Chapter 13 – Making Economic and Social Policy Reading Comprehension Quiz Multiple Choice Questions 1. The interaction of the people and their government, including citizens, interest groups, political parties, and the institutions of government at all levels is known as A. federalism. B. public policy. C. democracy. D. politics. E. pluralism. Answer: D 2. Redistributive policy in the United States tends to benefit A. the rich. B. individuals who are most active politically. C. everyone equally. D. the less fortunate. E. None of the above Answer: D 3. Which of the following is NOT a step in the policy-making process? A. Making rules for implementation B. Choosing a tool for solving the problem C. Deciding to act D. Judicial review of proposed rules E. Making assumptions about the world Answer: D 4. A nongovernmental organization that seeks to influence public policy through research and education is known as a(n) A. institute. B. think tank. C. influence organization. D. agenda-setter. E. propaganda machine. Answer: B 5. _______________ refers to attempts to manage the economy by controlling the money supply and thus interest rates. A. Monetary policy B. Bank policy C. Fiscal policy D. Inflation policy E. Regulatory policy Answer: A 6. Federal taxing and spending is considered _______ policy. A. fiscal B. laissez-faire C. monetary D. regressive E. regulatory Answer: A 7. The _________________ is an agency of Congress that analyzes presidential budget recommendations and estimates the costs of proposed legislation. A. Joint Committee on the Budget B. Office of Management and Budget C. Legislative Research Commission D. Congressional Budget Office E. Permanent Task Force on Revenue and Appropriations Answer: D 8. A loss of tax revenue due to federal laws that provide special tax incentives or benefits to individuals or businesses is known as a(n) A. appropriations limit. B. tax expenditure. C. budget shortfall. D. windfall profit. E. tax haven. Answer: B Skill Understanding 9. The task of setting America’s monetary policy falls to the A. Federal Reserve Board. B. Office of Management and Budget. C. Congressional Budget Office. D. President’s Council of Economic Advisors. E. Government Accountability Office. Answer: A 10. In times of recession, Keynes advocated A. increased government spending. B. tax cuts. C. increased tariffs. D. dramatic reductions in government programs. E. All of the above Answer: A 11. The United States has for many years imported much more than it has exported. This means that the country has been running A. unfair trade practices. B. international trade agreements. C. trade deficits. D. subsidization lapses. E. budget deficits. Answer: C 12. The international organization derived from the General Agreement on Tariffs and Trade (GATT) that promotes free trade around the world is the A. United Nations. B. World Protectionism Agency. C. International Association of Trade Partners. D. World Trade Organization. E. Global Free Trade Regime. Answer: D 13. ______________________________ are federal laws that try to prevent a monopoly from dominating an industry and restraining trade. A. Antitrust legislation B. Antidumping statutes C. Restrictive trade legislation D. Unlimited competition statutes E. Regulatory practices legislation Answer: A 14. A company in which new employees must join a union within a stated time period is called a(n) A. right-to-work corporation. B. organized employee industry. C. union shop. D. monopoly. E. open shop. Answer: C 15. Compared to other Western democracies, the United States developed social services later in part because many people here A. had a strong belief in the responsibility of the church to support poverty programs. B. had a strong antipathy to socialist programs. C. believed this was a land of rugged individualism. D. failed to see the poverty around them. E. None of the above Answer: C 16. Aid to the poor is called A. entitlements. B. means-tested entitlements. C. a social safety net. D. public assistance. E. social insurance. Answer: D 17. Social Security is funded by A. income tax. B. payroll taxes on employers and employees. C. general taxes. D. annual budget agreements in Congress. E. block grants. Answer: B 18. Which of the following was NOT part of the Great Society? A. Food Stamps B. Head Start C. Medicaid D. Social Security E. Medicare Answer: D 19. The most visible health care official in government is the A. surveyor general. B. solicitor general. C. surgeon general. D. health czar. E. food and drug czar. Answer: C 20. Which of the following is NOT a main provision of the 2010 Patient Protection and Affordable Health Care Act? A. Most Americans will be required to buy health insurance starting in 2014 and will be fined by the federal government if they do not do so. B. Insurance companies will be prevented from denying coverage to people for any reason, including preexisting conditions, such as high blood pressure, cancer, or mental illness. C. Insurance companies will have to extend coverage for young Americans up to 26 years of age under their parents’ insurance. D. General Medicare benefits will be cut, but the special Medicare Advantage program for higher-income beneficiaries will be increased. E. Individual Americans will pay a tax on “Cadillac” insurance plans that offer broader coverage at a much higher cost. Answer: D True/False Questions 1. Welfare, poverty programs, and Head Start for poor preschool children are examples of reverse distributive policy. Answer: False 2. Radical changes to public policy that occur only after the mobilization of large segments of society to demand action are known as punctuating policy. Answer: True 3. Fiscal policy is the government’s attempt to manage the economy by controlling taxing and spending. Answer: True 4. Value-added tax and sales tax are the same. Answer: False 5. The economic theory that opposes governmental interference in economic affairs beyond what is necessary to protect life and property is known as laissez-faire economics. Answer: True 6. If a country exports $100 billion worth of goods and imports $120 billion worth of goods in a given year, that country is said to have a trade deficit. Answer: True 7. According to the Constitution, the authority to regulate commerce between states and with foreign nations is held by the U.S. Trade Office. Answer: False 8. Aid programs restricted to one group of citizens only are called categorical aid. Answer: True 9. Social security is financed from general taxes. Answer: False 10. Under the Patient Protection and Affordable Health Care Act, Medicare benefits will be cut. Answer: False Chapter Examination Multiple Choice Questions 1. When government decides to tackle a problem, it does so through A. intervention. B. elections. C. public policy. D. referenda. E. a constitutional convention. Answer: C 2. ____________________ is a specific course of action that government takes to address a problem. A. Public policy B. Negotiation C. Arbitration D. Introspection E. Examination Answer: A 3. ____________________ policy is a policy that reduces benefits for all groups, such as imposing a tax increase in society, to pursue a common goal or solve a common problem. A. Joint B. Utopian C. Reverse distributive D. Security E. Regulatory Answer: C 4. Reducing college loan costs, increasing police patrols, and creating prescription drug coverage