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American Government 100
Patterson, pgs. 475-493, AG25-15
Part IV
Economic & Environmental Policy
True or False Questions
1. One of the few areas that government maintains a hand’s off policy is the environment for fear
that it will destroy a more efficient free market. True or False
2. Price fixing was prevalent in the United States in the late nineteenth century when large trusts
came to dominate many areas of the economy. True or False
3. When Republican President Richard Nixon took the United States off the gold standard in
1971 he went against the wishes of the Democratic Party. True or False
4. It was Richard Nixon who created the Environmental Protection Agency (EPA) , an action that
was applauded by lawmakers from both parties. True or False
5. The result of overregulation is higher-priced goods that are more expensive for consumers and
less competitive in the domestic and global markets. True or False
6. In 2010, Congress enacted the most substantial regulation of financial institutions since the
New Deal, designed to curb some of the abuses that contributed to the financial crisis. True or
False
7. An example of the failure of excess government regulation was the rule eliminating lead in
paint and gasoline. True or False
8. In working cooperatively with the FDA, the pharmaceutical industry has been able to
streamline the process since the 1990s, experiencing no problems with any of the drugs that have
been “fast-tracked” to market. True or False
9. Most of the regulatory agencies established during the third wave have a much more restrictive
policy mandate than those created earlier. True or False
10. The president cannot remove the members of older agencies that are run by commissions
even though the chief executive may have originally nominated them. True or False
11. The federal government sells permits to mining firms, timber companies, and ranchers that
give the latter the right to take or exploit resources. True or False
12. Unlike President Obama, President Bush had steadfastly opposed drilling for oil in the
Alaska Arctic National Wildlife Refuge. True or False
13. Because the federal government is dominated by powerful economic interests, rarely have
ESA administrators clashed with companies that extract natural resources? True or False
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14. According to Patterson, climate change is a myth created by extremist environmentalists as a
means to generate revenue for their movement. True or False
15. The United States lags behind most Western countries, including Germany, France, and Great
Britain, in reducing its greenhouse gas emissions. True or False
16. Unlike President Clinton, when George W. Bush assumed office in 2001, he rejected the
Kyoto Protocol, saying that it would blunt economic growth. True or False
Multiple Choice Questions
1. At the height of the Great Depression of the 1930s, what was the level of unemployment?
a) 12%, b) 19%, c) 25%, d) 35%.
2. What is public policy? a) an action by financial institutions to direct government activity, b) a
decision by government to follow a course of action designed to produce a particular result, c)
the ability and the power to direct major institutions by either the government or the private
sector, d) the evolution of the bureaucracy to compel wavering sectors of the economy to accept
outside interference.
3. The U. S. government imposes restraints on business activity for the purpose of promoting
economic efficiency and equity: a) fiscal policy, b) regulatory policy, c) educational policy, d)
environmental policy.
4. The tax and spend side of government is referred to as: a) federal policy, b) monetary policy,
c) fiscal policy, d) regulatory policy.
5. The following seeks to maintain a level of inflation consistent with sustained, controllable
economic growth through its money supply decisions: a) The Department of Homeland Security,
b) The Securities and Exchange Commission, c) The Commerce Department, d) The Federal
Reserve Board.
6. In the Wealth of Nations (1776), Adam Smith presented the case, which holds that private
individuals and firms should be allowed to make their own production and distribution decisions:
a) public enterprise, b) the welfare state, c) laissez-faire doctrine, d) liberty.
7. Adam Smith argued that the desire for profit guides the economic system toward the greatest
welfare for all: a) demand for goods, b) entrepreneurial talent, c) free enterprise, d) the invisible
hand.
8. What areas of the economy did Adam Smith say needed to be regulated or run by government?
a) natural monopolies, b) industries, c) agriculture, d) small businesses.
9. An economy that is predominantly private but also assigns a substantial role to government: a)
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free enterprise, b) corporatist economy, c) command economy, d) mixed economy.
