8.1.3 Final Exam: U.S. Government and Politics Exam
Final Exam
U.S. Government and Politics (S4504825) Erin Yamane
Points possible: 50 Date: ____________
Part I: Short-Answer Questions (30 points)
1. Summarize the civic responsibilities of U.S. citizens and explain how they differ from civic obligations.
Then explain how civic responsibilities promote the public good. (5 points)
Civic responsibilities are actions that are not required of U.S. citizens but that are important to society and
should ideally be undertaken by all. Civic robligations are actions all people in the United States are
obligated to perforrm, while civic responsibilities are actions that are important but not required of all
citizens.
Civiz responsibilities promote the public good because two examples of civic reponsibilities are voting in
elections and staying informed about current events. Voting is important because it determines who will
serve in the government. Citizens should also be well informed because they are then able to make better
decisions about policies and voting.
2. Describe the three main tools the Federal Reserve uses to control the U.S. money supply, and explain
how they are used. Then explain how changes in the money supply affect the U.S. economy as a whole.
(5 points)
The three main tools the Federal Reserve uses to control the U.S. money supply:
1) Use its check writing capabilities, using open market operations
- The Fed can “write a check” to buy securities and thereby increase the money supply to do such
things as buy back government bonds in the market. Unlike the rest of us, the Fed doesn’t have
to pay the money for a check it has written. As we will see, an increase in the country’s money
supply stimulates the economy. Likewise, if the Fed sells securities, the money paid for them
leaves the money supply and slows the economy.
, 2) Raise or lower the interest rates
- The Fed can raise or lower interest rates by changing: (a) the discount rate (the interest rate the
Fed charges banks on short-term loans), and/or (b) the Federal Funds rate (or Fed Funds rate),
the rate banks charge each other on short-term loans. When the Fed raises or lowers interest
rates, banks usually quickly follow by raising or lowering their prime rate (the rate banks charge
on loans to its most creditworthy customers). A reduction of the interest rate signals an
expansionary monetary policy. Why? Because by reducing the interest of its loans to banks, the
Fed allows banks to lend out money at lower rates. More businesses and individuals are willing to
take out loans, thus pouring more money into the economy.
3) Manipulate the reserve requirements for various banks to control the money flow and thereby
the interest rate
- All banks that are members of the Federal Reserve System are required to maintain a minimum
balance in a reserve account with the Fed. The amount of this minimum balance depends on the
total deposits of the bank’s customers. These minimum deposits are referred to as “reserve
requirements.” Lowering the reserve requirements for various banks has the same expansionary
effect. This move allows banks to make more loans with the deposits it has and thereby
stimulates the economy by increasing the money supply.
The Fed manipulates the money supply to effect the macro economy. When the Fed increases the money
supply going into the economy, the monetary policy set by the Fed is said to be expansionary. This
encourages investment and subsequently increases consumption demand. In the long run, however, an
expansionary policy can lead to higher prices and inflation. Therefore, it is the Fed’s responsibility to
maintain a proper balance and prevent the economy from both hyperinflation or recession.
3. Write a brief paragraph summarizing how U.S. presidential races work, including party nominations,
campaigns, and general elections. Then write a second brief paragraph describing some advantages and
drawbacks of this process. (5 points)
There are only two significant political parties in the USA: Democrats and Republicans. Each party
officially names their candidates for President and Vice-President (who run together) at the party
conventions usually in July or August. The election is critically important for the United States and the
world. Decisions made by the President can bring peace or war, and economic progress or decline.
4. Explain how civil liberties differ from civil rights and how each are protected in the United States. In
your explanation, provide examples of at least one civil liberty and at least one civil right. (5 points)
Civil liberties traditionally are those individual rights enumerated in the Bill of Rights. Civil Rights
historically came to refer to the rights of ethnic minorities to be protected from illegal discrimination. These
rights were codified in the federal Civil Rights Act of 1964, which was passed by President Lyndon
Johnson. Subsequent state and federal laws have expanded civil rights protection to other defined
groups, based on age, gender, disability, and sexual orientation, among other things.
