School Improvement in Maryland

Public Release Item: Public Release items have appeared on HSA forms and then are released for public viewing and use. Releasing items is one step to ensuring that schools, districts, and other stakeholders understand how the core learning goals are assessed on the HSA.

Goal 4 Economics

Expectation 4.1 The student will demonstrate an understanding of economic principles, institutions, and processes required to formulate government policy.

Indicator 4.1.4 The student will evaluate the effectiveness of current monetary and fiscal policy on promoting full employment, price stability, and economic performance.

Assessment Limits:

  • Business cycle, monetary policy (Federal Reserve actions) and fiscal policy (Legislative and Executive actions) and their effect on economic performance, full employment, and price stability.
  • Tools of monetary policy (Federal Reserve System – FED) include the reserve requirement, interest rates, and open-market operations (buying and selling of government securities).
  • Tools of fiscal policy include increasing/decreasing taxes and tariffs and/or spending.
  • Measures of economic performance include Gross Domestic Product (GDP), Consumer Price Index (CPI), and unemployment rate.

Selected Response Item - Released in 2002

Which of these actions would the Federal Reserve most likely take to help end a recession?

  1. print more currency
  2. reduce the interest rate
  3. sell government securities
  4. increase the reserve requirement
/share/clg/xml/public_release/government/2002_414_gov10.xml

Correct Answer:
B

Selected Response Item - Released in 2002

Look at the cartoon below. Then answer the following:

Which of these best represents the opinion of the cartoonist?

  1. Rates of inflation are low.
  2. Effects of inflation are unnoticeable.
  3. Actions needed to control inflation are unnecessary.
  4. Actions taken to control inflation are ineffective.
/share/clg/xml/public_release/government/2002_414_gov49.xml

Correct Answer:
D

Selected Response Item - Released in 2002

Look at the cartoon below. Then answer the following:

The problem illustrated in the cartoon is most harmful to which of these groups?

  1. people on fixed incomes
  2. investors owning foreign currency
  3. consumers paying cash for purchases
  4. workers receiving bonuses for productivity
/share/clg/xml/public_release/government/2002_414_gov50.xml

Correct Answer:
A

Selected Response Item - Released in 2001

Which of these government actions is designed to lower inflation?

  1. hiring more government workers
  2. increasing government loans
  3. selling government securities
  4. increasing government spending
/share/clg/xml/public_release/government/2001_414_gov24.xml

Correct Answer:
C

Selected Response Item - Released in 2001

Read the headline below.

Which of these does the headline suggest about unemployment rates?

  1. Rates vary among different geographical areas.
  2. Rates are affected by government fiscal policy.
  3. Rates increase as the economy expands.
  4. Rates decrease as businesses become automated.
/share/clg/xml/public_release/government/2001_414_gov53.xml

Correct Answer:
B

Selected Response Item - Released in 2001

Which of these sets monetary policy in the United States?

  1. Federal Reserve System
  2. Secretary of the Treasury
  3. Senate Budget Committee
  4. Federal Trade Commission
/share/clg/xml/public_release/government/2001_414_gov55.xml

Correct Answer:
A

Selected Response Item - Released in 2004

Which of these persons would the United States government count as unemployed?

  1. a photographer who is her own boss
  2. a waiter who earns most of his money from tips
  3. a person who is retired
  4. an accountant who quits her job to look for other work
/share/clg/xml/public_release/government/2004_414_gov08.xml

Correct Answer:
D

Selected Response Item - Released in 2004

With which of these government actions is the Consumer Price Index (CPI) most associated?

  1. imposing economic sanctions
  2. reducing unemployment
  3. measuring the rate of inflation
  4. offering federal business loans
/share/clg/xml/public_release/government/2004_414_gov29.xml

Correct Answer:
C

Selected Response Item - Released in 2005

Which of these actions by the federal government would most likely reduce inflation?

  1. increasing both spending and the money supply
  2. decreasing both spending and the money supply
  3. increasing loans to consumers
  4. decreasing the interest rate
/share/clg/xml/public_release/government/2005_414_gov04.xml

Correct Answer:
B

Selected Response Item - Released in 2005

Study the graph below.

The information in the graph is mostly about

  1. the economic growth of the country
  2. the tax revenues of the country
  3. the prices of consumer goods
  4. the tariffs placed on imports
/share/clg/xml/public_release/government/2005_414_gov32.xml

Correct Answer:
A

Selected Response Item - Released in 2005

Which of these is most closely associated with an economic recession?

  1. an increase in stock prices
  2. a decrease in demand for labor
  3. a decrease in the minimum wage
  4. an increase in consumer spending
/share/clg/xml/public_release/government/2005_414_gov56.xml

Correct Answer:
B

Selected Response Item - Released in 2003

Which of these best reflects how the federal government manages the economy through fiscal policy?

  1. taxing and spending
  2. buying and selling securities
  3. controlling the money supply
  4. controlling interest rates
/share/clg/xml/public_release/government/2003_414_gov29.xml

Correct Answer:
A

Selected Response Item - Released in 2003

Which of these is represented by the Gross Domestic Product (GDP)?

