


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 can 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 the 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?


Which of the following was not a major form of economic promotion by the federal government in the nineteenth 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


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 exposé 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?


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 regulating the economy should be limited to regulating the supply of money.


The idea that the government can stimulate a slow economy by increasing public spending or cutting taxes is called


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 rates to individuals and 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


Before World War II, ______ 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.


Sales taxes are ______, and most income taxes are ______.

regressive, progressive

A(n) ______ 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.


______ 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 (those making more than $250,000 a 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 prefer 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.


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?

Governemnt 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


Which of the following statements about the relationship between government and capitalism is false?

Before the progressive era, the market place 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?


Which of the following is the best description of the changing expectations of government's role in the economy since the 1930s?

people hold the government responsible for a healthy 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 nineteenth century?

manufacturing industries

The index of the total output of goods and services produced in a national economy is called the

gross domestic product

The goals of American social policy are

often controversial

Which of the following is an example of nineteenth-century "indoor relief"?

the police station

Which group was the first to receive government assistance throughout the United States?

mothers with dependent children

Social case work, in the nineteenth and early twentieth centuries, was largely concerned with

personal counseling and "mental hygiene"

How did the Great Depression change American attitudes about welfare?

It revealed that poverty could be caused by a flawed economic system, not just by personal irresponsibility

When was Social Security established?


Which of the following is not a program of forced savings?

Temporary Assistance to Needy Families

Social Security is a good example of

a contributory program

Which of the following statements about Social Security is false?

Contributors receive benefits in strict proportion to their contribution

Medicare is a ______ program; Medicaid is a ______ program.

contributory, noncontributory

The periodic adjustment of benefits or wages that takes into account the increased cost of living is called


Why have Americans typically been apprehensive about government efforts to reform health care?

they fear reform will be too costly and will jeopardize current health care arrangements

A cost-of-living adjustment is based on what?

the rate of inflation

When potential recipients of a benefit must establish their genuine need, the government program is called

means tested

What important noncontributory program was abolished by Congress in 1996?

Aid to Families with Dependent Children

When was Medicare established?


The Temporary Assistance to Needy Families program is administered

by the states with benefit levels varying between states

Which of the following statements about noncontributory programs is false?

the existence of these programs dates from the Civil War

Which program was designed to help augment the benefits to the aged, blind, and disabled?

Supplemental Security Income

Which of the following is an in-kind benefit?

food stamps

How does an entitlement differ from a right?

Unlike an entitlement, a right cannot be taken away by an act of congress

What was the significance of the Supreme Court case Goldberg v. Kelly?

It held that public assistance benefits could not be revoked without due process of law

Which of the following is not a goal of American social policy?

closing the gap between rich and poor

What do public opinion polls reveal about welfare policies?

they are among the most disliked government programs

What was the reason behind Progressive-era welfare for single mothers?

reformers wanted women to stay home with their children rather than going to work

The welfare reforms of 1996 did all of the following except

taking the federal government out of welfare policy, granting all authority to the states

Which of the following can be concluded from the results of the 1996 welfare reforms?

the reforms have reduced the number of people on welfare, but have done little to reduce poverty

The main change in welfare policies since 1996 is

increased use of non-cash assistance

Approximately what percentage of the current federal budget is spent on entitlement programs, such as Social Security and Medicare?

55 percent

Over the past three decades, the level of federal payroll tax has ______, and the level of federal corporate taxes has ______.

risen, fallen

Which of the following social policies is the most costly to the government?

social security

Which of the following is not an identifiable problem with Social Security?

the political consensus supporting a federal retirement program is crumbling

The idea of ______ was at the heart of George W. Bush's 2005 plan for Social Security reform.

private accounts

The goals of social policy

reflect changing views about which risks should be borne by the individual or shared by society

After the election of 2004, President George W. Bush announced that ______ would be the centerpiece of his domestic policy.

Social Security Reform

The first federal government assistance in education came

in 1785, when the federal government set aside land for public schools

What is the most significant force determining the distribution of opportunities in the United States?


What was the most significant education policy developed by the federal government in the nineteenth century?

the establishment of land-grant colleges

What event brought federal attention to elementary school education?

the fear that the soviets were winning the cold war through better technology

The idea that all people should have the freedom to use whatever talents and wealth they have to achieve their goals is called

equality of opportunity

Which of the following statements about the No Child Left Behind Act is false?

it creates a standard national test for all students

Which of the following was a key part of President Obama's overhaul of No Child Left Behind?

a proposal to change the criteria for allocating $14 billion in federal assistance to schools from a per pupil formula to a system of competitive grants

Which of the following is not a reason why the No Child Left Behind Act has been controversial?

the states were made responsible for setting standards and devising appropriate tests

Charter schools are best described as

public schools that are free to design special curricula

Who was in charge of caring for the poor during the nineteenth century?

private corporations

Since the 1930s, American employment and training programs have

fared poorly in terms of both expense and results

Which of the following was created during the New Deal?

Works Progress Administration

When was the U.S. Public Health Service founded?


What was the result of the efforts to reform health care in the United States in 1994?

Health care reform met resistance and no bill was voted on by congress

In 2010, approximately what percentage of American workers were offered health insurance through their jobs?

60 percent

Which of the following was not included in the congressional plans for health care reform?

a "public option" allowing individuals to acquire medical coverage directly from the government

The central thrust of federal housing policy has been to

promote homeownership

In 2007 and 2008, the government faced a housing crisis caused by


Which of the following is the strongest factor in predicting which groups in society receive the most benefits from government's social policies?

groups that are the most politically powerful

Which of the following groups receives the most benefits from government's social policies?

the middle class

When did the American welfare state begin?

the 1930s

Which of the following groups receives the least benefits from government's social policies?


Which of the following least explains why the elderly receive a large share of social benefits?

most member of congress are themselves elderly or soon will be

AARP has a membership of approximately ______ members.

40 million

Between 1959 and 2004, the percentage of elderly Americans living in poverty has gone from ______ to ______.

35 percent, 10 percent

______ are programs where the government provides a tax deduction for spending on health insurance and other benefits by both employers and employees.

tax expenditures

Which of the following is the best example of the shadow welfare state?

workplace medical insurance

What is the shadow welfare state?

social benefits that are distributed by private employers who are being subsidized by the government

Which of the following programs most benefits the working poor?

earned income tax credits

Which of the following is not a reason the working poor receive such a small amount of social policy benefits?

the working poor are often considered undeserving by public opinion

Since the welfare reforms of 1996, what is the primary reason for receiving federal cash assistance if one is nonworking and able-bodied?

the recipient is caring for children

What was the primary problem with private charities before the development of the welfare state?

they would make subjective decisions on who was deserving or undeserving of aid

Since the mid-1990s, by how much has the number of welfare recipients declined in the United States?

over 50%

Which of the following statements is incorrect?

men are more likely to be poor than women

Which of the following groups are more than twice as likely as other Americans to be below the poverty line?

single mothers

According to the text, why is it difficult to lobby for the interests of poor children?

children cannot vote

What was outdoor relief distributed by private charities?


What was the main fear concerning the consequences of outdoor relief?

it perpetuated poverty

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