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Unit 6

Unit 6. Economics EOC Review. The federal budget is put together a. every other year. b. by Congress and the White House. c. to report to Congress on the preceding year’s expenditures. d. in order to reimburse state governments for costs of federally funded programs. . Question 1.

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Unit 6

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  1. Unit 6 Economics EOC Review

  2. The federal budget is put together • a. every other year. • b. by Congress and the White House. • c. to report to Congress on the preceding year’s expenditures. • d. in order to reimburse state governments for costs of federally funded programs. Question 1

  3. The federal budget is put together • a. every other year. • b. by Congress and the White House. • c. to report to Congress on the preceding year’s expenditures. • d. in order to reimburse state governments for costs of federally funded programs. Question 1

  4. An example of expansionary fiscal policy would be • a. cutting taxes. • b. cutting government spending. • c. cutting production of consumer goods. • d. cutting prices of consumer goods. Question 2

  5. An example of expansionary fiscal policy would be • a. cutting taxes. • b. cutting government spending. • c. cutting production of consumer goods. • d. cutting prices of consumer goods. Question 2

  6. All of the following people are well-known classical economists EXCEPT • a. Adam Smith. • b. Arthur Laffer. • c. David Ricardo. • d. Thomas Malthus. Question 3

  7. All of the following people are well-known classical economists EXCEPT • a. Adam Smith. • b. Arthur Laffer. • c. David Ricardo. • d. Thomas Malthus. Question 3

  8. When revenues exceed expenditures, • a. there is a budget surplus. • b. there is a budget deficit. • c. the government must create more money. • d. the government is forced to issue more bonds to raise money. Question 4

  9. When revenues exceed expenditures, • a. there is a budget surplus. • b. there is a budget deficit. • c. the government must create more money. • d. the government is forced to issue more bonds to raise money. Question 4

  10. When you buy a United States Savings Bond, you • a. loan money to the government. • b. borrow money from a savings and loan association. • c. donate money for special government projects. • d. pay for your child’s college education. Question 5

  11. When you buy a United States Savings Bond, you • a. loan money to the government. • b. borrow money from a savings and loan association. • c. donate money for special government projects. • d. pay for your child’s college education. Question 5

  12. An example of contractionary fiscal policy would be • a. cutting taxes. • b. decreasing government spending. • c. increasing production of consumer goods. • d. expanding the government’s role in regulating private industry. Question 6

  13. An example of contractionary fiscal policy would be • a. cutting taxes. • b. decreasing government spending. • c. increasing production of consumer goods. • d. expanding the government’s role in regulating private industry. Question 6

  14. The purpose of expansionary fiscal policy is to • a. increase output. • b. prevent hyperinflation. • c. slow the growth of the GDP. • d. increase the separation between government and private industry. Question 7

  15. The purpose of expansionary fiscal policy is to • a. increase output. • b. prevent hyperinflation. • c. slow the growth of the GDP. • d. increase the separation between government and private industry. Question 7

  16. Supporters of supply-side economics believe that • a. government should be used as a tool to increase demand for goods. • b. demand for goods increases when prices rise. • c. taxes have a strong negative influence on economic output. • d. tax cuts have little impact on worker productivity. Question 8

  17. Supporters of supply-side economics believe that • a. government should be used as a tool to increase demand for goods. • b. demand for goods increases when prices rise. • c. taxes have a strong negative influence on economic output. • d. tax cuts have little impact on worker productivity. Question 8

  18. All of the following are characteristics of classical economics EXCEPT • a. a free market economy. • b. the law of supply and demand. • c. the idea of achieving market equilibrium. • d. a significant role for government in the running of the economy. Question 9

  19. All of the following are characteristics of classical economics EXCEPT • a. a free market economy. • b. the law of supply and demand. • c. the idea of achieving market equilibrium. • d. a significant role for government in the running of the economy. Question 9

  20. Which of these is a contractionary fiscal policy? • a. The federal government builds a new medical research center at a prestigious state university. • b. The President and Congress pass a new two-cent-per-gallon gasoline tax. • c. The federal government sends taxpayers up to $300 each in the form of an income tax rebate. • d. The sales tax on clothing is lifted for one week before the school year begins. Question 10

  21. Which of these is a contractionary fiscal policy? • a. The federal government builds a new medical research center at a prestigious state university. • b. The President and Congress pass a new two-cent-per-gallon gasoline tax. • c. The federal government sends taxpayers up to $300 each in the form of an income tax rebate. • d. The sales tax on clothing is lifted for one week before the school year begins. Question 10

  22. Why does the Federal Reserve alter monetary policy? • a. to regulate the banking industry • b. to provide services to member banks • c. to enable banks to clear checks • d. to lessen the effect of natural business cycles Question 11

