Federal Taxation and Economic Policies

When was the Federal Reserve System established to act as America's central bank?

• 1776

• 1865

• 1913

• 2008

What are the two main goals of the Federal Reserve System?

• To collect taxes and manage government spending.

• To control inflation and encourage full employment.

• To regulate international trade and currency exchange.

• To provide loans to individuals and businesses directly.

What is the effect of the Federal Reserve lowering the interest rate it charges banks?

• Banks borrow less money, and less money circulates in the economy.

• Banks borrow more money, and more money circulates in the economy.

• Banks are forced to close, leading to a financial crisis.

• The government collects more taxes from banks.

What is a primary cause of government deficits?

• The government spending less money than it collects in taxes.

• The government spending more money than it collects in taxes.

• Citizens paying too much in taxes.

• Businesses investing too much in the economy.

What is the main idea behind supply-side economics?

• Increasing government spending to boost demand.

• Raising taxes on the wealthy to fund public services.

• Lowering taxes on businesses and individuals to encourage economic growth.

• Implementing strict regulations on industries to protect consumers.

What has been the general trend for federal taxes over the last 30 years?

• Federal taxes have increased and become more progressive.

• Federal taxes have decreased and become less progressive.

• Corporate tax rates have increased, while social security taxes have decreased.

• All federal taxes have remained constant.

Which of the following is an example of mandatory spending by the government?

• Funding for the Department of Education.

• Defense spending.

• Social Security and Medicare.

• Farm price supports.