Topic 12: Government and the Economy

What does the government often do when inflation gets too high?

• It prints more money.

• It raises taxes.

• It raises interest rates.

• It increases government spending.

Our money has value because it is

• It's easily destroyed.

• It's made of gold and silver.

• It's generally acceptable.

• All of the above.

How many Federal Reserve districts are there?

• 12

• 50

• 116

• 3

Economic growth takes place when the GDP increases without increases in

• Employment

• Inflation

• Wages

• GDP

What is the largest entitlement program provided by the United States government?

• Military defense

• Welfare

• Interest debt

• Social security

What describes a situation in which everyone who wants a job can find one?

• Full employment

• Unemployment

• Interest

• Credit counseling

A general rise in the prices of goods and services is called what?

• Interest

• Loan

• Inflation

• Deficit budget

The __________________ grows when the government borrows money to pay for spending programs it cannot afford.

• Budget deficit

• Budget surplus

• debt

• Interest

The section of the graph in blue above most likely represents this element of fiscal policy:

• Budget surplus

• Budget deficit

• Inflation

• Recession

The Smith family earns a yearly income of $150,000 and pays $35,000 in income tax. The Harris family earns a yearly income of $75,000 and pays $15,000 in income tax. The Johnson family earns a $40,000 yearly income and pays $6,000 in tax.

According to the chart above, what type of tax is in effect?

• Proportional

• Progressive

• Regressive