Question 1

Question

A tax paid on personal earnings from
wages, interest, and investments.
A tax by state and local governments on
the sale of goods and services at the
point of sale.
A tax levied on the profits earned from
business activities.
A tax paid on the wages and salaries of
employees.
A tax paid to local governments by
landowners, homeowners, and
businesses.
A)
Match the definition with the tax.
Drag each item to the correct location.
(2 points)
 Individual income tax  Property tax  Sales tax  Payroll tax
 Corporate income tax
Question
2
Question
3
A)
Determine who pays individual income taxes, corporate income taxes, and payroll taxes.
(1 point)
Companies pay corporate income and payroll taxes, and employees pay individual income and
payroll taxes. Those who are self-employed may have to pay individual income, corporate income,
and payroll taxes.
Companies pay individual income, corporate income and payroll taxes, and employees pay
individual income and payroll taxes. Those who are self-employed only have to pay individual
income taxes.
Companies pay individual income and payroll taxes, and employees pay payroll taxes. Those who
are self-employed must pay payroll taxes.
Companies pay corporate income taxes and employees pay individual income taxes. Those who are
self-employed must pay individual income and payroll taxes.
A)
Which items are part of mandatory spending in the federal government?
Select the three correct answers.
(2 points)
state and local governments
Medicare and Medicaid
military and defense
Social Security
Federal Bureau of Investigation
education and transportation
Question
4
Question
5
A)
Suppose governmental expenses are rising rapidly. Which strategy could the federalgovernment use to solve this situation?
(1 point)
Delay payments for the interest on the national debt and increase tax rates for payroll and corporate
income taxes to raise funds for Medicare and Medicaid.
Increase corporate and individual income tax rates to raise revenue, and then eliminate payments to
state and local governments to cut other costs in the federal government.
Make cuts to defense and education spending, and then increase tax rates to reduce the effect of
increasing expenses in the federal government.
Increase payouts for entitlements and decrease income and payroll taxes so that consumers are
provided with more money to pay for increased medical costs.
A)
Which of the following is an action of a contractionary fiscal policy?
(1 point)
increasing overall aggregate demand by reducing taxes for individuals or businesses
decreasing overall aggregate demand by decreasing government spending
decreasing overall aggregate demand by reducing taxes for individuals or businesses
increasing overall aggregate demand by increasing government spending
Question
6
Question
7
A)
Which of the following arranges the categories of government spending from greatest to least?
(1 point)
Health Care, Pensions, and Transportation
Protection, National Defense, and Education
Interest on the National Debt, Health Care, and Protection
Education, Health Care, and Protection
A)
Which of the following statements correctly describes the issues associated with the nationaldebt?
(1 point)
Increased debt means more money is diverted from economic growth and social programs.
As the national debt decreases, more money needs to be paid toward interest payments.
The national debt has been steadily decreasing over time.
Unchecked debt could lead to decreased interest rates.
Question
8
Question
9
A)
Which statement best describes the roles of the Federal Reserve?
(1 point)
The Federal Reserve directs fiscal policy for the financial government, sets interest rates, and
regulates the banking industry.
The Federal Reserve directs monetary policy, sets interest rates, and provides banking services for
commercial banks.
The Federal Reserve prints the currency for the United States and controls the amount of money in
circulation.
The Federal Reserve provides lending directly to consumers, businesses, and other banks.
A)
Which statement accurately explains the functions of the Federal Reserve district banks andthose for the Board of Governors.
(1 point)
The Board of Governors set the discount rate and reserve requirements on banks while the Federal
Reserve district banks overlook the banking industry and implement the policies from the Board of
Governors.
The Federal Reserve district banks direct monetary policy and overlook the banking industry while
the Board of Governors implement the policies from the district banks.
The Federal Reserve district banks set the target federal funds rate and oversee open market
operations while the Board of Governors direct monetary policy and set reserve requirements on
banks.
The Board of Governors set the target federal funds rate and overlook the banking industry while the
Federal Reserve district banks implement the policies from the Board of Governors.
Question 10
The interest rate banks charge each
other for overnight lending.
The funds a bank must hold against the
deposit liabilities.
The interest rate a bank charges to its
best customers.
The short-term purchase of securities
with a dealer for the Federal Reserve to
resell the securities at a later date.
The interest rate the Federal Reserve
charges to banks for loans issued.
The purchase and sale of treasury and
mortgage-backed securities with dealers.
A)
Match the definition with the term provided.
Drag each term to the correct location.
(2 points)
 federal funds rate  discount rate  prime rate  repurchase agreements
 reserve requirements  open market operations
Question
11
Question
12
A)
What effects does the Federal Reserve have on the economy?
Select the three correct answers.
(2 points)
prices
economic growth
income distribution
poverty rate
employment
individual income tax rates
A)
The economy has been sluggish in recent months with slow economic growth. Which resultswould lead to a strong and healthy economy?
(1 point)
An increase in the money supply and decrease in interest rates result in more lending and risk.
A decrease in the money supply increases interest rates, which increases lending.
An increase in the money supply increases interest rates and inflation, which spurs economic
growth.
A short-term profits and decrease in the money supply cause a decrease in interest rates and
increased lending.
Question
13
A)
In one to two sentences, describe an example where people pay a flat tax and explain why it isa flat tax.
(2 points)
    
