Practice for Final 2025

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In 2008, President George W. Bush signed the Emergency Stabilization Act. This law created a $700 Billion fund that the government used to purchase worthless investments held by banks. What was one reason that the government enacted the Emergency Economic Stabilization Act?

• To promote price stability
• To reduce consumer consumption
• To promote economic growth
• To reduce the inflation rate

In January following an election year, a new president and a new Congress were sworn in. During the first 100 days of the new administration Congress and the president coordinated to address the country's economic issues. The government raised the personal income tax rate for high earners and corporations. Then produced a budget that reduced government spending and limited deficit spending. Which answer BEST describes the government's concern and its approach to addressing these concerns?

• Due to concerns about a high inflation rate, the government is pursuing expansionary fiscal policies.
• Due to concerns about a high inflation rate, the government is pursuing contractionary fiscal policies.
• Due to concerns about a high unemployment rate, the government is pursuing expansionary fiscal policies.
• Due to concerns about a high unemployment rate, the government is pursuing contractionary fiscal policies.

Stacey's Smoke Stack is a bbq food truck in Phoenix. There are a lot of other bbq food trucks in the area, so Stacey's business has a lot of competition. Because of the other businesses, she is unable to sell all of the meat she smokes each morning. She charges more money for meals than some of her competitors and is struggling to earn profit. Based on what you know about supply and demand, how can Stacey help her business succeed?

• She can increase the quantity demanded for her meals by raising their price.
• She can convince customers to pay more for her meals by increasing the supply of bbq.
• She can increase the quantity demanded for her meals by lowering their price.
• She can convince customers to buy more of her meals by increasing the supply of bbq.

The newspaper headline states: "US OFFICIALS ANNOUNCE NEW SUBSIDIES FOR THE NATIONS AGRICULTURAL INDUSTRY" How is this measure likely intended to affect US agriculture?

• It is intended to encourage agricultural imports to lower domestic production costs.
• It is intended to reduce the level of competition in the domestic agricultural industry.
• It is intended to increase profits for farmers by artificially raising the prices of agricultural goods.
• It is intended to help farmers maintain adequate production levels to meet customer demand.

How will a loan applicant's credit rating affect the interest rate on the loan he or she receives?

• A low credit rating will result in a lower interest rate because the applicant is in greater need.
• A high credit rating will result in a higher interest rate because the applicant is in greater need.
• A low credit rating will result in a higher interest rate because the risk of default on the loan is greater.
• A high credit rating will result in a lower interest rate because the risk of default on the loan is greater.

Year 1 inflation was 2.3% Year 2 inflation was 1.4% Year 3 inflation was 7.0% Year 4 inflation was 8.6% How will the US government MOST LIKELY attempt to address this trend?

• The treasury dept will recommend significant tax cuts to increase the spending power of consumers.
• Congress will pass a revised budget significantly increasing federal spending.
• The Federal Reserve will increase interest rates to decrease the money supply.
• The federal government will fund new infrastructure projects and public works to ensure people have jobs.