Lesson 52 - unit 11

Question 1

What are 4 goals of Federal economic policy?

Answer 1

1. promote economic growth and stabilization
2. reduce inflation and unemployment
3. preserve fairness and equal access to the free market
4. encourage international trade

Question 2

Why do some policies whose economic costs outweigh their economic benefits become law and remain enforced?

Answer 2

Because they have political benefits.

Question 3

What kind of policies do political leaders like?

Answer 3

Ones that distribute costs widely and benefit politically important groups directly.

Question 4

What are some examples of how government has intervened in the economy as a result of market failure?

Answer 4

1. Environmental policy of taxing or charging fines to polluters or requiring companies to clean up toxic waste dumps and pay for reducing their level of pollutant
2. ethanol subsidies
3. antitrust policies

Question 5

How do subsidies and taxes differ in their purpose and effect?

Answer 5

Subsidies are intended to correct for insufficient output or low prices in the market to make production worthwhile.
Taxes are intended to correct for excess output by lessening production by raising the cost.

Question 6

What 4 public goods does the government provide?

Answer 6

1. Security
2. Infrastructure
3. Education
4. Health care

Question 7

How do government programs redistribute wealth?

Answer 7

By charging taxes and redistributing the money to those who qualify for assistance.

Question 8

What are 2 other terms that are used to describe programs of income support and redistribution?

Answer 8

Transfer payments and entitlements.

Question 9

What program replaced the previous welfare program in 1996?

Answer 9

Temporary Assistance for Needy Families.

Question 10

What program replaced the food stamp program?

Answer 10

Supplemental Nutrition Assistance Program.