  23. Why does the Federal Reserve alter monetary policy? • a. to regulate the banking industry • b. to provide services to member banks • c. to enable banks to clear checks • d. to lessen the effect of natural business cycles Question 11

  24. How could the Federal Reserve encourage banks to lend out more of their reserves? • a. reduce the discount rate • b. increase the prime rate • c. raise the required amount of reserve • d. reduce the money supply Question 12

  25. How could the Federal Reserve encourage banks to lend out more of their reserves? • a. reduce the discount rate • b. increase the prime rate • c. raise the required amount of reserve • d. reduce the money supply Question 12

  26. How many Federal Reserve Districts are there? • a. 6 • b. 12 • c. 9 • d. 20 Question 13

  27. How many Federal Reserve Districts are there? • a. 6 • b. 12 • c. 9 • d. 20 Question 13

  28. What does “lender of last resort” mean with respect to the Federal Reserve? • a. It will lend money to a bank in a financial emergency. • b. It makes decisions about who a bank can lend money to. • c. It decides interest rates for interbank loans. • d. It has the power to decide how much money a bank can lend out. Question 14

  29. What does “lender of last resort” mean with respect to the Federal Reserve? • a. It will lend money to a bank in a financial emergency. • b. It makes decisions about who a bank can lend money to. • c. It decides interest rates for interbank loans. • d. It has the power to decide how much money a bank can lend out. Question 14

  30. What type of policy does the Federal Reserve use to counteract an expansion that is causing high interest rates? • a. fiscal policy • b. easy money policy • c. tight money policy • d. policy lags Question 15

  31. What type of policy does the Federal Reserve use to counteract an expansion that is causing high interest rates? • a. fiscal policy • b. easy money policy • c. tight money policy • d. policy lags Question 15

  32. Why does a bank sometimes hold excess reserves? • a. to be sure they can meet their customers’ demands • b. to protect against high prices • c. to make check clearing easier • d. to keep from lending too much money Question 16

  33. Why does a bank sometimes hold excess reserves? • a. to be sure they can meet their customers’ demands • b. to protect against high prices • c. to make check clearing easier • d. to keep from lending too much money Question 16

  34. Which of the following is one way the Federal Reserve Bank serves the government? • a. making loans to the government • b. minting coins for the government • c. selling government securities • d. financing state government projects Question 17

  35. Which of the following is one way the Federal Reserve Bank serves the government? • a. making loans to the government • b. minting coins for the government • c. selling government securities • d. financing state government projects Question 17

  36. What type of policy does the Fed use to counteract a contraction? • a. fiscal policy • b. easy money policy • c. tight money policy • d. policy lags Question 18

  37. What type of policy does the Fed use to counteract a contraction? • a. fiscal policy • b. easy money policy • c. tight money policy • d. policy lags Question 18

  38. What is the role of the Federal Open Market Committee? • a. It collects information about each Federal Reserve District and reports on economic conditions to the Board of Governors. • b. Composed of seven members appointed by the President, it oversees the Federal Reserve System. • c. It redraws the map of the twelve Federal Reserve Districts every ten years in response to economic changes. • d. It makes key decisions about interest rates and the growth of the United States money supply. Question 19

  39. What is the role of the Federal Open Market Committee? • a. It collects information about each Federal Reserve District and reports on economic conditions to the Board of Governors. • b. Composed of seven members appointed by the President, it oversees the Federal Reserve System. • c. It redraws the map of the twelve Federal Reserve Districts every ten years in response to economic changes. • d. It makes key decisions about interest rates and the growth of the United States money supply. Question 19

  40. Which of the following instruments is NOT used by the Federal Reserve to change the money supply? • a. the discount rate • b. the federal tax code • c. the required reserve ratio • d. open market operations Question 20

  41. Which of the following instruments is NOT used by the Federal Reserve to change the money supply? • a. the discount rate • b. the federal tax code • c. the required reserve ratio • d. open market operations Question 20

  42. What effect would an increase in the discount rate have on the money supply? • a. It would cause the money supply to contract. • b. It would increase the money multiplier. • c. It would cause the money supply to expand. • d. It would have no effect on the money supply. Question 21

  43. What effect would an increase in the discount rate have on the money supply? • a. It would cause the money supply to contract. • b. It would increase the money multiplier. • c. It would cause the money supply to expand. • d. It would have no effect on the money supply. Question 21

  44. Which of these tools in an example of monetary policy? • a. reducing income taxes • b. changing reserve requirements • c. increasing government spending • d. borrowing money through deficit spending Question 22

  45. Which of these tools in an example of monetary policy? • a. reducing income taxes • b. changing reserve requirements • c. increasing government spending • d. borrowing money through deficit spending Question 22

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