AnswersPMHS Civics Q2Fiscal Policy

Fiscal Policy — Unit test Answers

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1
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Which federal regulatory agency would most likely bring a civil suit against a business that broke securities laws?

A
the SEC
B
the FDA
C
OSHA
D
the FDIC
2
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What is the name of the period when an economy begins to shrink?

A
recession
B
depression
C
recovery
D
peak
3

Which is an example of a government entitlement that people are guaranteed to receive after paying into a program?

A
Social Security payments
B
healthcare services
C
transportation services
D
job placement services
4

The primary way government raises revenue is through

A
taxes and borrowing.
B
selling public property.
C
fines for law violations.
D
charging a fee for a license.
5

What happens when a bank is required to hold more money in reserve?

A
It has less money for loans.
B
It has less money for operations.
C
It has less money for interest payments.
D
It has less money for withdrawals.
6

Cost-push inflation occurs when

A
consumers begin purchasing more goods.
B
producers need more money to make and distribute goods.
C
the government prints more money and pushes prices up.
D
consumers have more money to spend on goods and services.
7

Which best describes how the federal budget is created?

A
The House proposes a budget and the president signs it into law after the Senate revises it.
B
The Congress proposes a budget and the president signs it into law after his office revises it.
C
The president proposes a budget and signs it into law after the House and Senate revise it.
D
The Senate proposes a budget and the president signs it into law after the House revises it.
8

Which of these are goals of an expansionary policy? Check all that apply.

A
increased available credit
B
decreased available credit
C
increased money supply
D
increased inflation
E
increased interest rates
F
decreased interest rates
9

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

A
The SEC makes sure that banks follow federal laws.
B
The SEC tries to limit risk in the financial system.
C
The SEC generally oversees banking practices.
D
The SEC generally oversees financial advisers.
10

What decisions does the business cycle help businesses make? Choose four answers.

A
whether to stay at old facilities or move to new facilities
B
whether to grow or shrink the business
C
whether to keep or change products
D
whether to increase or decrease production
E
whether to hire or lay off workers
F
whether to invest or save money
11

What are the signs of low inflation? Check all that apply.

A
Demand steadily rises.
B
Demand steadily falls.
C
Prices continue to increase.
D
Prices continue to decrease.
E
The economy grows in a healthy way.
F
The economy stagnates and struggles.
12

Businesses contribute to the government’s revenue by paying what kind of tax?

A
corporate
B
payroll
C
income
D
sales
13

Does a depression always follow a recession?

A
Yes, the trough is always considered a depression.
B
No, a depression is indicated when the recession is exceptionally long.
C
Yes, for recovery to occur, the trough must be reached.
D
No, the economy could decline quickly and bypass recession.
14

This graph shows changes in GDP and the unemployment rate in the United States in recent years.Which statement most accurately describes the trends shown on this graph?

Question illustration
A
When GDP falls, unemployment rises.
B
GDP and unemployment have little to do with each other.
C
When GDP rises, unemployment rises as well.
D
GDP and unemployment rise at times of world crises.
15

How do consumers’ feelings about the economy help contribute to growth?

A
Positive consumer attitudes influence spending habits.
B
Positive consumer attitudes increase job prospects.
C
Positive consumer attitudes inspire increased production.
D
Positive consumer attitudes can end a depression.

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