Pls 101 Exam 4 MSU UPDATED ACTUAL
Questions and CORRECT Answers
What is the fundamental debate regarding economic policy? - CORRECT ANSWER -
how much government should be involved in regulating the market
What are the 3 approaches to economic policy? - CORRECT ANSWER - Laissez-fair
Socialism
Social Democracy
What is the laissez-fair approach? - CORRECT ANSWER - hands off, government should
stand back
What is the socialism approach? - CORRECT ANSWER - government should control the
economy
Ex. china, cuba, north Korea
What is the Social Democracy approach? - CORRECT ANSWER - There are market and
private property but the government controls for certain standards still.
What are the two major types of government regulation of the economy? What do they do? -
CORRECT ANSWER - Competition: forces business to sell things of high quality for
lower prices
Protection: protection from intentionally negative business
What is promotion? - CORRECT ANSWER - The government helping certain industries
through things by using subsidies and trad barrier
What is the key trade off the government faces in managing the growth of the economy? -
CORRECT ANSWER - economic growth usually means there is also inflation
, What is fiscal policy? - CORRECT ANSWER - taxing and spending by the government
What is monetary policy? - CORRECT ANSWER - how easy it is for individuals to get a
loan
When the economy is in a recession, what can the government do to get out of it? - CORRECT
ANSWER - start spending money or cut taxes
3 major waves of equity-related economic regulation? When did they occur? - CORRECT
ANSWER - Progressive era (1900): stopped unfair business practices, like monopolies
Great Depression (1930s): regulate troubled economic sectors, like banking
New Social Regulation (1960/70s): addressed environmental, consumer, and worker safety
Demand side of fiscal policy? - CORRECT ANSWER - When the economy is sluggish the
government places additional money in consumers hands to increase spending
Supply side of fiscal policy? - CORRECT ANSWER - government using tax cuts as a
means for stimulating business activity
What government jobs did Henry Paulson and Ben Bernake hold in the 2008 financial crisis? -
CORRECT ANSWER - Paulson worked at Goldman Sachs as an investment bank
Bernake worked at the federal reserve as an economist
2 major tools the government use to redistribute income? - CORRECT ANSWER -
Progressive tax: taxes the wealthy more, taxes increase the more your income increases
Regressive Tax: lower income individual pay a higher tax rate
ex: sales tax
Questions and CORRECT Answers
What is the fundamental debate regarding economic policy? - CORRECT ANSWER -
how much government should be involved in regulating the market
What are the 3 approaches to economic policy? - CORRECT ANSWER - Laissez-fair
Socialism
Social Democracy
What is the laissez-fair approach? - CORRECT ANSWER - hands off, government should
stand back
What is the socialism approach? - CORRECT ANSWER - government should control the
economy
Ex. china, cuba, north Korea
What is the Social Democracy approach? - CORRECT ANSWER - There are market and
private property but the government controls for certain standards still.
What are the two major types of government regulation of the economy? What do they do? -
CORRECT ANSWER - Competition: forces business to sell things of high quality for
lower prices
Protection: protection from intentionally negative business
What is promotion? - CORRECT ANSWER - The government helping certain industries
through things by using subsidies and trad barrier
What is the key trade off the government faces in managing the growth of the economy? -
CORRECT ANSWER - economic growth usually means there is also inflation
, What is fiscal policy? - CORRECT ANSWER - taxing and spending by the government
What is monetary policy? - CORRECT ANSWER - how easy it is for individuals to get a
loan
When the economy is in a recession, what can the government do to get out of it? - CORRECT
ANSWER - start spending money or cut taxes
3 major waves of equity-related economic regulation? When did they occur? - CORRECT
ANSWER - Progressive era (1900): stopped unfair business practices, like monopolies
Great Depression (1930s): regulate troubled economic sectors, like banking
New Social Regulation (1960/70s): addressed environmental, consumer, and worker safety
Demand side of fiscal policy? - CORRECT ANSWER - When the economy is sluggish the
government places additional money in consumers hands to increase spending
Supply side of fiscal policy? - CORRECT ANSWER - government using tax cuts as a
means for stimulating business activity
What government jobs did Henry Paulson and Ben Bernake hold in the 2008 financial crisis? -
CORRECT ANSWER - Paulson worked at Goldman Sachs as an investment bank
Bernake worked at the federal reserve as an economist
2 major tools the government use to redistribute income? - CORRECT ANSWER -
Progressive tax: taxes the wealthy more, taxes increase the more your income increases
Regressive Tax: lower income individual pay a higher tax rate
ex: sales tax
