AnswersHSA 26-27 EconomicsEconomic Policy: Influential Theories

Economic Policy: Influential Theories — Unit test Answers

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1
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What part does interest play in deficit spending?

A
Governments must pay interest on money they borrow when they take on debt.
B
Citizens must pay interest when their governments borrow money.
C
Governments may charge foreign countries interest when they borrow money.
D
Interest is not a factor when a government’s budget is in deficit.
2
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Many classical economists such as Adam Smith believed that government should

i
intervene often in the economy.
i
intervene little in the economy.
a
always intervene in the economy.
t
totally control the economy.
3

Which body manages the Fed?

t
the Appropriations Committee
t
the Federal Reserve Board
t
the Federal Open Markets Committee
t
the Economic Policy Subcommittee
4

US federal income tax is progressive by law, but which best explains why wealthy individuals can often pay far less in taxes than the top tax rate?

H
High-income earners can fight in court for the right to a reduced rate.
H
High-income earners reduce their tax rates through numerous deductions.
H
High-income earners use tax laws to their advantage to reduce their tax rates.
H
High-income earners always place their assets overseas to lower their tax rates.
6

best

a
a tax that charges low-income earners a lower percentage than high-income earners
a
a tax that charges an equal percentage to all
a
a tax that charges earners based on their professions
a
a tax that charges high-income earners a lower percentage than low-income earners
7

producersconsumersgovernmentprices

A
producers
B
consumers
C
government
D
prices
8

Which best describes a difference between the views of Milton Friedman and John Maynard Keynes on the economy?

A
Friedman said that monetary policy should be used to influence aggregate demand, while Keynes believed the best approach was fiscal policy.
B
Friedman said that fiscal policy should be used to influence aggregate demand, while Keynes believed the best approach was monetary policy.
C
Keynes believed in little government intervention in the economy, while Friedman said government should play an active role.
D
Keynes believed the economy was too complicated to think of aggregates, while Friedman said higher aggregate demand could solve issues.
10

similardifferentallrandom

A
similar
B
different
C
all
D
random
11

Two doctors who join forces in business form a.

Answer not available
12

Which describes an example of the economic system known as free enterprise?

A
People are free to shop around for products, but manufacturers dictate what is available.
B
People are free to shop for the best price on products because there is open competition.
C
Government oversight of business gives people freedom to shop for the best deals.
D
Government regulations ensure that everyone has the freedom to shop for the best deals.
13

Which statement explains a way how the Securities and Exchange Commission upholds fair business practices?

T
The SEC makes sure that banks follow federal laws.
T
The SEC tries to limit risk in the financial system.
T
The SEC generally oversees banking practices.
T
The SEC generally oversees financial advisers.
16

Spending that can change from year to year is known as

A
discretionary spending.
B
deficit spending.
C
mandatory spending.
D
expansionary spending.
17

best

t
to reduce the number of responsibilities
t
to make it easier to raise funds for expansion
t
to move into a more favorable tax bracket.
t
to take advantage of little government oversight.
18

Successful entrepreneurs contribute to the economy by

b
becoming wealthy.
e
expanding markets.
e
encouraging free trade.
c
creating business strategies.
19

Articles of partnership establish

h
how businesses can raise capital.
w
what business taxes are paid.
h
how profits and losses are divided.
w
what is included in a charter.
20

Which statement is part of the IRS’s regulations concerning nonprofit organizations?

A
Donations are not tax deductible for the donor.
B
Organizational taxes are calculated and paid like other corporations.
C
Earnings can only be distributed to shareholders, not individual owners.
D
Organizations focusing on health care must provide services that help the community.

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