Chapter 16 InQuizitive: Economic Policy

Study the Who Are Americans? infographic, and then answer the question. Ben's family income was about $167,000. Based on the figure, what federal tax rate would this correspond to (round up to the nearest percentage)?

21

What is the correct definition of gross domestic product (GDP)?

the total value of goods and services produced within a country

Match each economic philosophy with the statement that best represents it.

Keynesianism: The government can control the business cycle by strategically spending or changing the tax rate. laissez-faire capitalism: -The best thing the government can do for the economy is stay out of it as much as possible. supply-side economics: -Lower taxes lead people to work harder, which increases overall revenue for the government.

Study the Who Participates? infographic, and then answer the question. Which of the following statements is true?

More populous states tended to get more funding for infrastructure, while smaller states get more per capita funding for infrastructure

Complete the following statement. Taxing and spending are related to ____________ policy, while _____________ policy is related to regulating the economy through manipulating credit and interest rates.

- fiscal -monetary

Study the Who Participates? infographic, and then answer the question. Place these states in order from those with the greatest per capita funding to those with the least per capita funding

1) Alaska 2) Iowa 3) Texas 4) Florida

Order these taxes from those that comprised the greatest proportion of federal revenue to those that comprised the smallest proportion of federal revenue for 2020.

1) Individual income taxes 2) Social insurance and retirement receipts 3) corporate income taxes 4) excise taxes

In which decade did the government first begin to promote full employment?

1930s (Feedback: The New Deal era changed the way the public viewed the national government's powers and responsibilities, and the government began hiring programs.)

Which of the following are examples of the government promoting market stability?

Correct Answers: -Congress enacts laws that protect people from economic fraud. -The court system protects intellectual property rights. -The Securities and Exchange Commission provides a transparent and safe capital market. Incorrect Answers: -The Treasury Department controls the level of investment outside the country.

What are the effects of free trade?

Correct Answers: -It can open new markets for producers. -It can provide consumers with a greater variety of higher-quality products at lower prices. -The foreign competition it promotes can impose costs on particular economic sectors or societal groups. Incorrect Answers: -It nearly always shrinks the country's economy.

Advocates for tax cuts for high earners and businesses most commonly make which of these two arguments?

Correct Answers: -Tax cuts for high earners and businesses will provide incentives for those individuals and companies to increase their investments in the economy. -Tax cuts for high earners and businesses will promote economic growth. Incorrect Answers: -Tax cuts for high earners and businesses will increase federal revenues. -Tax cuts for high earners and businesses will help with wealth redistribution.

Study the Who Are Americans? infographic, and then answer the question. Identify the correct and incorrect statements about taxation.

Correct Answers: -The federal tax rate is progressive, increasing as individuals' and families' income increases. -Those in the bottom 20 percent of income earners typically pay a higher rate in state and local taxes compared to federal income taxes. Incorrect Answers: -State and local tax rates increase as individuals' and families' income increases. -The middle income earners (i.e., middle 20%) pay the most in federal taxes.

Which of the following statements about labor unions are correct?

Correct Answers: -Twenty-eight states now have "right to work" provisions that guarantee that a worker does not have to belong to a union or pay union dues as a condition of employment. -Right to work laws make it more difficult for unions to collect dues. Incorrect Answers: -Most states have rejected right to work provisions and embrace strong union protections. -Right to work laws strengthen unions in states and help with collective bargaining.

According to Keynesian economic theory, what kinds of actions should government take to achieve full employment?

Correct Answers: -a tax cut that would put money into the hands of the American public -creation of public works jobs such as those created during the New Deal Incorrect Answers: -tax cuts for corporations that would "trickle down" to workers -reducing business regulations

Which of the following methods have been considered by the federal government to deal with climate change?

Correct Answers: -mitigation by reducing emissions -promoting alternative technologies -adapting to climate change Incorrect Answers: -space exploration for livable planets

The government passed the CARES Act to address the economic fallout of the COVID-19 pandemic. Which of these provisions were included in the legislation?

Correct Answers: -one-time payments to individuals and families -expanded unemployment insurance -student loan relief allowing borrowers to defer payments Incorrect Answers: -health insurance reimbursement for those with COVID-19

The government drew on the lessons from supply-side economics in its stimulus payments to the public during the COVID-19 crisis. (true or false)

False (Feedback: The stimulus payment represented a move back toward Keynesian economics rather than supply-side economics.)

Match each agency with its function.

Federal Deposit Insurance Corporation: -protect bank accounts against bank closures, up to $250,000 per account Congressional Budget Office: -provide independent expertise on budgeting to the legislative branch Office of Management and Budget: -provide independent expertise on budgeting to the executive branch Federal Reserve: -manipulate the money and credit supply in the country

Which of the following are examples of public policy?

Examples of public policy: -a law passed by Congress -a federal rule issued by an agency -a court ruling -a presidential order Not examples of public policy: -an editorial in the New York Times -a congressional election -a book written by a Supreme Court justice

Study the Who Participates? infographic, and then answer the question. States on the East Coast were the only states that received the highest levels of per capita infrastructure funding (over $3,000).

False

Comparing 1966 to 2022, which of these taxes represent an increasing proportion of federal revenues and which represent a decreasing proportion of federal revenues?

Increasing: -individual income taxes -social insurance taxes Decreasing: -excise taxes -corporate income taxes

Which of the following taxes are regressive taxes and which are progressive taxes?

Progressive tax: -individual income tax -wealth tax on assets above $50 million Regressive tax: -social security -sales tax

Examine the figure comparing the nominal and real dollar value of the minimum wage, and then answer the following question. Which statement about the federal minimum wage is correct?

The value of the nominal federal minimum wage has decreased due to inflation

Study the Who Are Americans? infographic, and then identify which statement is correct.

Taxes as a share of total income is lowest for the bottom 20 percent of income earners

The budget deficit grew at the beginning of the coronavirus pandemic in 2020. (true or false)

True (Feedback: he COVID-19 pandemic placed strains on the federal government as President Trump signed the $2.2 trillion CARES Act, and President Biden signed the $1.9 trillion American Rescue Plan, which were used to offset the negative economic effects of the pandemic. This grew the federal deficit)

At different times in American history the federal government has relied on certain taxes more than others. Which taxes were more relied upon in the nineteenth century, and which more so in the twentieth and twenty-first centuries?

Twentieth and Twenty-First Centuries: -social insurance tax -individual income tax Nineteenth Century: -tariffs -excise taxes

Match each economic goal to the example that best demonstrates it

promote business development: -The government awards over one billion dollars in funding to microchip consortium Sematech. promote stable markets: -Congress enacts a single national regulation for car emissions. protect employees and consumers: -Congress calls the head of General Motors to testify over faulty car ignition systems. promote economic prosperity: -The National Science Foundation awards millions of dollars in research grants