Primavera Economy Unit 4 Workbooks and Checkpoints
What services do commercial banks provide? (Select all that apply.)
Banks offer customers checking and savings accounts, Banks offer customers the ability to borrow money through loans, Banks offer customers investment accounts and services.
What is best defined as a "contract in which an individual loans money to a corporation and earns interest on a fixed schedule in return"?
Bond.
What impact could the opening of a military base have on a local economy?
Businesses would spring up to meet the needs of those on the base.
What is true about spending on Social Security?
It cannot be cut because it is part of mandatory spending.
What is the purpose of the Internal Revenue Service?
It collects income taxes for the federal government.
Which is a way the United States' federal debt impacts its economy?
It has a negative impact because the federal government has to make large interest payments on that debt.
What is true of military spending in the United States?
It is a major portion of discretionary spending.
What is true of education spending?
It is a significant expense of state governments.
Which advantage of a value-added tax is most likely to win Americans' acceptance?
It is much more difficult to evade paying taxes.
Which is a feature of a flat tax?
It is not progressive and remains the same for all consumers.
Which is an argument against implementing a value-added tax (VAT)?
It places an unfair burden on people with lower incomes.
Read the sentence. 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.
Read the sentence. Some states collect a sin tax on products like alcohol and tobacco. What outcome would a state expect when levying a sin tax?
It would expect a decrease in demand.
Which legislation led to the creation of a national currency and national banking system?
National Bank Act of 1863.
What are the largest categories of discretionary and mandatory spending?
National defense and Social Security.
Which explains why cutting the federal budget is difficult?
Only discretionary spending can be cut, and it is a smaller portion of the budget.
Read the sentence. The US government issued greenbacks during the Civil War. What were greenbacks?
Paper money printed with green ink on the reverse side.
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.
Which is an example of a federal government transfer payment?
Payment to individuals with disabilities.
Which is true regarding recent banking innovations? (Select all that apply.)
People can deposit checks without visiting a bank, Banking apps can be set to alert account holders of low balances.
What is an argument against the benefit taxation principle?
People who earn less money simply cannot afford to pay for some benefits.
What type of spending includes line items on a federal budget that have bypassed normal processes and are used to benefit a small group of people or businesses?
Pork barrel spending.
What are the functions of a finance company? (Select all that apply.)
Provide loans directly to consumers, Purchase installment contracts from merchants.
Which accurately describes differences between state and local government expeditures?
Public welfare programs at the local level make up a small part of the budget compared to the state level.
What types of banking transactions can be performed through a mobile app? (Select all that apply.)
Transfer money between savings and checking accounts, Receive automatic payments from an employer, Set up an automatic bill pay.
What are consequences of the Savings and Loan Crisis? (Select all that apply.)
United States taxpayers had to pay $100 billion in insurance claims, Some people who worked at S&Ls were jailed for fraud.
In what key area does the benefit principle of taxation and the ability-to-pay principle of taxation differ?
Who should pay the taxes.
What is money created by government decree?
Fiat money.
Which type of money derives its value from government decree, and not from gold or silver?
Fiat money.
Which items are primary areas of assistance for social welfare?
Food, housing, and medical care.
What is a significant health care expense spent by state governments?
Funding Medicaid programs.
What type of government expenditure is defense spending?
Goods and services.
How can the national debt impact private businesses? (Select all that apply.)
Government spending can drive up prices for everyone, Government borrowing can crowd private investors out of the lending market.
What impact can taxes have on the economy?
Higher taxes reduce demand because consumers have less money to spend.
What is a progressive income tax?
A tax in which the tax rate increases as a person's income increases.
Why would the government use an expansionary fiscal policy?
To stimulate aggregate demand.
How does the existence of a large federal debt slow economic growth? (Select all that apply.)
.25 - government, unemployment .25 - government, inflation
Which government tax policy is most likely to result in an increase in consumer demand?
A decrease in personal income tax.
Read the scenario. Anna says the tax system needs to be simplified. She says it takes the average US taxpayer approximately 14 hours to complete and file federal taxes. If Anna is correct, which tax would simplify the tax system and maintain equity and efficiency?
A flat tax that does not include deductions.
What is the definition of a stock?
A security sold by a corporation in exchange for shares of ownership in the company.
What is a proportional tax?