10. The following refers to the relationship of inputs (the labor and material that go into making a
product or service) to outputs (the product or service itself): a) equity, b) efficiency, c) per capita,
d) diminishing returns.
11. Where is the optimal place to achieve efficiency according to Adam Smith and other classical
economists? a) the free market, b) the government through its regulatory agencies, c) a
combination of both the free market and government agencies, d) public ownership of industry.
12. What is flawed about the assumption that the market always determines the price? a) The
profit motive forces producers to use as few resources as possible, resulting in shoddy goods, b)
If a producer can acquire a monopoly or can successfully conspire with other producers to fix the
price of the product, then efficiency is lost, c) Prices are a reflection of collusion throughout the
market that only government regulation can contain, d) Competition is a consequence of the
character and values of society, necessary ingredients for honesty.
13. Congress took the first step toward regulating railroad price-gauging by enacting the
following legislation in 1887: a) the Mann-Elkins Act, b) the Sherman Antitrust Act, c) the
Interstate Commerce Act, d) the Clayton Act.
14. Why did the Federal Trade Commission block the merger between Office Depot and Staples?
a) corruption practices by one of the parties was discovered, b) to maintain competition in its
areas of the market, c) Staples failed to submit an environmental impact statement, d) Office
Depot had earlier filed for bankruptcy.
15. The federal government tolerates business concentration, even permitting the merger of
competing firms because: a) capital costs are low in key sectors, b) such firms have friendly
relations with members of Congress, c) government officials realize that market competition is
no longer limited to domestic competition, d) government officials realize that collusion of prices
maybe a healthy condition for the market.
16. How did President begin the spiral toward polarizing both parties? a) by advocating a weak
foreign policy internationally, especially against the Soviet Union, b) by supporting policies for
the poor and cutting taxes for the middle class, c) by supporting Affirmative Action and the EPA,
d) by cutting taxes for upper incomes and deregulating key industries.
17. The unpaid costs of production to society, such as a chemical plant releasing toxic wastes in a
local river: a) contagion, b) production inequality, c) societal losses, d) externalities.
18. The passage of the Airlines Deregulation Act in 1977 resulted in: a) air fares declining in
price and there was more competition between airlines on most routes, b) air fares going up as a
result of less competition and airlines refusing to fly many routes as a result of collusion, c) air
fares being stabilized after a downward trend, preventing smaller carriers from going under, d)
the airlines successfully fighting the legislation, having it rescinded after a short period.
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19. The crisis in America’s financial system demonstrates that: a) Too little government
regulation results in greater efficiencies, b) Too much government regulation eliminates waste, c)
Either too little or too much regulation can result in economic inefficiency requiring the need to
find the proper balance, d) In the final analysis, the government has no business regulating the
economy or its businesses because it’s unconstitutional.
20. The following occurs when an economic transaction is fair to each party, focusing on
outcomes: a) economies of scale, b) efficiency, c) supply and demand, d) economic equity.
21. The government agency which serves to protect consumers from unsafe products: a) the
Product Liability Commission, b) the Consumer Product Safety Commission, c) the Product
Protection Regulatory Commission, d) the Commission on Product Safety.
22. Why are newer federal agencies more responsive to the president than to the firms they
regulate? a) with the changes in the power of the president, he has the ability and power to
expand the size of newer agencies, b) unlike the past, the media is a powerful tool available to
contemporary presidents, c) the president can remove mandates that have been passed by
Congress, d) most of the newer agencies are headed by a single director who can be removed
from office at the president’s discretion.
23. Roughly, how many Americans say they are either an active environmentalist or sympathetic
to environmental concerns? a) 35%, b) 57%, c) 66%, d) 75%.
24. The modern environmental movement gained impetus with the publication of Rachel
Carson's, Silent Spring, which: a) discussed the serious problems of deforestation, b) criticized
the overutilization of the oceans, c) revealed the threat of harmful pesticides such as DDT, d)
identified the links between processed foods and cancer.
