12.12.T - Lesson: Stabilizing the Economy & Government Spending Review

Which of the following were programs or legislation created during the New Deal? (choose all that apply)

All

During the Great Recession, the federal government employed fiscal policy to try to stimulate the economy. Which of the following are examples of legislation that Congress passed to try to turn around the economy during the Great Recession? (choose all that apply)

American Recovery and Reinvestment Act of 2009 Economic Stimulus Act of 2008

Hazlitt discusses the fact that the Tennessee Valley Authority increased prosperity in its region. Why does he say this isn't surprising and shouldn't be regarded as a miraculous result of government spending?

Because taxes were taken from other parts of the country and concentrated in this one section.

Hazlitt writes about an example of government spending where bureaucrats want to build a new bridge connecting two towns, even when existing bridges can easily handle the current traffic. What are the arguments made for building the bridge even though it isn't needed? (choose all that apply)

Building the bridge will provide employment. The bridge will exist thanks to government spending, when otherwise it wouldn't have.

Contractionary fiscal policy is beneficial when the economy is growing at a greater rate than ____________.

Contractionary fiscal policy is beneficial when the economy is growing at a greater rate than ____________.

What United States president initiated an unprecedented spending spree with the introduction of the New Deal?

Franklin D. Roosevelt

Increased taxes reduce the economic incentives for business success. Which of the following are consequences of these reduced incentives? (choose all that apply)

Potential entrepreneurs decide not to become new employers. Consumers are prevented from getting better and cheaper products. Real wages are held down. Existing businesses don't give new employment. People are deterred from starting new enterprises.

The New Deal was a series of legislation enacted by the federal government intended to provide relief from what economic downturn?

The Great Depression

Why is contractionary monetary policy rarely used?

Voters don't like tax increases, and politicians who pass such laws risk being voted out of office.

Which of the following are negative consequences of an economy that is growing too quickly? (choose all that apply)

asset bubbles unsustainability

Fiscal policy characterized by decreased government spending and increased taxes is called ____________.

contractionary fiscal policy

When a bridge is built using taxpayer funds, the result is a _________.

diversion of jobs

In his discussion of public works, Hazlitt writes, "There is no more persistent and influential faith in the world today than the faith in ______________."

government spending

Which of the following are consequences of contractionary monetary policy rarely being used? (choose all that apply)

high inflation increased government debt

The Great Recession was partially caused by an asset bubble in the ________ market.

housing

Large-scale asset purchases in which a central bank buys government bonds or other financial assets from commercial banks and other financial institutions is known as _____________.

quantitative easing