A tax in which the percentage a person pays stays the same regardless of income.
Read the statement. [Blank] of the Constitution states that the government's collection of income taxes is legal. Which accurately completes the sentence?
Amendment XVI.
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.
Which noteworthy legislation limited how much banks could earn from investments, such as the selling of securities, and also established the Federal Deposit Insurance Corporation (FDIC)?
Banking Act of 1933.
Which social welfare government acts and programs were enacted as a result of the Great Depression? (Select all that apply.)
Federal Deposit Insurance Corporation (FDIC), Emergency Banking Act.
What government action occurred due to the Savings and Loan Crisis?
Congress passed legislation transferring insurance coverage for S&Ls to the FDIC.
What is one way credit unions differ from commercial banks?
Credit unions do not exist to make a profit.
Which financial institutions typically have membership requirements, such as belonging to the military?
Credit unions.
What was the purpose of the Banking Act of 1933?
To improve bank security.
Which is the largest item in discretionary spending?
Defense.
Which characteristic of money makes it possible to make change at stores?
Divisibility.
Read the sentence. The dollar can be broken down into cents. What characteristic is the dollar displaying in this example?
Divisible.
What is a significant expense for states but not for the federal government?
Education.
How does the circular flow of the financial flow work?
Savers deposit funds into financial intermediaries, who then lend a portion to borrowers.
Which criteria for effective taxes is violated by confusing instructions?
Simplicity.
Why is it important that money stores its value? (Select all that apply.)
So that buyers know what their money will buy, So that sellers will accept it as payment.
What are examples of federal mandatory spending? (Select all that apply.)
Social Security, Medicare.
If Jim hides $30 under his mattress and he still has $30 there three weeks later, what function has the money fulfilled?
Store of value.
What were results of the Savings and Loan Crisis? (Select all that apply.)
The Federal Deposit Insurance Corporation (FDIC) replaced the Federal Savings and Loan Insurance Corporation (FSLIC), People moved their deposits from savings and loan institutions to banks, The final cost to taxpayers who had to cover the deposit insurance was more than $100 billion.
What is the purpose of a balanced budget amendment to the US constitution?
The amendment would require the US government to spend no more than it collects in taxes and other revenues, excluding borrowing.
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.
Read the scenario. For three years in a row, the federal government's expenditures exceeded its revenue. As a result, the federal debt grew by $4 billion, and the interest payment on the federal debt increased substantially. Which are true about the scenario? (Select all that apply.)
The federal government's deficit spending led to an increase in the federal debt, The federal government's increase in debt led to an increase in interest payments.
What is a fiscal policy?
The government affecting the economy through tax policies and federal spending.
What is the purpose of an expansionary fiscal policy?
To increase the level of aggregate demand to grow the economy.
What reasons would people have to promote social welfare?
To provide for those who cannot afford food, shelter, or medical care.
What are examples of discretionary government spending? (Select all that apply.)
The government allocates discretionary spending for space programs, The government allocates discretionary spending for national defense, The government allocates discretionary spending for national parks.
How can heavy federal debt lead to higher interest rates?
The government causes increased borrowing competition, which leads banks to increase interest rates.
Which could be part of a fiscal policy?
The government increases taxes.
What are the primary opposing viewpoints concerning social welfare? (Select all that apply.)
The government or society should provide social welfare, Individuals and private groups should assist those in need; there is no place for the government.
How do unfunded mandates impact state spending?
The mandates force states to spend money in ways they did not anticipate.
How does the national debt impact private investors? (Select all that apply.)
The national debt causes a crowding-out effect and increases interest rates for private borrowers, The national debt requires the government to increase revenue streams and potentially increase taxes.
What is the definition of risk?
The possibility of losing value on an investment.
What is the definition of return?
The profit or loss accumulated from an investment.
How does a flat tax differ from value-added tax (VAT)?
The rate remains the same under a flat tax, whereas the rate changes under a VAT.
Read the scenario. 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 are payroll taxes used?
They are used for entitlement programs like Social Security.
Once the federal budget is set, how is money allocated?
Through the appropriations committees.
What is the primary role of a financial interdiary?
To channel funds between savers and borrowers.
What is the purpose of a contradictionary fiscal policy?
To decrease the level of aggregate demand to slow rising inflation.