Short Answer Rubric (2 points)
PointsAwarded
Criteria
2
The answer is very clear.
The answer is fully supported by details.
There may be a few errors in grammar, usage, or mechanics. Errors do not interfere withmeaning.
1
The answer is somewhat clear.
Details are weak or not related.
There are some errors in grammar, usage, and mechanics. Errors interfere with meaning.
0
The question is not answered.
Question
14
A)
In one to two sentences, explain how unchecked debt could affect investors in the U.S.government debt, and how that could affect the cost of borrowing.
(2 points)
    
Short Answer Rubric (2 points)
PointsAwarded
Criteria
2
The answer is very clear.
The answer is fully supported by details.
There may be a few errors in grammar, usage, or mechanics. Errors do not interfere withmeaning.
1
The answer is somewhat clear.
Details are weak or not related.
There are some errors in grammar, usage, and mechanics. Errors interfere with meaning.
0
The question is not answered.
Question
15
A)
Compare and contrast the federal funds rate, the discount rate, and the prime rate.
(4 points)
    
Short Answer Rubric (4 points)
PointsAwarded
Criteria
4
The answer is very clear.
The answer is fully supported by details.
There may be a few errors in grammar, usage, or mechanics. Errors do not interfere withmeaning.
3
The answer is mostly clear.
The answer is supported by mostly relevant details.
There are a few errors in grammar, usage, or mechanics. Errors do not interfere withmeaning.
2
The answer is somewhat clear.
Details are weak or not related.
There are some errors in grammar, usage, and mechanics. Errors interfere with meaning.
1
The answer is not clear.
There are few or no supporting details.
There are many errors in grammar, usage, and mechanics. Errors interfere with meaning.
0
The question is not answered.

Question
16
A)
Explain how implementation of fiscal policies and monetary policies can both be utilized toincrease consumer and business spending and spur economic growth. Which of these policies willimpact the federal budget and how?
(4 points)
    
Short Answer Rubric (4 points)
PointsAwarded
Criteria
4
The answer is very clear.
The answer is fully supported by details.
There may be a few errors in grammar, usage, or mechanics. Errors do not interfere withmeaning.
3
The answer is mostly clear.
The answer is supported by mostly relevant details.
There are a few errors in grammar, usage, or mechanics. Errors do not interfere withmeaning.
2
The answer is somewhat clear.
Details are weak or not related.
There are some errors in grammar, usage, and mechanics. Errors interfere with meaning.
1
The answer is not clear.
There are few or no supporting details.
There are many errors in grammar, usage, and mechanics. Errors interfere with meaning.
0
The question is not answered.

Answer 1

Sure! Here are the answers to your questions based on the information provided:

Question 1

Match the definitions with the tax:

1. Individual income tax - A tax paid on personal earnings from wages, interest, and investments.
2. Sales tax - A tax by state and local governments on the sale of goods and services at the point of sale.
3. Corporate income tax - A tax levied on the profits earned from business activities.
4. Payroll tax - A tax paid on the wages and salaries of employees.
5. Property tax - A tax paid to local governments by landowners, homeowners, and businesses.

