AnswersIL-EconomicsMonetary Policy: The Federal Reserve

Monetary Policy: The Federal Reserve — Unit test Answers

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On which of these are individuals required to pay income taxes in the United States? Check all that apply.wagestipsgasolinestore purchasesinvestment earnings

w
wages
t
tips
g
gasoline
s
store purchases
i
investment earnings
2
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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.
3

Which federal regulatory agency would most likely bring a civil suit against a business that broke securities laws?

t
the SEC
t
the FDA
O
OSHA
t
the FDIC
4

When a government decides to limit the number of goods that can be sold to another nation, that government is creating

m
monetary policy.
t
trade policy.
f
fiscal policy.
r
regulatory policy.
5

Occupational Safety and Health AdministrationEnvironmental Protection AgencyFood and Drug AdministrationSecurities and Exchange Commission

A
Occupational Safety and Health Administration
B
Environmental Protection Agency
C
Food and Drug Administration
D
Securities and Exchange Commission
6

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.
7

The diagram shows different types of policies.

Question illustration
T
The Best Economic Policies
G
Government Economic Policies
I
Ineffective Economic Policies
T
The Free Enterprise System
8

spendingprofitdebtsaving

A
spending
B
profit
C
debt
D
saving
9

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.
10

How can government revenue be increased? Select four options.

A
by raising the minimum wage
B
by lowering income taxes
C
by increasing the sales tax
D
by giving property tax breaks
E
by increasing income tax exemptions
11

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.
12

The government of Country C has passed a law protecting the physical safety of factory workers. This is an example of

m
monetary policy.
s
supply and demand.
f
fiscal policy.
r
regulatory policy.
13

Which best describes why governments collect taxes?

A
to control the value of currency
B
to keep the government running
C
to ensure surplus funds
D
to fund government programs
14

Expansionary spending takes place when a government makes the decision to

p
put a freeze on the number of its employees.
r
raise taxes to balance its budget.
r
raise taxes to run a budget surplus.
r
raise spending to stimulate the economy.
15

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

Which types of taxes are both state and federal? Select three options.individual incomecorporate incomepayrollsalesestate

A
individual income
B
corporate income
C
payroll
D
sales
E
estate
17

How can government revenue be increased? Select four options.by raising the minimum wageby lowering income taxesby increasing the sales taxby giving property tax breaksby increasing income tax exemptions

A
by raising the minimum wage
B
by lowering income taxes
C
by increasing the sales tax
D
by giving property tax breaks
E
by increasing income tax exemptions
18

What are federal sources of revenue? Select four options.income taxcorporate taxpayroll taxsales taxexcise tax

A
income tax
B
corporate tax
C
payroll tax
D
sales tax
E
excise tax
19

producersconsumersgovernmentprices

A
producers
B
consumers
C
government
D
prices
20

What are the city council’s responsibilities regarding the budget? Select two options.determining whether to veto the proposed budgetdeleting specific lines of the proposed budgetapproving or rejecting a budget as a wholeputting the budget into effect the next fiscal yearwriting a budget and presenting it for public review

A
determining whether to veto the proposed budget
B
deleting specific lines of the proposed budget
C
approving or rejecting a budget as a whole
D
putting the budget into effect the next fiscal year
E
writing a budget and presenting it for public review

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