are examples of A. the people. B. politics. C. outcomes. D. government. E. policies. Answer: E 5. Politics is about interaction or process while policy is the __________ of that process. A. input B. development C. policing D. duration E. product Answer: E 6. A policy that provides to one group of society while taking away benefits from another is known as A. cost-benefit policy. B. positive-gains policy. C. redistributive policy. D. monetary policy. E. social policy. Answer: C 7. Welfare, poverty programs, and Head Start for poor preschool children are examples of _________________ policy. A. redistributive B. conservative C. regulatory D. regressive E. paternalistic Answer: A 8. Policy that takes away exactly as much in benefits as another group gains is sometimes called a A. socialist trap. B. cost-benefit tradeoff. C. pay-as-you-go approach. D. government ploy. E. zero-sum game. Answer: E 9. What is a policy that reduces benefits for all groups? A. Distributive B. Zero-sum C. Redistributive D. Reverse distributive E. None of the above Answer: D 10. Voting, writing e-mails, contributing money to campaigns, and filing lawsuits are all examples of A. the people. B. politics. C. outcomes. D. government. E. policies. Answer: B 11. Lower prescription drug costs, higher profits, cleaner air, and safer neighborhoods are examples of A. the people. B. politics. C. outcomes. D. government. E. policies. Answer: C 12. Social Security, air traffic control, national defense, and education spending are examples of _________________ policy. A. pejorative B. unrewarded C. redistributive D. regulatory E. distributive Answer: E 13. A public policy that provides benefits to all groups in society is called A. pork barrel spending. B. welfare policy. C. distributive policy. D. monetary policy. E. reverse distributive policy. Answer: C 14. Politics is concerned with A. what the government gets from the people. B. who gets what, when, where, and how from government. C. free and open elections. D. maintaining the power and influence of elected officials. E. None of the above Answer: B 15. The list of issues that the federal government pays attention to is called the A. federal docket. B. policy agenda. C. presidential priorities. D. programs watch. E. implementation items. Answer: B 16. Small adjustments to existing public policies are known as A. comprehensive policy. B. non-existent policy. C. punctuated policy. D. conservative policy. E. incremental policy. Answer: E 17. The three elements of iron triangles are A. interest groups, a federal agency, and a related congressional committee. B. the legislature, executive, and judiciary. C. think tanks, the public, and protesters. D. state governments, local governments, and the federal government. E. the army, navy, and air force. Answer: A 18. National parks such as Yosemite, the Grand Canyon, and the National Air and Space Museum are examples of what type of policy tool? A. Federal spending B. Providing goods and services directly C. Regulation D. Using taxes to regulate the economy and encourage certain behaviors E. Environmental policy Answer: B 19. What provides a daily record of all new and proposed federal government rules? A. Congressional Record B. Federal Register C. Congressional Daily D. Daily Federal Roster E. Rules of Federal Government Answer: B 20. A(n) _________________________ is a policy-making instrument composed of a tightly related alliance of a congressional committee, interest groups, and federal department or agency. A. aluminum cage B. iron triangle C. glass house D. titanium tryst E. issue network Answer: B 21. Which of the following is NOT a stage in the issue-attention cycle? A. Making rules for implementation B. The gradual decline of intense public interest C. The pre-problem stage D. Alarmed discovery and euphoric enthusiasm on an issue E. The realization that change will incur significant cost Answer: A 22. A precise statement of how a law is implemented is called a(n) A. evaluation report. B. final project. C. policy plan. D. rule. E. regulation. Answer: D 23. Efforts to study an issue, appoint a blue-ribbon commission, or highlight the need for future action are examples of _______________ benefits. A. enlisted B. pretend C. symbolic D. federal E. regulatory Answer: C 24. Which is true? A. The number of rules issued by the federal government has declined substantially since the mid-1980s. B. Making rules became much easier in the 1960s. C. The number of pages in the Federal Register increased dramatically in the 1970s. D. Rules have become a less common approach by the government in the past decade. E. The number of pages in the Federal Register has remained constant since the 1950s. Answer: C 25. Who generally has the most influence over the construction of rules? A. The House of Representatives B. Interest groups C. The Supreme Court D. Citizens E. The White House staff Answer: B 26. What is an organization composed of scholars who study public policy known as? A. Lobby B. Think tank C. Zero-sum game D. Issue network E. None of the above Answer: B 27. A decision NOT to move ahead with the policy process is known as A. escapism. B. agenda-setting. C. abdication. D. nondecision. E. circling. Answer: D 28. Which of the following is NOT one of the tools used by the federal government to solve most public problems? A. Providing protection against risk B. Spending money C. Providing goods and services directly D. Using taxes to regulate the economy and encourage certain behaviors E. Asking the judicial branch for rulings on state government policies Answer: E 29. Which of the following is NOT a source of what political scientists call third-party government? A. Charities B. Private businesses C. Colleges and universities D. Interest groups E. State and local governments Answer: D 30. The movement of public opinion toward public policy from initial enthusiasm for action to realization of costs and a decline in interest is called a(n) A. policy agenda. B. issue flowchart. C. policy progression. D. issue-attention cycle. E. policy-making circle. Answer: D 31. A policy-making instrument composed of loosely related interest groups, congressional committees, presidential aides, and other parties is called a(n) A. iron triangle. B. agenda alliance. C. executive committee. D. issue network. E. policy web. Answer: D 32. Benefits such as new roads, bridges, and schools and higher pay or greater safety are examples of _________________ benefits. A. expensive B. material C. implicit D. generated E. elusive Answer: B 33. _________________________ is a policy that encourages or discourages certain behavior by imposing a legally binding rule. A. Regulation B. Pluralism C. Protection D. Structuring E. Incentivizing Answer: A 34. Radical changes to public policy that occur only after the mobilization of large segments of society to demand action are called A. incremental policy. B. dangerous policy. C. punctuating policy. D. public policy. E. liberal policy. Answer: C 35. Direct payments to individuals, hospitals, corporations, and other nations are examples of what type of policy tool? A. Regulation B. Social policy C. Federal spending D. Providing protection against risk E. Using taxes to regulate the economy and encourage certain behaviors Answer: C 36. The federal government has a commitment to cover losses for many borrowers, such as