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AP United States Government & Politics
Economic Policy and the Budget Text Questions
1.
The responsibility for declaring that the U.S. economy is in
recession rests with
A. the Office of Management and Budget
B. the Securities and Exchange Commission
C. the National Bureau of Economic Research
D. the Chairman of the Federal Reserve
E. the Secretary of the Treasury
2.
Among the factors that contributed to the 2008 economic
crisis were
A. rising energy costs associated with the price of oil
B. high tax rates on capital gains
C. the inability of Americans to pay for mortgages
they could no longer afford
D. A and C only
E. All of the above
3.
4.
5.
6.
7.
The 2008 economic stimulus plan was designed to
A. raise the minimum wage with the hope that
increased wages would boost the economy
B. provide tax rebate checks to individuals with the
hope that increase spending would boost the
economy
C. increase taxes on those making over $250,000
D. bailout failing Wall Street stockbrokers
E. none of the above
Wal-Mart is an example of a multinational corporation
because
A. they sell many goods made in China
B. they have vast holdings in many countries
C. they account for 12 percent of productivity growth
in the U.S. during the 1990s
D. they have the lowest prices around
E. they are the world’s largest company
Among the ways the American government is involved in
the economy are
A. regulating stock transactions
B. providing workers with health insurance
C. providing a minimum wage
D. prohibiting workers from unionizing
E. both A and C
In 1992, Bill Clinton ran a successful campaign against
George H.W. Bush in large part because of Clinton’s
campaign slogan
A. “the age of big government is over”
B. “read my lips, no new taxes”
C. “it’s the economy, stupid”
D. “don’t stop thinking about tomorrow”
E. “now is the time to reach for a new frontier”
Hundreds, if not thousands, of studies by political
scientists have concluded that voters
A. vote solely on the basis of party identification
B. ignore the economic consequences of
government policies
C. vote for candidates who promise the most
D. vote against their personal financial interests
E. vote for the candidate who will benefit the voter’s
financial condition the most
8.
The term “pocketbook” voting refers to
A. political corruption
B. the importance of women voters
C. voters whose votes are easily purchased
D. voters who prioritize economic concerns
E. women’s economic concerns
9.
Employment is more likely to be a concern of
A. Republicans
B. members of the House of Representatives
C. Democrats
D. Conservatives
E. incumbents
10. Conservatives complain about
A. the oppressive scope of government regulation
B. high taxes
C. excessive regulation of the private sector
D. the size of the public sector
E. all of the above
11. On economic policy, Democrats are said to appeal more
to which types of voters?
A. the working class and union households
B. investment bankers and business professionals
C. economic policies of Democrats have no appeal
D. young urban professionals
E. soccer moms and NASCAR dads
12. On economic policy, Republicans are said to appeal to
which types of voters?
A. retirees
B. there is no real voter support for Republican
economic policies
C. business owners, managers, and professional
people
D. union members and the working class
E. students and young adults
13. The nation’s unemployment rate is determined by
A. a monthly random survey of the population
B. randomly selected payroll audits by the Federal
Reserve Board
C. monthly changes in income tax withholding
monitored by the IRS
D. monthly unemployment claims made in each
state
E. tracking of media coverage of job cuts
14. One of the chief tasks of the Bureau of Labor Statistics is
to
A. declare the U.S. economy is in recession
B. set the exchange rate for U.S. currency
C. regulate trade
D. oversee the implementation of tax policy
E. measure unemployment
15. The official unemployment rate underestimates
unemployment because it leaves out
A. the homeless
B. students
C. housewives
D. high-tech sector
E. discouraged workers
16. The term “discouraged workers” refers to
A. unemployed workers who left jobs they did not
like
B. workers who hate their jobs
C. unemployed workers have given up their search
for a new job
D. workers whose pay has not increased
E. workers who can’t compete in the global
economy
17. Which of the following statements is an accurate reflection
of how America’s political parties respond to high inflation?
A. Both the Democrats and Republicans are willing
to accept high inflation.
B. Studies have found no correlation between a
given political party and its acceptance of high
inflation rates.
C. The Democrats are more willing to accept high
inflation than Republicans.
D. Neither Democrats nor Republicans are willing to
accept high inflation.
E. Republicans are more willing to accept high
inflation than the Democrats.
