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Terms in this set (43)
Why is contractionary monetary policy rarely used?
Voters don't like tax increases, and politicians who pass such laws risk being voted out of office.
The Great Recession was partially caused by an asset bubble in the ________ market.
housing
During the Great Recession, the federal government employed fiscal policy to try to stimulate the economy. Which of the following are examples of legislation that Congress passed to try to turn around the economy during the Great Recession? (choose all that apply)
American Recovery and Reinvestment Act of 2009, Economic Stimulus Act of 2008
Fiscal policy characterized by decreased government spending and increased taxes is called ____________.
contractionary fiscal policy
Contractionary fiscal policy is beneficial when the economy is growing at a greater rate than ____________.
two to three percent per year
Hazlitt discusses the fact that the Tennessee Valley Authority increased prosperity in its region. Why does he say this isn't surprising and shouldn't be regarded as a miraculous result of government spending?
Because taxes were taken from other parts of the country and concentrated in this one section.
What happens when providing employment becomes the primary reason (the end instead of the means) for government spending? (choose all that apply)
Need becomes a subordinate consideration, Government projects have to be invented.
Increased taxes reduce the economic incentives for business success. Which of the following are consequences of these reduced incentives? (choose all that apply)
Consumers are prevented from getting better and cheaper products.
Real wages are held down. Correct!
People are deterred from starting new enterprises.
Potential entrepreneurs decide not to become new employers.
Existing businesses don't give new employment.
The New Deal was a series of legislation enacted by the federal government intended to provide relief from what economic downturn?
The Great Depression
Which of the following were programs or legislation created during the New Deal? (choose all that apply)
Public Works Administration
Civilian Conservation Corps Correct
Social Security Act Correct
Agricultural Adjustment Act
Which of the following are consequences of contractionary monetary policy rarely being used? (choose all that apply)
increased government debt, high inflation
Which of the following are negative consequences of an economy that is growing too quickly? (choose all that apply)
unsustainability, asset bubbles
Large-scale asset purchases in which a central bank buys government bonds or other financial assets from commercial banks and other financial institutions is known as _____________.
quantitative easing
Hazlitt writes that the "pleasant dreams" of government being able to spend without taxing and being able to endlessly pile up debt "have always been shattered by" what?
national insolvency or runaway inflation
The sum total of all the money the government owes is referred to as the __________.
national debt
When government expenditures exceed government revenues, the federal budget is considered to be ___________.
in deficit
When government revenues exceed government expenditures, the federal budget is considered to be __________.
in surplus
When government revenues equal government expenditures, the federal budget is considered to be ___________.
balanced
What does the United States government do when the budget is in deficit?
It sells securities to individuals, corporations, financial institutions, and other governments.
In the United States, state governments are mostly funded by which of the following types of taxes? (choose all that apply)
income taxes, sales taxes
The Tax Cuts and Jobs Act of 2017 changed the corporate income tax from 35% to __________.
21%
The major excise taxes in the United States are on which of the following products? (choose all that apply)
alcohol, gasoline, tobacco
In the United States, local governments are primarily funded through __________.
property taxes
A tax that applies the same tax rate regardless of income is called a __________.
flat tax
America's budget deficit reached a trillion dollars during the terms of which presidents? (choose all that apply)
Donald and Barack
Each year, the finer points of America's federal budget are first debated in twelve _____________.
appropriations committees
FICA tax is a payroll tax that funds which of the following government programs? (choose all that apply)
Social Security, Medicare
Taxes on imported goods are called ______________.
tariffs
In the United States, the bulk of spending by local and state governments goes to which of the following areas? (choose all that apply)
public education
public safety
public welfare
road construction and repair
Emergency services provided by the government include which of the following services? (choose all that apply)
emergency medical services
firefighting
police protection
The government operates many public buildings, such as libraries and courthouses, as well as many public _____, including Yellowstone and Yosemite.
parks
The government plays an important role in keeping private companies accountable and preventing them from causing excessive pollution. In the United States, the federal organization tasked with protecting human and environmental health is the _________________.
Environmental Protection Agency
Firefighting is an example of a government service that could be provided by the private sector. However, firefighting services are operated by the government because _____________.
it's more beneficial to society for firefighting services to be provided to everyone
What is the largest government healthcare program in the United States?
Medicare
As of 2019, there is over ______________ of federal student loan debt in the United States.
$1.5 trillion
When a borrower stops making payments on their loan for several months, the loan is considered to be in __________.
default
Those who advocate for government lending believe that extending credit to individuals will help them prosper. However, an important point these advocates of government lending forget is that all credit is _________.
debt
According to Hazlitt, what is the end result when the government provides loans or subsidies to business?
The government taxes successful businesses in order to support unsuccessful businesses.
Which of the following are reasons that private lenders are likely to make fewer mistakes than government lenders? (choose all that apply)
Private lenders are selected by a process of survival of the fittest.
Private money will only be invested where repayment with interest or profit is expected.
The money they're lending is their own or has been voluntarily entrusted to them.
In the United States, government welfare services include which of the following programs? (choose all that apply)
food
stamps
public housing
unemployment benefits
What percentage of student loans are given out by the government?
92%
According to Hazlitt, the belief that government loans for farmers are beneficial comes from which of the following "acts of shortsightedness"? (choose all that apply)
thinking only of the first half of the
transaction
looking at the matter only from the standpoint of the farmers that borrow
According to Hazlitt, which of the following are true, in general, about the individuals selected for government loans? (choose all that apply)
They will be poorer risks than the individuals selected for private loans
There will be a higher percentage of failures, or defaults, on these loans
More money will be lost by
loans to these individuals
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