05 Jan Citizens will default on

Question 1

(TCO 7) Describe how today’s conservatives use the term “political economy.”

Conservatives use the term to try to get back to the pure market system advocated by Adam Smith.

Conservatives understand the term within the context of Machiavelli’s The Prince.

Conservatives veer toward John Stuart Mill’s usage, which advocated utilitarianism.

Conservatives take a neo-utilitarian approach, hoping to benefit the weakest members of society.

Question 2

(TCO 7) Early 20th-century European governments subscribed to _____ doctrines, generally keeping their hands away from the economy.

classic liberal

inflationary

neoclassical

Smithian

Question 3

(TCO 7) The 1973 Mideast war allowed members of the Organization of Petroleum Exporting Countries (OPEC) to _____.

sell to nations in Eastern Europe

export to Japan and China

quadruple oil prices

keep oil prices down

Question 4

(TCO 7) Between 1965 and 1973, the percentage of Americans living below the poverty line _____.

doubled

greatly decreased

slightly increased

rapidly increased

Question 5

(TCO 7) The _____ administration simplified the Food Stamp program by eliminating the provision that recipients buy the stamps at a discount with their own money.

Kennedy

Johnson

Ford

Carter

Question 6

(TCO 7) Medical costs consume nearly _____% of the U.S. gross domestic product, most of it paid through government and private health insurance.

11

18

22

26

Question 7

(TCO 7) Many Americans think the federal budget goes primarily toward welfare, which is _____.

absolutely true

somewhat exaggerated

not at all the case

slightly offensive

Question 8

(TCO 7) How might Americans’ reluctance toward entitlement programs benefit them in the long run?

Citizens will pay lower taxes, stimulating the economy via “trickle-down” economics.

Entitlement programs are complex and inefficient; our government will save time and money by proceeding with caution.

Americans can justify raising the debt ceiling through entitlement programs, so long as they are wary of the choices they make.

Government subsidies to businesses, rather than spending on welfare programs, will help the United States generate revenue and reduce overall spending.

Question 9

(TCO 7) What was the poverty line in 2012?

$14,505

$17,060

$23,050

$26,750

Question 10

(TCO 7) Theoretically, what are the consequences if the government assumes the burden of bad loans?

Citizens will default on their mortgages.

Banks will learn from their mistakes and pay back the burden with interest.

Ultimately, the government will profit.

Firms will be encouraged to continue their risky behavior.