students, farmers, and small businesses, if they fail to repay their loans. This is an example of what type of policy tool? A. Monetary policy B. Federal spending C. Providing goods and services directly D. Providing protection against risk E. Using taxes to regulate the economy and encourage certain behaviors Answer: D 37. Government policy that attempts to manage the economy by controlling taxing and spending is known as A. public policy. B. monetary policy. C. budgetary policy. D. regulatory policy. E. fiscal policy. Answer: E 38. An estimate of the total output of all U.S. economic activity is the A. GDP. B. GAO. C. OMB. D. VAT. E. None of the above Answer: A 39. Which of the following is NOT one of the stages of the normal business cycle identified by economists? A. Recovery B. Recession C. Contraction D. Inflation E. Expansion Answer: D 40. The two most common yardsticks for measuring the performance of the economy are A. expansion and contraction. B. inflation and unemployment. C. fiscal and monetary policy. D. trade deficits and national debt. E. budget deficits and gross national product. Answer: B 41. A rise in the general price level (and decrease in dollar value) owing to an increase in the volume of money and credit in relation to available goods is called A. a recession. B. bankruptcy. C. a budget deficit. D. unemployment. E. inflation. Answer: E 42. ____________________ refers to the number of Americans who are out of work but actively looking for a job. A. Hardship B. Unemployment C. Welfare D. Inflation E. Recession Answer: B 43. A combination of an increase in the number of workers looking for jobs and a rise in prices is called A. good news. B. unemployment. C. stagflation. D. regulation. E. a tariff. Answer: C 44. Inflation is measured using A. international exchange rates. B. the gross domestic product. C. the consumer price index. D. the unemployment rate. E. the annual growth rate. Answer: C 45. The value of all goods and services produced by an economy during a specific period of time such as a year is called the A. budget production. B. growth rate. C. economic output. D. gross domestic product. E. consumer price index. Answer: D 46. In its simplest terms, monetary policy involves managing the A. supply of money. B. federal deficit. C. relationship between taxation and spending. D. balance of trade. E. All of the above Answer: A 47. Inflation is usually a more serious danger during periods of economic A. expansion. B. contraction. C. uncertainty. D. volatility. E. None of the above Answer: A 48. A(n) _______________ tax is a tax on a specific kind of merchandise, such as tobacco. A. flat B. excise C. progressive D. property E. import Answer: B 49. What is the primary source of revenue in the government budget? A. Excise taxes B. Corporate income taxes C. Borrowing D. Payroll taxes E. Individual income taxes Answer: E 50. The _____________ Amendment, ratified in 1913, allowed the federal government to levy individual income taxes. A. Third B. Sixth C. Sixteenth D. Twenty-ninth E. Twenty-third Answer: C 51. Taxes on imports from other countries are known as A. shipping fees. B. excise taxes. C. sin taxes. D. executive agreements. E. tariffs. Answer: E 52. A _______________ tax is a tax whereby people with lower incomes pay a higher fraction of their income than people with higher incomes. A. liberal B. flat C. regressive D. socialist E. progressive Answer: C 53. Which of the following is an example of mandatory spending? A. Defense spending B. Spending on Social Security C. Foreign aid D. Infrastructure projects E. Research on renewable energy sources Answer: B 54. A sales tax on items such as clothing and food purchases by all individuals is an example of A. a regressive tax. B. monetary policy. C. inflation. D. an excise tax. E. deficit spending. Answer: A 55. When Congress and the president cannot use their discretion to change the spending rates it is called A. mandatory spending. B. automatic spending. C. irrational spending. D. required spending. E. defense spending. Answer: A 56. The _________________ is a presidential staff agency that serves as a clearinghouse for budgetary requests and management improvements for government agencies. A. Office of Management and Budget B. Council of Economic Advisers C. White House staff D. Office of Administration E. cabinet Answer: A 57. A(n) ____________ tax is a tax on the increased value of a product at each stage of production and distribution rather than just at the point of sale. A. value-added B. production C. stage D. sin E. excise Answer: A 58. The spending category that accounts for the largest percentage of the federal budget is A. social programs, such as Social Security. B. defense. C. interest on the national debt. D. transportation needs. E. None of the above Answer: A 59. The system created by Congress in 1913 to establish banking practices and regulate currency in circulation and the amount of credit available is called the A. Banking Oversight Commission. B. Monetary Policy Review Board. C. Federal Reserve System. D. Congressional Budget Office. E. Securities and Exchange System. Answer: C 60. Which of the following is true regarding the Federal Reserve System? A. It consists of 12 regional banks. B. It is the primary institution responsible for fiscal policy. C. It is composed of members of the House and Senate banking committees. D. Its Board of Governors is elected by governors of the ten states with the greatest number of chartered banks. E. None of the above Answer: A 61. The amount of interest banks charge for loans to each other is known as the A. federal reserve requirement. B. federal funds rate. C. federal circulation rate. D. federal banking provision. E. federal monetary rule. Answer: B 62. Which of the following is a way in which the Federal Reserve System can influence the economy? A. Raising income taxes B. Cutting government spending on Social Security and Medicare C. Directly changing the mortgage rate that private lenders charge borrowers for home loans D. Entering trade agreements with foreign countries E. Changing interest rates banks must pay for borrowing money Answer: E 63. The economic theory that opposes governmental interference in economic affairs beyond what is necessary to protect life and property is known as A. trickle-down theory. B. protectionism. C. laissez-faire economics. D. socialism. E. Keynesianism. Answer: C 64. The policy of erecting trade barriers to protect domestic industry is known as A. deregulation. B. protectionism. C. free-trade economics. D. monetary policy. E. dumping. Answer: B 65. An imbalance in international trade in which the value of imports exceeds the value of exports is called a(n) A. exchange rate adjustment. B. regulatory regime. C. unfair tariff. D. monopoly. E. trade deficit. Answer: E 66. Which of the following is true regarding the North American Free Trade Agreement? A. Its signatories are the United States, Argentina, and Brazil. B. It was passed by Congress over the veto of President Clinton. C. It has had virtually no impact on the economies of the participating countries. D. It created the largest geographical free trade zone in the world. E. It was negotiated and signed by Ronald Reagan. Answer: D 67. GATT is mainly concerned with A. global warming. B. antitrust legislation. C. encouraging free trade. D. U.S.