AnswersEAP-Virginia and US Government BUnit Test

Unit Test — Unit test Answers

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"Meeting the spending targets in this budget meant some very difficult choices."President Barack Obama,2012 Budget Message of the President

A
deciding which country to borrow from to finance spending
B
deciding what would be funded and what would be cut
C
deciding how to keep interest rates low on the national debt
D
deciding how much to increase tax rates
2
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What is a primary economic goal of governments?

A
reducing income inequality
B
maximizing individual freedoms
C
advancing technological innovation
D
protecting natural resources
3

The Fed’s use of open market operations affects banks’

A
interest rates.
B
money available to lend.
C
lending practices.
D
stability.
4

An increase in gross domestic product (GDP) is a sign that a country’s economy is

A
declining.
B
stagnant.
C
growing.
D
depressed.
5

Rules ensuring that businesses offer safe products to consumers are part of a nation's

A
trade policy.
B
monetary policy.
C
regulatory policy.
D
fiscal policy.
6

This circle graph shows historical information about Bolivia’s workforce. What does the graph indicate about Bolivia’s labor force in 2010?

Question illustration
A
Industry contributed to one-third of the country's total GDP.
B
Industry workers made up the smallest share of the workforce.
C
The majority of people at this time worked in agriculture.
D
The services sector provided the highest salary.
7

When the Fed adjusts its interest rate, it directly influences consumer

A
saving.
B
spending.
C
borrowing.
D
investing.
8

Which best describes a central bank's primary goals?

A
limiting inflation and reducing unemployment
B
reducing unemployment and maintaining cash flow
C
controlling stagflation and reducing unemployment
D
managing credit and ensuring the money supply's liquidity
9

Which statements describe how the Fed responds to high inflation? Check all that apply.It charges banks more interest.It pays banks less interest.It sells more securities.It decreases the money supply.It increases the money supply.

A
It charges banks more interest.
B
It pays banks less interest.
C
It sells more securities.
D
It decreases the money supply.
E
It increases the money supply.
10

A flow chart shows an aspect of fiscal policy. Money goes from the government, to household, and to firms.

Question illustration
A
the way in which a government creates a budget
B
a budget that is severely unbalanced
C
government spending to strengthen the economy
D
ways in which governments spend money
11

In a free enterprise system, governments address public problems through policy to ensure that

A
citizens' needs are met and protected.
B
economic operations of businesses are controlled.
C
workers earn more than workers in other countries.
D
the nation's level of productivity remains steady.
12

Read the scenario.The citizens of Country D have noticed that the average prices of most goods within their nation have begun to rise. At the same time, employers are not raising wages at the same rate. The combination of these challenges has resulted in a decrease in overall demand, causing a decline in GDP.

A
the government of Country D
B
the enterprises of Country D
C
the businesses of Country D
D
the workers of Country D
13

lowstablehigh

A
low
B
stable
C
high
14

A diagram shows that taxes go into the government, which then go into spending.

Question illustration
A
Government Spending
B
The National Economy
C
The Federal Debt
D
Fiscal Policy
15

Which of the following statements most accurately describes the federal government and its employees?

A
Millions of Americans work for the federal government.
B
The federal government is not allowed to hire employees.
C
The majority of Americans are employed by the federal government.
D
The number of federal employees is too small to affect government spending.
16

Why does the Fed pay interest to banks?

A
It is interest on money held in reserve.
B
It is interest on credit available to the Fed.
C
It is interest on loans taken by the Fed.
D
It is interest on government investments.
17

The map shows GDP per capita in the United States for a given year.What conclusion can someone draw from the map?

Question illustration
A
States with the highest per capita GDP tend to be in the South.
B
Alaska has the lowest per capita GDP of any state.
C
States with the lowest per capita GDP tend to be in the South.
D
Florida has a higher per capita GDP than New York.
18

What gives the US government the power to collect taxes?

A
the Constitution
B
laws passed by Congress
C
an executive order
D
common law
19

Which statement best describes the likely effects of an expansionary fiscal policy?

A
It can increase unemployment and reduce inflation.
B
It can increase unemployment and inflation.
C
It can reduce unemployment but lower inflation.
D
It can reduce unemployment but increase inflation.
20

Which of these effects of expansionary spending would a government most want to avoid?

A
higher employment
B
higher inflation
C
growth in production
D
growth in consumer spending

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