Economics Checkpoints Questions and Answers Already Graded A

Economics Checkpoints Questions and Answers Already Graded A In what way could tax policy be used to slow a rapidly growing economy? Taxes could be raised to decrease the money in circulation. Which criteria for effective taxes is violated by confusing instructions? simplicity Why is it important for a tax to be efficient? to produce reasonable revenue What is one argument in favor of the benefit principle of taxation? Those who receive the service pay for it. What is a proportional tax? a tax in which the percentage a person pays in taxes stays the same regardless of income What is a regressive tax? a tax in which the percentage individuals pay decreases as their income increases What is a progressive income tax? a tax in which the tax rate increases as a person's income increases Which disadvantage of the value-added tax (VAT) is most likely to be cited by people with low incomes? As a consumption tax, everyone pays the same amount, regardless of ability to pay. Jill makes $100,000 per year, and Kelly makes $40,000 per year. Under a flat tax, what would be true? The women would pay the same percentage. How does a flat tax differ from a value-added tax (VAT)? The rate remains the same under a flat tax, whereas the rate changes under a VAT. Which is an example of a federal government transfer payment? payment to individuals with disabilities The federal government operates military bases in many states. Luke Air Force Base is located in Glendale, Arizona, but the federal government is considering moving the base to New Mexico. What problem will Glendale face if Luke Air Force Base is closed? a loss of revenue Which accurately describes how the federal budget is established? The executive branch prepares a budget and sends it to both houses of Congress which will pass budget resolutions. What problem does the president face when presenting a budget to Congress? What problem does the president face when presenting a budget to Congress? Congress could pass the budget, but it may not agree with the president's priorities. What are examples of discretionary federal spending that can face budget cuts? education military A few states have adopted a balanced budget amendment. What is the purpose of the balanced budget amendment enacted by these states? It prevents states from deficit spending. What is a significant health care expense spent by state governments? funding Medicaid programs Which accurately describes differences between state and local government expenditures? Public welfare programs at the local level make up a small part of the budget compared to the state level. Which social welfare government acts and programs were enacted as a result of the Great Depression? Federal Deposit Insurance Corporation (FDIC) Emergency Banking Act Which act enacted by President Barack Obama includes expanded access to private and public health insurance for citizens, yet continues to be a point of contention both politically and socially? Patient Protection and Affordable Care Act What reasons would people have to promote social welfare? to provide for those who cannot afford food, shelter, or medical care What is true about spending on Social Security? It cannot be cut because it is part of mandatory spending. Why would the government use an expansionary fiscal policy? to stimulate aggregate demand What are examples of mandatory government spending? government is required by law to fund Medicare. 2. The government is required by law to fund veteran benefits. 3.The government is required by law to fund Social Security. How can heavy federal debt lead to higher interest rates? The government causes increased borrowing competition, which leads banks to increase interest rates. Why is it important that money is limited in its availability? If it is widely available, it could lose its value. Which characteristic of money makes it possible to make change at stores? divisibility How does money act as a measure of value? It tells the buyer the worth of an item. Which is an example of bartering? sweeping floors at a movie theater to see films for free giving golf clubs to a friend for an MP3 player Which type of money derives its value from government decree, and not from gold or silver? fiat money What are greenbacks? demand notes printed by the federal government during the Civil War Which legislation led to the creation of a national currency and national banking system? National Bank Act of 1863 What was the Gold Standard Act? legislation passed in 1900 that established gold as the only standard for redeeming paper money What is one way credit unions differ from commercial banks? Credit unions do not exist to make a profit. Which is true regarding recent banking innovations Banking apps can be set to alert account holders of low balances. People can deposit checks without visiting a bank. What services do commercial banks provide? Banks offer customers the ability to borrow money through loans. Banks offer customers checking and savings accounts. Banks offer customers investment accounts and services. What government action occurred due to the Savings and Loan Crisis? Congress passed legislation transferring insurance coverage for S&Ls to the FDIC. What was the purpose of the Banking Act of 1933? to improve bank security What is a benefit of international trade? an increase in the variety of goods What does the theory of comparative advantage suggest? The nation that should produce a good is the one with the lowest opportunity cost. How can free trade be harmful to a country militarily? It may lose the ability to produce important products it would need during wartime. How can infant industries be harmed by open free trade? They will not survive due to high production costs. The United States engages in free trade with Holland. Last year, the United States decided to put a 75 percent tariff on imported tulips. Why would the United States impose that tariff? o protect US tulip growers from competition Which is true regarding special interests and trade policy? Special interests could push for high tariffs to prevent competing exports from entering the country. What position did labor unions take on the free trade agreements passed in the 1990s? They were opposed to them because they feared the loss of US jobs. What is an argument for free trade? The possibility of a trade freeze decreases. What is a goal of the North American Free Trade Agreement? to decrease trade barriers and tariffs What is the purpose of the North American Free Trade Agreement? to increase trade between Mexico, the United States, and Canada The exchange rate for converting US dollars to the British pound is .767. How much is $200 US worth in Great Britain? £153 What is the trade-weighted value of the dollar? an index showing the measurement of the foreign exchange value of the US dollar in relation to foreign currencies commonly used in trade How does the World Bank Group assist developing countries? It offers loans to developing countries Which of Rostow's Five Stages of Economic Growth involves agricultural production and hunting and gathering? Traditional society Which region of the world accounts for the most people living in extreme poverty? Sub-Saharan Africa What are major obstacles to economic development for developing countries? external debt to foreign banks debt to foreign bank Which correctly explains the effects of population growth in developing countries? Population growth is higher in less developed countries, creating greater demands on health care and education. Which international agency consists of 189 countries, promotes international monetary cooperation, and facilitates international trade? International Monetary Fund Which international agency would most likely be involved in funding the construction of a water pipeline in a developing country? world bank group