-Mexican trade. E. environmental protection. Answer: C 68. The two types of regulatory agencies created by Congress are A. joint committees and corporate task forces. B. judicial evaluation boards and economist advisory groups. C. unfair practices agencies and congressional regulatory committees. D. oversight commissions and budgetary departments. E. independent agencies and independent regulatory commissions. Answer: E 69. Over the past century, business regulation has A. been handled by the Federal Reserve System. B. increased in three major waves. C. not occurred. D. been primarily the responsibility of the president and his closest advisors. E. been ruled by the Supreme Court to be unconstitutional under most circumstances. Answer: B 70. Domination of an industry by a single company is known as A. an oligarchy. B. dumping. C. a monopoly. D. regulation. E. corporatism. Answer: C 71. A monopoly that controls goods and services, often in combinations that reduce competition, is known as a A. natural dominator. B. labor injunction. C. trust. D. free trade agreement. E. regulatory agency. Answer: C 72. The Walsh-Healey Act of 1936, the Fair Labor Standards Act of 1938, and the Occupational Safety and Health Act of 1936 are all examples of A. federal regulations to protect workers. B. antitrust legislation. C. labor injunctions. D. trade agreements. E. deregulation. Answer: A 73. The type of policy that promotes cutbacks in the amount of federal regulation in specific areas of economic activity is A. deregulation. B. antiregulation. C. deficit spending. D. social responsibility. E. stagflation. Answer: A 74. ____________________ refers to a company with a labor agreement under which union membership is a condition of employment. A. Closed shop B. Monopoly C. Trust D. Right to work E. Worker protection Answer: A 75. A ____________ is a court order forbidding specific individuals or groups from performing certain acts (such as striking) that the court considers harmful to the rights and property of an employer or a community. A. collective bargaining agreement B. shop mandamus C. regulatory ruling D. labor injunction E. legislative mandate Answer: D 76. A method whereby representatives of the union and employer determine wages, hours, and other conditions of employment through direct negotiation is known as A. a labor injunction. B. deregulation. C. collective bargaining. D. advantage seeking. E. mediation. Answer: C 77. A(n) ________________________ is required by federal law from all agencies for any project using federal funds to assess the potential effect of the new construction or development on the environment. A. environmental impact statement B. global warming assessment C. environmental cost-benefit analysis D. pay-as-you-go report E. House Environment Oversight Committee evaluation Answer: A 78. The _____________________________________ was created by Congress to enforce the Clean Air and Water Acts passed in the early 1970s. A. Department of the Interior B. Environmental Protection Agency C. Occupational Safety and Health Administration D. Greenpeace Committee E. Global Warming Commission Answer: B 79. Efforts by companies to improve their reputations by paying attention to their contributions to the social good are known as A. smoke screens. B. regulatory assessment reports. C. charitable organization contributions. D. labor injunctions. E. corporate social responsibility. Answer: E 80. No industry has undergone more extensive deregulation than the ____________________ industry. A. transportation B. energy C. drug D. computer E. waste removal Answer: A 81. The deregulation of the _______________ industry has been one of the most visible to consumers. A. airline B. consumer electronics C. oil and gas D. publishing E. automotive Answer: A 82. Programs such as unemployment insurance, disaster relief, or disability payments that provide benefits to all eligible citizens are called A. entitlements. B. means-tested entitlements. C. social safety nets. D. public assistance. E. social insurance. Answer: A 83. The first public assistance programs were actually created in the late 1800s when states established aid programs to help A. veterans. B. poor single mothers and their children. C. blind citizens. D. widows. E. war orphans. Answer: B 84. Means-tested entitlements are defined as A. programs such as unemployment insurance, disaster relief, or disability payments that provide benefits to all eligible citizens. B. programs such as Medicaid and welfare under which applicants must meet eligibility requirements based on need. C. the many programs that the federal government provides to protect Americans against economic and social misfortune. D. aid to the poor. E. programs in which eligibility is based on prior contributions to government, usually in the form of payroll taxes. Answer: B 85. Aid programs restricted to one group of citizens only are called A. categorical aid. B. welfare. C. entitlement aid. D. individual aid. E. grant aid. Answer: A 86. The social safety net is defined as A. programs such as unemployment insurance, disaster relief, or disability payments that provide benefits to all eligible citizens. B. programs such as Medicaid and welfare under which applicants must meet eligibility requirements based on need. C. the many programs that the federal government provides to protect Americans against economic and social misfortune. D. aid to the poor. E. programs in which eligibility is based on prior contributions to government, usually in the form of payroll taxes. Answer: C 87. Most public assistance programs are means-tested entitlement programs, which means that A. written exams are required. B. oral and written exams are required. C. applicants must prove their poverty. D. applicants’ financial records are closely examined by federal investigators. E. any children in the family must be put in foster homes. Answer: C 88. Social insurance is defined as A. programs such as unemployment insurance, disaster relief, or disability payments that provide benefits to all eligible citizens. B. programs such as Medicaid and welfare under which applicants must meet eligibility requirements based on need. C. the many programs that the federal government provides to protect Americans against economic and social misfortune. D. aid to the poor. E. programs in which eligibility is based on prior contributions to government, usually in the form of payroll taxes. Answer: E 89. Beneficiaries of the Social Security Act include A. widows and widowers. B. children of deceased or disabled persons. C. retired persons. D. disabled workers. E. All of the above Answer: E 90. In 1983, Congress made a number of changes to Social Security to deal with the pending shortfall including A. raising the retirement age at which one qualifies for Social Security benefits. B. increasing Social Security taxes. C. imposing the first-ever tax on the Social Security payments to upper-income individuals. D. imposing a one-time cut in the annual cost-of-living increase in benefits. E. All of the above Answer: A 91. The federal government began protecting women and children against poverty with which of the following? A. National School Lunch Act B. Earned Income Tax Credit C. Infancy and Maternity Protection Act D. Aid to Families with Dependent Children E. Federal Surplus Relief Corporation Answer: C 92. The 1996 welfare reform legislation included which of the