GOVT 350 Final Exam
What was the significance of FDR's Brain Trust? - ANS-This group devised measures to
implement that became New Deal policies. Members were primarily academics from
universities.
What is meant by the term 'New Deal' under FDR? - ANS-Policies enacted under FDR
that created active intervention from a strong central government.
What does the phrase 'cradle to grave' mean? - ANS-Individuals are dependent on
government support for their entire lives.
Friedman discusses 4 spending categories. What are they? - ANS-1.) Spending on
yourself
2.) Spending your money on someone else
3.) Spending someone else's money on you
4.) Spending someone else's money on someone else
Which of Friedman's 4 spending categories results in the most efficient and wise
allocation of scarce resources? - ANS-Spending your money on yourself. You best know
your needs and resources, and you can allocate them best.
What is the fundamental fallacy of the welfare state? - ANS-Bureaucrats spending
someone else's money on other people leads to waste and corruption.
The modern welfare state can be traced back to which influences? - ANS-Bismarckian
Germany
Industrial Britain
Sweden
What two contradictory phenomena occurred as a result of New Deal programs? -
ANS-Widespread dissatisfaction with the explosion of welfare activities contrasted with
continued pressure for further expansion (p. 96)
What is the most important component of Social Security? - ANS-Old age and survivors'
benefits. These account for 2/3 of total expenditures and 3/4 of the recipients.
What measures does Friedman propose to 'wind down' Social Security? - ANS-1.)
Repeal the payroll tax
, 2.) Continue to pay existing beneficiaries
3.) Give workers who already earned coverage what they are entitled to
4.) Give workers who have not yet earned coverage a capital sum
5.) Terminate any further accumulation of benefits
6.) Finance payments under items 2, 3, and 4 out of general tax funds
What is Process Philosophy in its most basic essence? - ANS-Process Philosophy sees
reality as an evolving entity based on change rather than on absolutes.
How does Process Philosophy relate to the expansive jurisdiction of the national
government? - ANS-Process Philosophy leaked into government policy and began to
see legislation as a way to enact change and propel reality forward.
What is the Madisonian interpretation of Article 1 Section 8 Clause 1? -
ANS-Madisonian interpretation is that the grand objects should be achieved through the
enumerated powers.
What causes inflation? - ANS-Monetary policy causes inflation.
How does inflation impact prices and the value of money? - ANS-Inflation raises prices
while simultaneously lowering the values of money.
Why do inflationary policies distort price signals? - ANS-Producers think demand has
gone up so they produce more at the same price but then realize that the price of the
things they buy has gone up as well
Explain: "Inflation is a monetary phenomenon arising from a rapid increase in the
quantity of money than in output" - ANS-Inflation occurs when money is injected into the
economy at a rate higher than the economy's output (reflected in GDP)
Explain: "In today's world, government determines the quantity of money" - ANS-As a
producer of money, government is often responsible for inserting money into and out of
the economy.
Explain: "There is only one cure for inflation: a slower rate of increase in the quantity of
money" - ANS-This would allow the price system to stabilize and not be disrupted by the
increase while allowing for an elastic economy.
What was the significance of FDR's Brain Trust? - ANS-This group devised measures to
implement that became New Deal policies. Members were primarily academics from
universities.
What is meant by the term 'New Deal' under FDR? - ANS-Policies enacted under FDR
that created active intervention from a strong central government.
What does the phrase 'cradle to grave' mean? - ANS-Individuals are dependent on
government support for their entire lives.
Friedman discusses 4 spending categories. What are they? - ANS-1.) Spending on
yourself
2.) Spending your money on someone else
3.) Spending someone else's money on you
4.) Spending someone else's money on someone else
Which of Friedman's 4 spending categories results in the most efficient and wise
allocation of scarce resources? - ANS-Spending your money on yourself. You best know
your needs and resources, and you can allocate them best.
What is the fundamental fallacy of the welfare state? - ANS-Bureaucrats spending
someone else's money on other people leads to waste and corruption.
The modern welfare state can be traced back to which influences? - ANS-Bismarckian
Germany
Industrial Britain
Sweden
What two contradictory phenomena occurred as a result of New Deal programs? -
ANS-Widespread dissatisfaction with the explosion of welfare activities contrasted with
continued pressure for further expansion (p. 96)
What is the most important component of Social Security? - ANS-Old age and survivors'
benefits. These account for 2/3 of total expenditures and 3/4 of the recipients.
What measures does Friedman propose to 'wind down' Social Security? - ANS-1.)
Repeal the payroll tax
, 2.) Continue to pay existing beneficiaries
3.) Give workers who already earned coverage what they are entitled to
4.) Give workers who have not yet earned coverage a capital sum
5.) Terminate any further accumulation of benefits
6.) Finance payments under items 2, 3, and 4 out of general tax funds
What is Process Philosophy in its most basic essence? - ANS-Process Philosophy sees
reality as an evolving entity based on change rather than on absolutes.
How does Process Philosophy relate to the expansive jurisdiction of the national
government? - ANS-Process Philosophy leaked into government policy and began to
see legislation as a way to enact change and propel reality forward.
What is the Madisonian interpretation of Article 1 Section 8 Clause 1? -
ANS-Madisonian interpretation is that the grand objects should be achieved through the
enumerated powers.
What causes inflation? - ANS-Monetary policy causes inflation.
How does inflation impact prices and the value of money? - ANS-Inflation raises prices
while simultaneously lowering the values of money.
Why do inflationary policies distort price signals? - ANS-Producers think demand has
gone up so they produce more at the same price but then realize that the price of the
things they buy has gone up as well
Explain: "Inflation is a monetary phenomenon arising from a rapid increase in the
quantity of money than in output" - ANS-Inflation occurs when money is injected into the
economy at a rate higher than the economy's output (reflected in GDP)
Explain: "In today's world, government determines the quantity of money" - ANS-As a
producer of money, government is often responsible for inserting money into and out of
the economy.
Explain: "There is only one cure for inflation: a slower rate of increase in the quantity of
money" - ANS-This would allow the price system to stabilize and not be disrupted by the
increase while allowing for an elastic economy.