18. The high unemployment rate of younger adults is not
always as important politically as it could be because
A. most unemployment among younger adults is a
result of choice, not circumstance
B. young people vote less than older people, so
their concerns do not capture the attention of
politicians
C. young adults have plenty of time to find a job
D. unemployment among older adults matters more
E. older adults suffer from even higher rates of
unemployment
19. The coalition behind the Republican Party is most likely to
be concerned with
A. inflation and unemployment
B. inflation
C. labor rights
D. expanding government regulation
E. none of the above
23. According to monetarists, too much money
A. unemployment
B. a budget surplus
C. inflation
D. recession
E. a budget deficit
24. The Federal Reserve Board is intended to be
A. half Democrat and half Republican
B. replaced by each new President
C. independent of partisan politics
D. formally under the control of the POTUS
E. formally under the control of Congress
25. Monetary policy refers to
A. control over the money supply
B. manipulation of the supply of money in private
hands
C. manipulation of the supply of credit in private
hands
D. all of the above
E. none of the above
26. Fiscal policy refers to
A. federal taxing, spending, and borrowing
B. the creation of jobs
C. printing of money
D. the setting of interest rates
E. none of the above
27. The icon for economic leadership among Republicans is
A. Teddy Roosevelt
B. Ronald Reagan
C. Andrew Jackson
D. Franklin Roosevelt
E. Bill Clinton
28. Keynesianism economic theory argues for
A. higher tariffs to limit imports
B. keeping the government’s hands off the economy
C. stimulating the economy through government
spending programs
D. government policies designed to control inflation
E. lower taxes to stimulate economic growth
20. The consumer price index (CPI) measures
A. the change in income, controlling for periods of
unemployment
B. the change in the cost of buying a fixed basket of
goods and services
C. the change in the prime lending rate
D. the change in what various incomes can buy
E. the change in the amount of taxes paid by
individuals
29. In order to avoid an economic depression, Keynesian
economic theory argues that government policies should
A. raise interest rates
B. lower taxes
C. increase supply
D. reduce demand
E. increase demand
21. The manipulation of the supply of money and credit in
private hands to promote economic health is known as
A. Socialism
B. Fiscal Policy
C. Supply-Side economics
D. Monetary Policy
E. Keynesianism
30. Ronald Reagan and George W. Bush advocated tax cuts
because
A. they embraced Keynesian economic theory
B. they believed lower taxes would stimulate
economic growth
C. they thought that lower taxes would generate
more revenue for the government
D. both A and B
E. both B and C
22. Monetary policy is directly regulated by
A. the POTUS
B. the Department of Commerce
C. the FED
D. the United States Mint
E. the Treasury Department
31. President Reagan’s economic policies emphasized
A. balancing the budget and then cutting taxes
B. supply-side economics in which tax cuts and
deregulation are designed to free funds for
saving and investing
C. balancing the budget through cuts in all
categories of government spending
D. all of the above
E. none of the above
32. A budget deficit occurs when expenditures exceed
A. revenues
B. authorizations
C. inflation
D. borrowing
E. appropriations
33. Which of the following is NOT true about taxes?
A. Individuals are taxed on their income.
B. Complaints about taxation are as old as the
Boston Tea Party.
C. Tax expenditures result when donations are
made to charitable organizations.
D. A tax loophole is also known as a tax break.
E. Income tax revenue is lower than corporate tax
revenue.
34. Which amendment to the U.S. Constitution permitted the
federal income tax?