following? A. Providing welfare benefits to legal immigrants B. A five-year time limit on benefits C. Required recipients to enter some kind of work training program within two months of receiving benefits D. All of the above E. None of the above Answer: D 93. As part of the New Deal agenda, the federal government A. made loans to states and localities to aid the poor. B. cut interest rates. C. invested billions in banks. D. acquired several investment banks. E. made loans directly to poor people. Answer: A 94. Federal Emergency Relief Administration (FERA) was established to A. aid in the care of children orphaned by natural disaster. B. build bridges over flooded rivers. C. give unemployed workers cash grants to get them through the summer. D. give bankers actual paper money to put in bank vaults. E. supply natural disaster relief to southern states. Answer: C 95. Public welfare assistance an individual may receive in a lifetime is limited to A. three years. B. five years. C. eight years. D. No limitation E. two months after job training begins. Answer: B 96. Which of the following is NOT a federal agency promoting health care? A. PHS B. FDA C. CDC D. NIH E. EPA Answer: E 97. In 2010, the federal government provided approximately _______ of financial aid that college students received. A. $50 billion B. $70 billion C. $90 billion D. $1.1 trillion E. $1.5 trillion Answer: C 98. Controlling crime is considered primarily a(n) ________________ matter. A. ethical B. regional C. state and local D. religious E. federal Answer: C 99. The federal government enforces its laws primarily through the A. House of Representatives. B. Department of Homeland Security. C. Drug Enforcement Agency. D. Department of Justice. E. None of the above Answer: D 100. Health care costs have ____________ since 1970. A. remained about the same B. doubled C. tripled D. quadrupled E. quintupled Answer: D 101. Despite passage of the Medicare program in 1965, the United States did NOT provide comprehensive insurance to the rest of the insured until A. 1975. B. 1985. C. 1995. D. 2000. E. 2010. Answer: E 102. The federal government’s top crime priority today is A. the war on drugs. B. securing the borders. C. terrorism. D. illegal immigration. E. None of the above Answer: C 103. The federal government became more involved in local education with the passage of the __________________ Act in 2002. A. Testing and Assessment B. Head Start Plus C. No Child Left Behind D. Fundamental Education E. All of the above Answer: C True/False Questions 1. The government turns to lobbying when it decides to solve a problem. Answer: False 2. Redistributive policies are often designed to impose sacrifices on all citizens in pursuit of a common goal. Answer: False 3. Reducing college loan costs, increasing police patrols, and creating prescription drug coverage are examples of politics. Answer: False 4. Politics is a specific course of action that government takes to address a problem. Answer: False 5. A public policy that provides benefits to all groups in society is called redistributive policy. Answer: False 6. Social Security, air traffic control, national defense, and education spending are examples of distributive policy. Answer: True 7. A policy that provides to one group of society while taking away benefits from another is known as distributive policy. Answer: False 8. A decision NOT to move ahead with the policy process is known as nondecision. Answer: True 9. The issue-attention cycle begins with the realization that change will incur significant cost. Answer: False 10. A policy-making alliance that involves very strong ties among a congressional committee, an interest group, and a federal department or agency is known as an issue network. Answer: False 11. The policy-making process always follows six key steps in the same order. Answer: False 12. The list of issues that the federal government pays attention to is called the federal docket. Answer: False 13. A nongovernmental organization that seeks to influence public policy through research and education is known as an educational institute. Answer: False 14. The movement of public opinion toward public policy from initial enthusiasm for action to realization of costs and a decline in interest is called an issue-attention cycle. Answer: True 15. Small adjustments to existing public policies are known as “baby steps” policy. Answer: False 16. Punctuating policy refers to radical changes to public policy that occur only after the mobilization of large segments of society to demand action. Answer: True 17. An iron triangle is a policy-making instrument composed of a tightly related alliance of a congressional committee, interest groups, and federal department or agency. Answer: True 18. The three elements of iron triangles are the legislature, the executive, and the judiciary. Answer: False 19. A policy-making instrument composed of loosely related interest groups, congressional committees, presidential aides, and other parties is called a policy web. Answer: False 20. A precise statement of how a law is implemented is called a regulation report. Answer: False 21. Congress typically has the greatest influence over the construction of rules. Answer: False 22. The four sources of third-party government are executive branch agencies, congressional committees, interest groups, and think tanks. Answer: False 23. Raising taxes and cutting spending are examples of monetary policy. Answer: False 24. The stages of the normal business cycle are expansion, contraction, recession, and recovery. Answer: True 25. The two most common yardsticks for measuring the performance of the economy are trade deficits and the national debt. Answer: False 26. Inflation is measured using the gross domestic product. Answer: False 27. Inflation is a rise in the general level of prices. Answer: True 28. Stagflation refers to a period in which there is simultaneously economic expansion and inflation. Answer: False 29. Usually, inflation increases when unemployment drops. Answer: True 30. The primary source of revenue in the federal budget is corporation taxes. Answer: False 31. The federal government spends more money annually than all state and local governments combined. Answer: True 32. Most federal government spending is discretionary. Answer: False 33. A progressive tax is designed so that people with higher incomes pay a larger fraction of their income than people with lower incomes. Answer: True 34. The national debt refers to the amount of money the federal government gives state governments. Answer: False 35. The Office of Management and Budget is a presidential staff agency that serves as a clearinghouse for budgetary requests and management improvements for government agencies. Answer: True 36. A value-added tax is a tax on the increased value of a product at each stage of production and distribution rather than just at the point of sale. Answer: True 37. A regressive tax is a tax in which poorer people pay a larger share of their income than wealthier people. Answer: True 38. The Federal Reserve System consists of 50 banks, one for each state. Answer: False 39. Monetary policy is handled primarily by the Federal Reserve System. Answer: True 40. The amount of interest banks charge for loans to each other is known as the federal reserve requirement. Answer: False 41. An imbalance in international trade in