Final Exam
U.S. Government and Politics (S4504825) Erin Yamane
Points possible: 50 Date: ____________
Part I: Short-Answer Questions (30 points)
1. Summarize the civic responsibilities of U.S. citizens and explain how they differ from civic obligations.
Then explain how civic responsibilities promote the public good. (5 points)
Civic responsibilities are actions that are not required of U.S. citizens but that are important to society and
should ideally be undertaken by all. Civic robligations are actions all people in the United States are
obligated to perforrm, while civic responsibilities are actions that are important but not required of all
citizens.
Civiz responsibilities promote the public good because two examples of civic reponsibilities are voting in
elections and staying informed about current events. Voting is important because it determines who will
serve in the government. Citizens should also be well informed because they are then able to make better
decisions about policies and voting.
2. Describe the three main tools the Federal Reserve uses to control the U.S. money supply, and explain
how they are used. Then explain how changes in the money supply affect the U.S. economy as a whole.
(5 points)
The three main tools the Federal Reserve uses to control the U.S. money supply:
1) Use its check writing capabilities, using open market operations
- The Fed can “write a check” to buy securities and thereby increase the money supply to do such
things as buy back government bonds in the market. Unlike the rest of us, the Fed doesn’t have
to pay the money for a check it has written. As we will see, an increase in the country’s money
supply stimulates the economy. Likewise, if the Fed sells securities, the money paid for them
leaves the money supply and slows the economy.
, 2) Raise or lower the interest rates
- The Fed can raise or lower interest rates by changing: (a) the discount rate (the interest rate the
Fed charges banks on short-term loans), and/or (b) the Federal Funds rate (or Fed Funds rate),
the rate banks charge each other on short-term loans. When the Fed raises or lowers interest
rates, banks usually quickly follow by raising or lowering their prime rate (the rate banks charge
on loans to its most creditworthy customers). A reduction of the interest rate signals an
expansionary monetary policy. Why? Because by reducing the interest of its loans to banks, the
Fed allows banks to lend out money at lower rates. More businesses and individuals are willing to
take out loans, thus pouring more money into the economy.
3) Manipulate the reserve requirements for various banks to control the money flow and thereby
the interest rate
- All banks that are members of the Federal Reserve System are required to maintain a minimum
balance in a reserve account with the Fed. The amount of this minimum balance depends on the
total deposits of the bank’s customers. These minimum deposits are referred to as “reserve
requirements.” Lowering the reserve requirements for various banks has the same expansionary
effect. This move allows banks to make more loans with the deposits it has and thereby
stimulates the economy by increasing the money supply.
The Fed manipulates the money supply to effect the macro economy. When the Fed increases the money
supply going into the economy, the monetary policy set by the Fed is said to be expansionary. This
encourages investment and subsequently increases consumption demand. In the long run, however, an
expansionary policy can lead to higher prices and inflation. Therefore, it is the Fed’s responsibility to
maintain a proper balance and prevent the economy from both hyperinflation or recession.
3. Write a brief paragraph summarizing how U.S. presidential races work, including party nominations,
campaigns, and general elections. Then write a second brief paragraph describing some advantages and
drawbacks of this process. (5 points)
There are only two significant political parties in the USA: Democrats and Republicans. Each party
officially names their candidates for President and Vice-President (who run together) at the party
conventions usually in July or August. The election is critically important for the United States and the
world. Decisions made by the President can bring peace or war, and economic progress or decline.
4. Explain how civil liberties differ from civil rights and how each are protected in the United States. In
your explanation, provide examples of at least one civil liberty and at least one civil right. (5 points)
Civil liberties traditionally are those individual rights enumerated in the Bill of Rights. Civil Rights
historically came to refer to the rights of ethnic minorities to be protected from illegal discrimination. These
rights were codified in the federal Civil Rights Act of 1964, which was passed by President Lyndon
Johnson. Subsequent state and federal laws have expanded civil rights protection to other defined
groups, based on age, gender, disability, and sexual orientation, among other things.