25. The national parks are run by the National Park Service, an agency within the: a) Department
of Interior, b) The U.S. Forest Service, c) The Agriculture Department, d) The Environmental
Protection Agency.
26. The nation’s parks and forests are subject to the following policy: a) natural extraction, b)
environmental protection, c) multiple use, d) economic preservation.
27. Because of the efforts of environmental regulation since the 1960s, urban air pollution has
declined by: a) 35%, b) 46%, c) 51%, d) 60%.
28. According to EPA figures, about how many of the most dangerous toxic waste sites are still
contaminated today? a) about one-tenth, b) more than one-third, c) about one-half, d) more twothirds.
29. The scientific community has concluded that carbon emissions are trapping heat in the
atmosphere that is producing a gradual rise in the earth's atmosphere: a) Heat Depletion
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Biosphere, b) Greenhouse Effect, c) Coercive Carbon Retardation, d) Atmospheric Heat
Deterioration.
30. The United States is the world’s single largest source of carbon-fuel emissions on a percapita basis, emitting about what percent of the world’s total? a) 10 percent, b) 15 percent, c) 20
percent, d) 25 percent.
31. The government's approach to labor developed by the courts in the early 19th century: a)
Collective action by labor was to be protected based on the First Amendment's right of assembly,
b) Union activity was regarded as interference with the natural supply of labor and the free
setting of wages, c) Unionized labor was a natural growth of industrial development, d) Federal
troops were sent in to protect the workers from goon squads hired by industry to break strikes.
32. Government programs today provide billions of dollars of assistance annually to farmers,
small and large, accounting for about what amount of net agricultural income? a) more than a
fourth, b) more than a fifth, c) more than a sixth, d) more than an eighth.
Fill-in Questions
1. What was the response to the 1929-1931 drop in stock prices that made matters worse?
a) Businesses cut back ___________,
b) investors fled the ______ _______,
c) depositors withdrew their bank ________,
d) consumers slowed their _________.
2. What was the result of deregulation of the subprime mortgage market?
a) Mortgage firms lured marginally qualified homebuyers by offering low
_________ _______ and ______ _____ payments.
b) After pocketing the up-front _______, they sold the mortgages to unsuspecting
__________ in order to reduce their risk.
c) When the economy _________, many homeowners __________ on their mortgages.
3. The following agencies were created as a result of a need to regulate key sectors of the
economy:
a) This agency was created in 1907 because unsafe food and drugs were being widely
marketed. Its role was to clean up the problem: The _____ ____ _____
_______________.
b) This legislation was designed in part to protect investors from dishonest or imprudent
stock and bond brokers: The ___________ ____ _________ ____ of 1934.
c) This legislation required employers to pay workers a minimum wage: The _____
__________ ____ of 1938.
4. Why is the problem of effectively addressing climate change such a difficult challenge?
a) Climate change is ___________ by the fact that no single _______ can solve the
problem on its own.
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b) The problem is also compounded by the rapid expansion of the economies of ______,
India, and other developing nations, which has increased the level of carbon emissions.
c) These less-developed countries say they _______ ____ bear the burden of curbing
global warming,
d) arguing that the problem stems from decades-long carbon emissions by the
_______________ nations, including the United States.
5. The National Labor Relations Act of 1935:
a) gave workers the right to ________ _____________,
b) prohibited _________ from ___________ union activities
c) or ______________ against union employees.
Answers
True or False Questions
1. False
3. False
5. True
7. False
9. False
11. True
13. False
15. True
Multiple Choice Questions
1. c
3. b
5. d
7. d
9. d
11. a
13. c
15. c
17. d
19. c
21. b
23. c
25. a
27. d
29. b
31. b
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Fill-in Questions
1. a) production, b) stock market, c) savings, d) spending
3. a) Food and Drug Administration, b) Securities and Exchange Act, c) Fair Standards Act
5. a) bargain collectively, b) business, disrupting, c) discriminating
A:AG25-15
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