which the value of imports exceeds the value of exports is called a trade deficit. Answer: True 42. The World Trade Organization was derived from NAFTA to promote free trade. Answer: False 43. The two types of regulatory agencies created by Congress are independent agencies and independent regulatory commissions. Answer: True 44. Domination of an industry by a single company is known as corporatism. Answer: False 45. Collective bargaining is a method whereby representatives of the union and employer determine wages, hours, and other conditions of employment through direct negotiation. Answer: True 46. The Environmental Protection Agency was created by Congress to enforce the Clean Air and Water Acts passed in the early 1970s. Answer: True 47. Deregulation is the policy of erecting trade barriers to protect domestic industry. Answer: False 48. Compared to other Western democracies, the United States developed social services later, in part because many people here had a strong belief in the responsibility of the church to support poverty programs. Answer: False 50. Entitlements are defined as programs such as unemployment insurance, disaster relief, or disability payments that provide benefits to all eligible citizens. Answer: True 51. Aid programs that are restricted to students only are called grant aid. Answer: False 52. The many programs that the federal government provides to protect Americans against economic and social misfortune are called the social safety net. Answer: True 53. The first public assistance programs were actually created in the late 1800s when states established aid programs to help poor single mothers and their children. Answer: True 54. Most public assistance programs are means-tested entitlement programs, which means that applicants must prove their poverty. Answer: True 55. Aid to the poor is called public assistance. Answer: True 56. Medicare was created in 1965 to provide basic health services for the poor and covers everything from hospital care to family planning. Answer: False 57. Supplemental Security Income was created to provide an extra measure of support for the elderly, the poor, and the disabled. Answer: True 58. Medicaid is a public assistance program that provides health care to the poor. Answer: True 59. Like many other social welfare programs, the food stamps program was part of the Great Society plan. Answer: True 60. The federal government’s first involvement with education occurred in the 1960s. Answer: False 61. Americans are living longer than ever before. Answer: True 62. The surgeon general is the head of the Public Health Service. Answer: True 63. The most visible health care official in government is the surveyor general. Answer: False 64. The Department of Homeland Security was created during George W. Bush’s administration. Answer: True Short Answer Questions 1. Define politics and public policy. Answer: Politics is the process by which decisions are made within a society regarding the allocation of resources and the management of public affairs. Public policy refers to the principles and actions taken by government to address societal issues and guide public behavior. 2. Define distributive policy and give an example of such policy. Answer: Distributive policy involves allocating resources or benefits to particular groups or sectors, such as infrastructure projects. Example: Funding for highways and public transportation systems. 3. Define reverse distributive policy and give an example of this type of policy. Answer: Reverse distributive policy seeks to reduce or withdraw benefits or resources from specific groups, often to address budget deficits. Example: Cuts in welfare benefits or social services. 4. Define redistributive policy and give an example of a redistributive policy. Answer: Redistributive policy aims to reallocate resources to promote equity, often through taxes and social programs. Example: Progressive income taxes and social welfare programs. 5. Define think tank and explain its role in setting policy agendas. Answer: A think tank is an organization that conducts research and provides analysis to influence public policy and decision-making. Role: They help shape policy agendas by providing expert opinions and recommendations. 6. Define iron triangle and give an example of one. Answer: An iron triangle represents the stable, mutually beneficial relationship between government agencies, congressional committees, and interest groups. Example: The relationship between the Department of Defense, the Armed Services Committee, and defense contractors. 7. What is punctuating policy, and under what conditions are we likely to see the government use it? Answer: Punctuating policy refers to significant, abrupt changes in policy in response to crises or major shifts in public opinion. Conditions: Likely during economic downturns, social upheavals, or major events that demand immediate government action. 8. Identify the five tools used by the federal government to solve most public problems. Answer: Federal government tools: Legislation, regulation, taxation, spending, and enforcement. 9. Identify the four sources of third-party government. Answer: Sources of third-party government: Contracts, grants, vouchers, and loans. 10. Explain how increasing and decreasing taxes and increasing and decreasing government spending are expected to affect the economy. Answer: Tax and spending impact: Increasing taxes or cutting spending can slow economic growth, while decreasing taxes or increasing spending can stimulate it. 11. Identify the two most common ways of measuring the performance of the economy and explain the theoretical relationship between them. Answer: Economic performance measures: GDP (Gross Domestic Product) and unemployment rate; GDP growth typically correlates with lower unemployment. 12. Define progressive and regressive taxes and give examples of both. Answer: Progressive tax: Higher rates on higher income (e.g., income tax brackets). Regressive tax: Higher burden on lower-income individuals (e.g., sales tax). 13. What is the Office of Management and Budget, and what is its role in the federal budget process? Answer: Office of Management and Budget (OMB): Assists the President in preparing the federal budget and oversees its implementation, ensuring that spending aligns with presidential priorities. 14. Define tax expenditures and explain their significance as a type of fiscal policy. Answer: Tax expenditures: Government spending through tax code provisions that provide exemptions, deductions, or credits; they reduce tax revenues and influence fiscal policy by affecting government income and economic behavior. 15. Define and explain laissez-faire economics and Keynesian economics. Answer: Laissez-faire economics: Advocates minimal government intervention in markets. Keynesian economics: Supports government intervention to manage economic cycles and promote stability through fiscal and monetary policies. 16. What is the General Agreement on Tariffs and Trade, and how does it impact international trade? Answer: General Agreement on Tariffs and Trade (GATT): An international agreement aimed at reducing trade barriers and promoting international trade through negotiations; it was replaced by the WTO in 1995. 