A. Sixteenth
B. Tenth
C. Eighteenth
D. Fourteenth
E. Fifteenth
35. A tax system where those with more taxable income not
only pay more taxes but higher rates of taxes is known as
A. socialism
B. regressive
C. communism
D. unfair
E. progressive
36. The fastest growing source of federal revenue has been
A. fees and services
B. corporate income taxes
C. personal income taxes
D. borrowing
E. Social Security taxes
37. Income taxes
A. were first used in 1915 after the passage of the
Sixteenth Amendment
B. were declared unconstitutional by the SCOTUS
in 1895
C. yield about 11 cents of every federal revenue
dollar
D. provide the largest source of federal revenue
E. all of the above
38. The federal debt
A. consists of all the money borrowed over the
years by the national government that is still
outstanding
B. is all money borrowed over the years by the
federal government and owed to state
governments
C. is money owed to foreign nations by the United
States government
D. is the difference between the amount of annual
tax receipts and government expenditures
E. is money owed by taxpayers to the United States
government, but never paid
39. The federal government borrows money primarily
A. to assure the future of Social Security
B. for military defense
C. for future development needs
D. for capital needs
E. for its day-to-day expenses
40. A majority of the national debt is currently held by
A. the American public
B. Fortune 500 companies
C. foreign investors
D. Bank of America
E. the World Bank
41. An example of a tax expenditure is
A. the Social Security system
B. the purchase of a Stealth bomber by the
Pentagon
C. direct government support of charities
D. a lower tax rate for lower income families
E. a tax deduction for the mortgage interest paid by
homeowners
42. Tax expenditures tend most to benefit
A. middle and upper-income people and
corporations
B. state and local governments
C. lower-income people and the poor
D. the government
E. lower middle-class people and small businesses
43. The military industrial complex refers to
A. the competition between the military and civilian
industries for government dollars
B. the government-owned industries that
manufacture military weapons and equipment
C. the Pentagon and the buildings that surround it
D. the close relationship between defense officials
and the corporations that supply their hardware
needs
E. the global network of bases that the Department
of Defense maintains
44. The purchasing of military hardware is known as
A. research and design
B. mobilization
C. appropriations
D. procurement
E. requisitioning
45. Entitlements are
A. increases in funding for specific individuals or
groups like farmers or small business owners
B. policies for which Congress has obligated itself to
pay X level of benefits to Y number of recipients
C. government efforts to redistribute and equalize
wealth
D. budget items, the funding of which fluctuates
greatly from year to year
E. special rights granted to elderly Americans
46. The Congressional Budget Office (CBO) was created in
order to
A. assist the president in developing and carrying
out the budget
B. collect revenues and administer the federal
income tax
C. hold public hearings on the federal budget
D. set levels of spending on military and special
programs
E. assist members of Congress in setting the
parameters of the federal budget
47. Who writes the tax codes?
A. the House Ways and Means Committee and the
Senate Finance Committee
B. the Office of Management and Budget
C. the Congressional Budget Office
D. the House of Representatives and the POTUS
E. the Internal Revenue Service
48. The heads of executive agencies send their budget
requests to the
A. House Ways and Means Committee
B. Congressional tax committees
C. Treasury Department
D. Office of Management and Budget
E. POTUS
49. The task of the Government Accountability Office (GAO) is
A. to audit, monitor, and evaluate what agencies are
doing with their budgets
B. to assist Congress in developing the federal
budget
C. to assist the POTUS in developing the federal
budget
D. all of the above
E. none of the above
50. What was the purpose of the Congressional Budget and
Impoundment Control Act of 1974?
A. to reduce congressional budgetary powers
B. to reduce the number of tax brackets
C. to enhance congressional budgetary powers
D. to set limits on congressional spending
E. to reform the congressional budgetary process
51. The Congressional Budget and Impoundment Control Act
of 1974 did all of the following EXCEPT
A. mandate that new spending be offset with new
revenue sources
B. create a budget committee in each house of
Congress
C. establish a fixed budget calendar
D. establish the CBO
E. all of the above resulted from the legislation
52. A budget resolution
A. is an act of Congress that establishes a
discretionary government program or an
entitlement
B. sets limits on expenditures based on revenue
projects
C. resolves the differences between House and
Senate versions of the budget
D. revises program authorizations to achieve
required savings
E. must be passed to actually fund programs
established by authorization bills
53. A budget reconciliation
A. revises program authorizations to achieve
required savings
B. must be passed to actually fund established
authorization bills
C. sets limits on expenditures based on revenue
projections
D. reconciles the differences between the House
and Senate versions of a budget
E. is an act of Congress that establishes a
discretionary government program or an
entitlement
54. Which of the following would be a specific example of an
appropriations bill?
A. Congress voting to discontinue the federal
income tax
B. a budget resolution passed by both houses of
Congress
C. a bill to continue the space shuttle program for
another five years
D. a bill establishing a national health insurance
program
E. a bill funding the Department of Interior for the
fiscal year
55. According to the Gramm-Rudman-Hollings Act, spending
that exceeds mandated limits would trigger
A. automatic budget cuts of international spending
B. automatic tax increases
C. automatic budget cuts of defense programs
D. automatic budget cuts of both domestic and
defense programs
E. automatic budget cuts of entitlement programs
56. What are the automatic across the board spending cuts
called?
A. appropriations
B. reconciliations
C. continuing resolutions
D. authorizations
E. sequestrations