ECONOMICS TOPIC 9 TEST REVIEW

Which of the following conclusions is supported by the data in this illustration?

• The growth in defense spending is responsible for most spending growth since 1970.

• Spending growth would be flat if not for large defense expenditures

• The United States is failing to pay the annual cost of borrowing

• Human resources represents by far the largest category of spending in 2012

This photograph likely shows the result of which of the following?

• collapse of open market operations

• failure to establish a federal budget

• Keynesian economics

• an inside lag

What is the first step in creating the federal budget?

• The House Budget Committee and the Senate Budget Committee combine their work into a single budget proposal

• The Office of Budget and Management works with the President’s staff to create an overall spending plan

• Congress breaks into small committees and works with the Congressional Budget Office

• Each federal agency writes an estimate of how much it expects to spend in the coming fiscal year

This photograph shows the implementation of which of the following?

• a contractionary fiscal policy

• application of the Laffer curve

• a tight-money monetary policy

• an expansionary fiscal policy

Keynesian economics differed from classical economics in which of the following ways?

• It encouraged a laissez-faire approach to the economy

• It relied on adjustments in monetary policy to impact the economy

• It paid little attention to impact of policies in the short term

• It relied on government to maximize economic output in some cases

Analyze this political cartoon, which shows President Roosevelt in a rowboat and Uncle Sam in the water

• the depression was a threat to the nation and required Roosevelt’s bold response.

• Keynesian policies threatened to swamp the United States in debt

• the New Deal was an overreaction that was harmful to the country

• Roosevelt’s actions to rescue the nation from disaster were insufficient

“[W]e cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can't afford it.”

—President Barack Obama, April 13, 2011

This statement is most clearly opposed to which of the following?

• an easy money monetary policy

• supply-side economics

• Keynesian economic theory

• Expansionary fiscal policy

Which of the following BEST summarizes the idea represented by this graph?

• Very low taxes produce high revenues

• Revenues will fall steadily with any increase in taxes

• Raising taxes can actually lead to reduced revenues

• Revenues continue to rise as tax rates increase

In what 10-year span has the government had the highest deficits?

• 1960–1970

• 1980–1990

• 1990–2000

• 2000–2010

What is an example of an opportunity cost of the federal government having to service its debt?

• It has less money for the crowding-out effect

• It has less money to pay to bondholders

• It is unable to pay for entitlement programs

• It has less money to spend on infrastructure