17. What is the North American Free Trade Agreement, and how and when did it come into being? Answer: North American Free Trade Agreement (NAFTA): A 1994 trade agreement between the U.S., Canada, and Mexico to reduce trade barriers and increase economic cooperation, later replaced by the USMCA in 2020. 18. Identify the two types of regulatory agencies that have been created by Congress and explain how members of those agencies are selected. Answer: Regulatory agencies: Independent regulatory agencies (e.g., SEC) are headed by commissioners appointed by the President, confirmed by the Senate. Executive agencies (e.g., EPA) are led by administrators appointed by the President. 19. Define monopoly and explain what the government can and has done to regulate and/or prevent monopolies. Answer: Monopoly: A market structure where a single company dominates, reducing competition. Regulation: The government uses antitrust laws (e.g., Sherman Act) to prevent monopolistic practices and promote competition. 20. What are entitlements? Answer: Entitlements: Government programs providing benefits to individuals based on eligibility criteria, such as Social Security and Medicare. 21. Define means-tested entitlements. Answer: Means-tested entitlements: Programs that provide benefits based on income or financial need, such as Medicaid and Supplemental Nutrition Assistance Program (SNAP). 22. What is the social safety net? Answer: Social safety net: A collection of government programs designed to protect individuals from economic hardship, including unemployment benefits and social security. 23. List three programs brought about by the New Deal. Answer: New Deal programs: Social Security Act, Civilian Conservation Corps (CCC), and Works Progress Administration (WPA). 24. List three programs brought about by the Great Society. Answer: Great Society programs: Medicare, Medicaid, and the Elementary and Secondary Education Act. 25. What does the No Child Left Behind Act require of States? Answer: No Child Left Behind Act: Requires states to implement standardized testing to measure student achievement and hold schools accountable for improving performance. Essay Questions 1. Compare and contrast politics and public policy and explain the relationship between them. Answer: Politics encompasses the activities, discussions, and processes through which power and authority are negotiated and exercised in society. It involves competing interests, elections, and decision-making processes. Public policy, on the other hand, refers to the specific decisions and actions taken by government to address societal issues and achieve public goals. The relationship between them is that politics shapes the formulation and direction of public policy, while public policy represents the outcomes of political decisions and reflects the goals and compromises achieved through political processes. 2. Analyze the three types of public policy. Answer: Public policy can be categorized into three types: 1. Distributive Policy: This involves allocating resources or benefits to various groups or individuals, such as funding for infrastructure or public health programs. It aims to provide goods or services broadly. 2. Redistributive Policy: This aims to adjust the distribution of wealth and resources among different societal groups, often through programs like Social Security or progressive taxation, to reduce inequality. 3. Regulatory Policy: This involves imposing restrictions or rules to control behavior and protect the public, such as environmental regulations or financial oversight. It seeks to manage the actions of individuals and businesses to ensure compliance with societal standards. 3. Define incremental and punctuating policy. Which is more often used by the federal government and why? Answer: Incremental Policy refers to gradual, small-scale adjustments to existing policies rather than complete overhauls. This approach is commonly used by the federal government because it minimizes disruption and allows for continuous adaptation based on existing frameworks. Punctuating Policy involves significant, often sudden changes in policy that occur in response to major events or crises. Although less frequent, this approach is used to address substantial problems or shifts in public opinion that require immediate and sweeping reform. Incremental policy is more often used because it offers stability and predictability, while punctuating policy is reserved for transformative changes driven by significant events or shifts in political dynamics 4. Compare and contrast iron triangles and issue networks. Answer: Iron Triangles refer to the stable, mutually beneficial relationships among government agencies, congressional committees, and interest groups that work together to influence policy in a specific area. These relationships are characterized by close, often exclusive interactions, leading to policy decisions that benefit all parties involved. Issue Networks are more fluid and less stable than iron triangles. They consist of a broad range of actors, including interest groups, experts, media, and government officials, who come together around specific policy issues. Issue networks are characterized by their dynamic and evolving nature, with shifting alliances and a greater emphasis on diverse perspectives. Iron triangles are stable and focused, while issue networks are more diverse and adaptable, reflecting the complexity and changing nature of modern policy-making. 5. What is an issue-attention cycle, and how does it relate to the decision by policy makers whether or not to act on a policy problem? Answer: The issue-attention cycle refers to the pattern through which public and political focus on a policy issue shifts over time. It typically starts with heightened attention and concern, leading to policy proposals and debates. However, interest often wanes as new issues emerge or the initial problem is addressed. Policy makers use this cycle to gauge whether to act on an issue based on its current salience and public pressure. If an issue is at the peak of attention, there may be greater motivation and urgency to address it. Conversely, if attention has declined, decision-makers might prioritize other issues or delay action. This cycle influences the timing and intensity of policy responses. 6. Explain the two most common measurements in evaluating the performance of the economy and discuss how the measures relate to one another. Answer: The two most common measurements for evaluating the performance of the economy are Gross Domestic Product (GDP) and the unemployment rate. GDP measures the total value of all goods and services produced within a country, reflecting overall economic activity and growth. A rising GDP indicates economic expansion. The unemployment rate measures the percentage of the labor force that is actively seeking work but unable to find employment. These measures are interrelated: typically, as GDP increases, economic activity and job creation rise, leading to lower unemployment. Conversely, high unemployment can signal economic trouble, potentially causing GDP growth to slow. Both indicators are crucial for assessing economic health and guiding policy. 