OST Government & the Economy

The federal government uses fiscal policies to maintain economic stability, including making changes to which of the following?

• Taxes and interest rates.

• Interest rates and the federal reserve requirement.

• Interest rates and government spending.

• Taxes and government spending.

A major function of the Federal Reserve is to

• Pass laws regulating the economy

• Lend money to state governments

• Manage the supply of currency & bank credit

• Issue US savings bonds

When you get a job the federal, state, and local governments all take out taxes. This is an example of what type of power?

• Implied power

• Expressed power

• Reserved power

• Concurrent power

Why would the government spend more than it collects in taxes during an economic depression?

• Promote companies to merge so they are more effiecent

• To encourage competition between business causing prices to drop

• Lower taxes on businesses.

• Put more money into the economy.

Which is the correct cause and effect relationship?

• Fed wanting economy to grow - - has to wait for Congress & Pres to approve any moves.

• Economy expanding rapidly - - Fed lowers reserve requirements

• Inflation is rising - - Raise reserve requirements/interest rates

• Weak economy - - Raise reserve requirements/interest rates

When inflation is widespread, the government can

• raise taxes on foreign governments

• lower tariff rates (taxes) on imports

• raise interest rates and/or taxes

• close all state banks

The federal government uses fiscal policies to maintain economic stability. Which of the following could the government use to try and stimulate economic growth?

• Decrease taxes and increase governmet spending.

• Increase taxes and decrease government spending.

• Decrease taxes and decrease gorvernment spending

• Increase taxes and increse government spending.

What is one way the Federal Reserve System regulates economic activity?

• Regulating tariff rates on foreign imports.

• Regulating production on consumer goods.

• Regulating the amount of money in circulation.

• Regulating spending by the federal government.

The government has enacted a law requiring the installation of seat belts on buses. What is the intended benefit of this type of increased government regulation?

• To increase tax revenue.

• To promote economic growth.

• To reduce private sector profits.

• To enhance consumer protections.

Identify whether the policy listed is related to taxes or spending.

The government decides to begin a massive effort to expand American's access to high speed rail travel.

• Spending Policy

• Tax Policy