1. Chapter Eighteen Economic Policy

2. Copyright © Houghton Mifflin Company. All rights reserved. 18-2 If government cuts taxes to encourage people to spend more money to stimulate economic growth, it is using a. business cycling. b. fiscal policy. c. monetary policy. d. deficit financing. e. public income reductions.

3. Copyright © Houghton Mifflin Company. All rights reserved. 18-3 If government cuts taxes to encourage people to spend more money to stimulate economic growth, it is using a. business cycling. b. fiscal policy. (correct) c. monetary policy. d. deficit financing. e. public income reductions.

4. Copyright © Houghton Mifflin Company. All rights reserved. 18-4 The budget-making process is initiated by a. Congress. b. the Federal Reserve. c. the Council of Economic Advisers. d. the Office of Management and Budget. e. the Budget Control Board.

5. Copyright © Houghton Mifflin Company. All rights reserved. 18-5 The budget-making process is initiated by a. Congress. b. the Federal Reserve. c. the Council of Economic Advisers. d. the Office of Management and Budget. (correct) e. the Budget Control Board.

6. Copyright © Houghton Mifflin Company. All rights reserved. 18-6 The role of appropriations committees is to a. monitor overall spending. b. oversee implementation of the Gramm-Rudman- Hollings Act. c. authorize spending in particular legislative areas. d. offer a comprehensive budget-review process. e. decide which programs will be funded.

7. Copyright © Houghton Mifflin Company. All rights reserved. 18-7 The role of appropriations committees is to a. monitor overall spending. b. oversee implementation of the Gramm-Rudman- Hollings Act. c. authorize spending in particular legislative areas. d. offer a comprehensive budget-review process. e. decide which programs will be funded. (correct)

8. Copyright © Houghton Mifflin Company. All rights reserved. 18-8 Significant tax reform is normally difficult because a. tax policy can be changed only by constitutional amendment. b. the president usually supports the status quo. c. special interests mobilize to preserve provisions to them. d. there has been little criticism of existing tax measures. e. the public distrusts any attempt to reform the tax system.

9. Copyright © Houghton Mifflin Company. All rights reserved. 18-9 Significant tax reform is normally difficult because a. tax policy can be changed only by constitutional amendment. b. the president usually supports the status quo. c. special interests mobilize to preserve provisions to them. (correct) d. there has been little criticism of existing tax measures. e. the public distrusts any attempt to reform the tax system.

10. Copyright © Houghton Mifflin Company. All rights reserved. 18-10 Of the following, which can be considered a progressive tax? a. State and local sales taxes b. Federal income tax c. Payroll tax that funds social security d. Federal poll taxes e. use taxes

11. Copyright © Houghton Mifflin Company. All rights reserved. 18-11 Of the following, which can be considered a progressive tax? a. State and local sales taxes b. Federal income tax (correct) c. Payroll tax that funds social security d. Federal poll taxes e. use taxes