Reference no: EM133436835

Question

1. Article I, Section 8, Clause 1 of the Constitution states, "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States."*

True

False

2. Article I, Section 8, Clause 2 of the Constitution states that the Congress shall have Power To ... "borrow Money on the credit of the United States."

True

False

3. In Pollock v. Farmers' Loan and Trust (1892) the Supreme Court ruled export taxes unconstitutional because Article I did not specifically grant Congress the power to directly tax individuals.

True

False

4. To trump the court's decision in Pollock, Congress proposed and the states ratified the Seventeenth Amendment (1913), which allows Congress to tax people's incomes.

True

False

6. The president began defining the income tax system and later created the Internal Revenue Service (IRS) to oversee the collection process.

True

False

7. Our national income tax is a regressive tax, meaning one's tax rate increases, or progresses, as one's income increases.*

True

False

8. During World War II, the highest tax bracket required a small number of Americans, only those making equivalent of $2.5 million a year in today's dollars, to pay 94 percent of their income in tax. *

True

False

9. Since President Kennedy encouraged a major drop in the tax rate in 1962, the top tax bracket has gradually diminished.*

True

False

10. While conservative Ronald Reagan was in office in the 1980s, the income tax fell to below 30 percent, and in the most recent decades, it has hovered between 35 and 40 percent.

True

False

11. Congress has used executive power not only as a revenue source but also as a way to draft social policy, by encouraging certain behaviors and discouraging others.

True

False

12. When it comes to setting up a national budget, both the Democrat and the Republican parties vote to spend more money than the federal government takes in in taxes, thus increasing the national debt.*

True

False

13. How the government manages the supply and demand of its currency and thus the value of the dollar is called fiscal policy.

True

False

14. In economics a general increase in prices and fall in the purchasing value of money is called monetary policy.

True

False

True

False

17. The Congress both sells bonds to and purchases bonds from commercial banks.*

True

False

18. When the fed buys bonds back with interest, it is giving the banks more money with which to operate and to loan out to customers.*

True

False

19. Commercial banks will borrow larger sums when the discount rate is lower and drop their interest rates accordingly in order to loan more money to its customer-borrowers.*

True

False

20. When banks can offer lower interest rates to consumers, people purchase more cars and houses.*

True

False

21. If the Fed reserve requirement declines from $16 on hand for every $100 it loans out to $12 on hand per $100, the bank will be encouraged to loan out less.*

True

False

22. If the Fed reserve requirement rises, the interest rates will also rise.

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False

True

False

24. Critics of the conservative approach to monetary policy, including many liberals, point to studies that show it has not had the desired effects.

True

False

25. The Libertarian Party opposes all national controls of the economy and believes the free market does the best job of adjusting to economic downturns.

True

False