Question 2

Determine who pays individual income taxes, corporate income taxes, and payroll taxes:

• Companies pay corporate income taxes and payroll taxes, and employees pay individual income taxes and payroll taxes. Those who are self-employed must pay individual income and payroll taxes.

Question 3

Which items are part of mandatory spending in the federal government?

1. Medicare and Medicaid
2. Social Security
3. Military and defense

(Note: "state and local governments" and "Federal Bureau of Investigation" are not typically classified as mandatory spending.)

Question 4

Suppose governmental expenses are rising rapidly. Which strategy could the federal government use to solve this situation?

• Make cuts to defense and education spending, and then increase tax rates to reduce the effect of increasing expenses in the federal government.

Question 5

Which of the following is an action of a contractionary fiscal policy?

• Decreasing overall aggregate demand by decreasing government spending.

Question 6

Which of the following arranges the categories of government spending from greatest to least?

• Health Care, Pensions, and Transportation

Question 7

Which statement correctly describes the issues associated with the national debt?

• Increased debt means more money is diverted from economic growth and social programs.

Question 8

Which statement best describes the roles of the Federal Reserve?

• The Federal Reserve directs monetary policy, sets interest rates, and provides banking services for commercial banks.

Question 9

Which statement accurately explains the functions of the Federal Reserve district banks and those for the Board of Governors?

• The Board of Governors set the discount rate and reserve requirements on banks, while the Federal Reserve district banks oversee the banking industry and implement the policies from the Board of Governors.

Question 10

Match the definition with the term provided:

1. Federal funds rate - The interest rate banks charge each other for overnight lending.
2. Reserve requirements - The funds a bank must hold against the deposit liabilities.
3. Prime rate - The interest rate a bank charges to its best customers.
4. Discount rate - The interest rate the Federal Reserve charges to banks for loans issued.
5. Repurchase agreements - The short-term purchase of securities with a dealer for the Federal Reserve to resell the securities at a later date.
6. Open market operations - The purchase and sale of treasury and mortgage-backed securities with dealers.

Question 11

What effects does the Federal Reserve have on the economy?

1. Prices
2. Economic growth
3. Employment

Question 12

The economy has been sluggish in recent months with slow economic growth. Which results would lead to a strong and healthy economy?

• An increase in the money supply and decrease in interest rates result in more lending and risk.

Question 13

In one to two sentences, describe an example where people pay a flat tax and explain why it is a flat tax. An example of a flat tax is the system employed by some states where all individuals pay the same percentage of their income regardless of their income level. It is considered a flat tax because it levies the same rate on everyone, leading to a consistent tax burden across different income brackets.

Question 14

In one to two sentences, explain how unchecked debt could affect investors in U.S. government debt, and how that could affect the cost of borrowing. Unchecked national debt may lead to increased risk for investors, as they might perceive higher chances of default or fiscal instability. This perception can result in increased interest rates on government debt, raising borrowing costs for the federal government and ultimately affecting all borrowing in the economy.

Question 15

Compare and contrast the federal funds rate, the discount rate, and the prime rate. The federal funds rate is the interest rate at which banks lend to each other overnight, influencing overall monetary policy. The discount rate is the interest rate the Federal Reserve charges banks for loans, serving as a tool for controlling the money supply. The prime rate is the interest rate banks offer to their most creditworthy customers and is generally higher than the federal funds rate, reflecting the risk associated with lending beyond federal borrowing. Together, these rates impact borrowing behavior in the economy; however, they serve different roles within the banking system.

Question 16

Explain how implementation of fiscal policies and monetary policies can both be utilized to increase consumer and business spending and spur economic growth. Which of these policies will impact the federal budget and how? Fiscal policies, such as increased government spending or tax cuts, directly influence the federal budget by altering revenues and expenses, which can stimulate economic growth by increasing consumer demand. Monetary policies, on the other hand, such as lowering interest rates or increasing the money supply, can spur spending by making borrowing cheaper, but do not directly affect the federal budget. Both policies can work in tandem; fiscal measures may create a more immediate effect on the economy, while monetary policy provides a supportive backdrop for sustained economic activity.

Please review and adjust the answers according to any specific guidelines provided by your instructor or your textbook.