  1. the amount of reserve that banks are required to hold
  2. the rate of interest charged on reserves lent to banks
  3. the total value of goods and services produced within a nation
  4. the change in the average price of consumer goods and services
/share/clg/xml/public_release/government/2003_414_gov35.xml

Correct Answer:
C

Selected Response Item - Released in 2003

Which of these consumer activities is most influenced by the Federal Reserve?

  1. getting a home mortgage
  2. purchasing a discount airplane ticket
  3. using a prescription drug
  4. reading nutritional labels on foods
/share/clg/xml/public_release/government/2003_414_gov53.xml

Correct Answer:
A

Selected Response Item - Released in 2006

Which of these is an economic goal of United States government policy?

  1. to limit competition
  2. to create a classless society
  3. to promote full employment
  4. to own the means of production
/share/clg/xml/public_release/government/2006_414_gov07.xml

Correct Answer:
C

Selected Response Item - Released in 2006

Which of these economic indicators would be most useful for determining the rate of inflation?

  1. the prime interest rate
  2. the unemployment rate
  3. Consumer Price Index (CPI)
  4. Gross Domestic Product (GDP)
/share/clg/xml/public_release/government/2006_414_gov24.xml

Correct Answer:
C

Selected Response Item - Released in 2006

Read the headline below.

Which of these best explains the reason for the Federal Reserve's action?

  1. to encourage consumers to stop spending money
  2. to make it easier for businesses to borrow money to expand
  3. to give businesses incentives to decrease their production of goods and services
  4. to provide more funds for the federal government to use for entitlement programs
/share/clg/xml/public_release/government/2006_414_gov50.xml

Correct Answer:
B

Selected Response Item - Released in 2007

Which of these is an example of government fiscal policy?

  1. creating budgets
  2. adjusting the discount rate
  3. conducting open-market operations
  4. changing the reserve requirement
/share/clg/xml/public_release/government/2007_414_gov25.xml

Correct Answer:
A

Selected Response Item - Released in 2007

Which of these is a responsibility of the Federal Reserve System?

  1. collecting taxes
  2. lending money to individuals
  3. controlling the money supply
  4. approving government budgets
/share/clg/xml/public_release/government/2007_414_gov49.xml

Correct Answer:
C

Selected Response Item - Released in 2007

Which of these is a characteristic of an economic downturn?

  1. increased employment levels
  2. increased consumer spending
  3. decreased government regulation
  4. decreased production of goods and services
/share/clg/xml/public_release/government/2007_414_gov50.xml

Correct Answer:
D

Selected Response Item - Released in 2008

Study the chart below.

INSTRUMENTS OF THE FEDERAL RESERVE SYSTEM
Instrument Function
Interest Rate Interest rate charged to banks by other banks or the Federal Reserve
Reserve Requirements Requirements on the amount of funds banks must hold in reserve against deposits
Open Market Operations The buying and selling of United States government securities in the open market

Based on the chart, which of these would be a result of open market operations by the Federal Reserve System?

  1. interest rates on loans decrease
  2. new types of currency are created
  3. the operating hours of banks change
  4. the size of the money supply changes
/share/clg/xml/public_release/government/2008_414_gov09.xml

Correct Answer:
D

Selected Response Item - Released in 2008

Study the political cartoon below.

Question Image

What rates are being cut as shown in the political cartoon?

  1. tariff
  2. interest
  3. personal income tax
  4. corporate income tax
/share/clg/xml/public_release/government/2008_414_gov46.xml

Correct Answer:
B

Selected Response Item - Released in 2008

Study the graph below.

Question Image

Which of these best characterizes the condition of the United States’economy between 1975 and 1978?

  1. a rapidly rising unemployment rate
  2. increased economic growth
  3. a constant inflation rate
  4. steady interest rates
/share/clg/xml/public_release/government/2008_414_gov54.xml

Correct Answer:
B

Selected Response Item - Released in 2009

If government statistics show rising unemployment and a falling Consumer Price Index, which of these actions should the Federal Reserve take to help the economy?

  1. increase government spending
  2. decrease interest rates
  3. increase the reserve requirements for banks
  4. decrease tariffs placed on imported products
/share/clg/xml/public_release/government/2009_414_gov16.xml

Correct Answer:
B

Selected Response Item - Released in 2009

The Consumer Price Index (CPI) reports on price changes for over 90,000 items.

Which of these is most likely the reason the federal government uses the CPI?

  1. to help measure inflation
  2. to determine the unemployment rate
  3. to analyze worker productivity
  4. to measure the national average income
/share/clg/xml/public_release/government/2009_414_gov35.xml

Correct Answer:
A

Selected Response Item - Released in 2009

Which of these is a function of the Federal Reserve?

  1. to set the level of income tax
  2. to establish export laws
  3. to regulate the money supply
  4. to pass spending legislation
/share/clg/xml/public_release/government/2009_414_gov58.xml

Correct Answer:
C

Selected Response Item - Released in 2009

Which of these is a goal of the United States government in stabilizing the economy?

  1. to increase the national debt
  2. to decrease the unemployment rate
  3. to increase the Consumer Price Index (CPI)
  4. to decrease the Gross Domestic Product (GDP)
/share/clg/xml/public_release/government/2009_414_gov66.xml

Correct Answer:
B