1- Determine who pays individual income taxes, corporate income taxes, and payroll taxes.(1 point)

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

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

Select the three correct answers.

(2 points)

• Federal Bureau of Investigation
• military and defense
• Medicare andMedicaid
• Social Security
• state and local governments
• education and transportation

3- Suppose expenses for Medicare and Medicaid are rising rapidly. Which strategy could the federal government use to solve this situation?(1 point)

• Increase payouts for entitlements and decrease income and payroll taxes so that consumers are provided with more money to pay for increased medical costs.
• 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.
• 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.
• Make cuts to defense and education spending, and then increase income and payroll tax rates to reduce the effect of increasing expenses in the federal government.

4- Arrange the following revenues in the federal government, from greatest to least.

Drag each item to put them in the correct order.

• miscellaneous revenue
• corporate income taxes
• excise taxes
• individual income taxes
• customs duties
• social security and medicare taxes

5- How do the instances when expansionary fiscal policy should be used compare with those for contractionary fiscal policy?(1 point)

• Expansionary fiscal policy should be used to combat high inflation and contractionary fiscal policy should be used to increase government revenue.
• Expansionary fiscal policy should be used during recessions to help build the economy and contractionary fiscal policy should be used when there is high inflation.
• Expansionary fiscal policy should be used to increase government revenue and contractionary fiscal policy should be used to increase consumer spending.
• Expansionary fiscal policy should be used to decrease the unemployment rate and contractionary fiscal policy should be used when economic growth is too fast.

6- Which statement best interprets the trend in the national debt since 2004?(1 point)

• The national debt has been steady or slowly decreasing each year since 2004.
• The national debt increased from 2007 to 2009 and has been steady since 2009.
• The national debt has increased from 2007 to 2009 and from 2015 to 2019.
• The national debt has been steadily increasing each year since 2004.

7- Which situations result in an increase in the national debt?

Select the two correct answers.

(2 points)

• a balanced federal budget
• an increase in intragovernmental debt
• a decrease in the federal budget'sdeficit
• an increase in the federal budget's deficit
• a surplus in the federal budget
• a decrease in intragovernmental debt

8- Which statement best describes the roles of the Federal Reserve?(1 point)

• 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.
• 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.

9- Compare the functions of the Federal Reserve district banks with those for the Board of Governors.(1 point)

• 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 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 theBoard of Governors implement the policies from the district 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.

10- What effects does the Federal Reserve have on the economy?

Select the three correct answers.

(2 points)

• employment
• economic growth
• poverty rate
• income distribution
• individual income tax rates
• prices

11- The economy has been sluggish in recent months with slow economic growth. Explain the policies that the Federal Reserve could use to improve the economy.(1 point)

• The Federal Reserve stops purchasing treasuries and securities, and then issues new reverse repurchase agreements. The short-term profits and decrease in the money supply cause a decrease in interest rates and increased lending.
• The Federal Reserve sells treasuries back to banks and issues new reverse repurchase agreements. The decrease in the money supply increases interest rates, which increases lending.
• The Federal Reservepurchases treasuries and securities, and also issues new repurchase agreements. The increase in the money supply increases interest rates and inflation, which spurs economic growth.
• The Federal Reserve purchases treasuries and securities and also issues new repurchase agreements. The increase in the money supply and decrease in interest rates result in more lending and risk.

12- Analyzethe relationship between the federal budget and national debt. Explain howa federal budget deficit and a federal budget surplus influence levels of national debt.

13- Compare and contrast the federal funds rate, the discount rate, and the prime rate.

14- 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?(4 points)