7. Define monetary policy and explain how is it carried out in the United States. Answer: Monetary policy involves managing the money supply and interest rates to influence economic activity, aiming to control inflation, stabilize currency, and achieve sustainable growth. In the United States, it is carried out primarily by the Federal Reserve (Fed). The Fed uses tools such as open market operations (buying or selling government securities), changing the discount rate (the interest rate charged to banks), and adjusting reserve requirements (the amount banks must hold in reserves). Through these actions, the Fed influences overall liquidity, borrowing costs, and economic conditions. 8. There is considerable disagreement over fairness of sales taxes. Discuss this debate. What is your opinion in this matter? Answer: The debate over sales taxes centers on their perceived fairness. Proponents argue that sales taxes are straightforward and can generate substantial revenue, benefiting from broad-based application. Critics claim they disproportionately affect lower-income individuals, as they spend a higher percentage of their income on taxable goods and services compared to higher-income individuals. This regressive nature can exacerbate economic inequality. In my opinion, while sales taxes are efficient, they should be designed with exemptions for essential goods and services, and combined with progressive income taxes to mitigate their regressive impact and enhance fairness. 9. Evaluate laissez-faire economics and Keynesian economics as approaches to stimulating the economy. Answer: Laissez-faire economics advocates minimal government intervention in the market, relying on the self-regulating nature of free markets to stimulate economic growth. Proponents believe that market forces efficiently allocate resources and that government intervention distorts this process. Keynesian economics, on the other hand, supports active government intervention to manage economic cycles. Keynesians argue that during downturns, increased government spending and lower taxes can stimulate demand and reduce unemployment. This approach aims to smooth out economic fluctuations and promote stability. Each approach has merits and drawbacks: laissez-faire emphasizes efficiency and freedom, while Keynesian economics focuses on stabilization and mitigating recessions. 10. The United States has experienced persistent trade deficits. Why is this the case and is it a cause for concern? Answer: The United States' persistent trade deficits occur due to a combination of factors: high consumer demand for imported goods, lower production costs abroad, and strong U.S. currency that makes imports cheaper. This imbalance means the U.S. imports more than it exports, leading to a trade deficit. While trade deficits can indicate strong economic performance and consumer confidence, they can also be a concern if they lead to excessive borrowing from foreign countries and potential economic vulnerability. Long-term deficits may affect the value of the dollar and lead to trade imbalances that could strain international relations. 11. The United States is a member of the North American Free Trade Agreement. What are the advantages and disadvantages of this and other free trade agreements for the U.S.? Answer: Advantages of free trade agreements (FTAs) like NAFTA for the U.S. include: 1. Increased Market Access: U.S. businesses gain access to foreign markets, boosting exports and economic growth. 2. Economic Efficiency: FTAs reduce tariffs and trade barriers, lowering costs for consumers and businesses. 3. Investment Opportunities: They encourage foreign investment by providing a stable trade environment. Disadvantages include: 1. Job Losses: Certain industries may suffer due to increased competition, potentially leading to job losses. 2. Trade Imbalances: FTAs can exacerbate trade deficits if imports significantly outpace exports. 3. Economic Disruption: They can negatively impact sectors that struggle to compete with cheaper foreign goods. 12. In what ways does Congress regulate business? Are congressional efforts in this regard sufficient? Answer: Congress regulates business through several key mechanisms: 1. Legislation: Congress enacts laws such as the Sherman Antitrust Act and the Consumer Protection Act to prevent monopolies and protect consumers. 2. Oversight: Congressional committees monitor and oversee business practices and enforcement of regulations by federal agencies. 3. Appropriations: Congress controls funding for regulatory agencies, influencing their capacity to enforce business regulations. Effectiveness and sufficiency: Sufficient: Legislative measures and oversight can effectively address many business practices and protect public interests. Insufficient: Challenges include regulatory capture, inadequate enforcement, and the need for more updated regulations to address modern business practices and technologies. 13. Evaluate the advantages and disadvantages of deregulation in the context of the transportation industry. Answer: Deregulation in the transportation industry has significant advantages and disadvantages: Advantages: 1. Increased Competition: Deregulation fosters competition, leading to lower prices and more choices for consumers. 2. Innovation: It encourages innovation and efficiency among firms, as companies seek to differentiate themselves and reduce costs. Disadvantages: 1. Reduced Service Quality: Without regulatory oversight, some companies may cut corners, potentially reducing service quality and safety. 2. Market Instability: Deregulation can lead to market instability and monopolies, as weaker firms may be driven out, reducing competition in the long run. 14. Explain the difference between entitlements and means-tested entitlements. Answer: Entitlements are government programs providing benefits to individuals based on established eligibility criteria, regardless of income. Examples include Social Security and Medicare, which guarantee benefits to qualifying individuals. Means-tested entitlements are programs that provide benefits only to individuals whose income or resources fall below a specified level. Examples include Medicaid and Supplemental Nutrition Assistance Program (SNAP), which are designed to assist those with financial need. 15. Describe how social policy expanded in the twentieth century under the New Deal and Great Society programs. Answer ; The New Deal (1930s) introduced social policies like Social Security, unemployment insurance, and welfare programs to provide economic relief and support during the Great Depression. The Great Society (1960s) further expanded social policy with initiatives such as Medicare, Medicaid, and the Elementary and Secondary Education Act to address poverty and inequality. Both periods significantly increased the federal government's role in providing social safety nets and public services. 16. What are three reasons for the increased costs of health care coverage in the U.S.? Answer: Three reasons for increased health care costs in the U.S. are: 1. Rising Medical Technology Costs: Advanced medical technologies and treatments often come with high costs for development and implementation. 2. Aging Population: As the population ages, there is greater demand for medical care and chronic disease management, driving up overall expenses. 3. Administrative Costs: The complexity of the U.S. health care system, including billing and insurance procedures, contributes to high administrative costs. Test Bank for Government by the People David B. Magleby, Paul C. Light, Christine L. Nemacheck 9780205073245, 9780134732831
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