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Unit #8: Government and the Economy 1. All are ways the government promotes marketplace competition EXCEPT A. B. C. D. encouraging businesses to start up. passing and enforcing anti-trust laws. participating in global trade. limiting loans to small businesses. 2. Why does the United States government enforce anti-trust laws? A. B. C. D. To prevent monopolies To stop competition To increase taxes To provide additional public goods and services 3. A radio DJ on Z104.3 FM used inappropriate language. Which government agency will most likely levy a fine and/or penalty against the radio station? A. B. C. D. Federal Trade Commission Federal Communications Commission Consumer Protection Safety Commission Federal Deposit Insurance Corporation 4. Which of the following agencies prevents air and water pollution? A. B. C. D. the EPA (Environmental Protection Agency) the FTC (Federal Trade Commission) the FCC (Federal Communications Commission) the NRA (National Rifle Association) 5. Which government agency would issue a consumer alert if a product currently being sold was unsafe? A. B. C. D. Environmental Protection Agency Federal Communications Commission Federal Reserve System Federal Trade Commission **BREAKING NEWS** President Eisenhower Signs Interstate Highway Bill 6. The headline above best describes A. B. C. D. a private service. an individual initiative. a state program. a public good. 7. Governments produce goods and services because – A. B. C. D. individuals acting alone could not produce them efficiently. U.S. businesses refuse to produce them. individual businesses are forbidden by law from delivering public commodities. the Constitution of the United States requires it. 8. When the United States post office delivers the mail they are providing- A. B. C. D. a private good an individual initiative a state program a public service 9. Public goods and services are those things the government provides for us because – A. A. B. C. D. they benefit many people and businesses. we are able to provide them for ourselves. there is a government budget surplus. monetary policy is not working to promote economic growth. 10. National defense, public schools, and public libraries are all examples of – A. B. C. D. goods and services provided by the government private businesses that serve our communities goods and services we pay for on an as needed basis private businesses that are owned by individuals 11. The government collects taxes to – A. B. C. D. encourage investments. provide public goods and services. jump start a sluggish economy. provide politicians' salaries. Ways the Government Pays for Public Goods and Services -Tax revenue -Borrowed funds -??? 12. What replaces the question mark above? A. B. C. D. Trade Donations Fees Bartering 13. Why does the government get involved in taxing, spending, and borrowing? A. B. C. D. In order to provide jobs for its citizens. In order to influence the economy. To ensure all citizens pay the same amount of taxes. In order to provide jobs. 14. What is one likely way that the government can support additional spending on public programs? A. B. C. D. lower taxes raise taxes lower interest rates raise interest rates 15. If the government reduces the taxes on it’s citizens, what effect will it have on business and private spending? A. B. C. D. Funds available for growth will decrease More funds will be available for private and business spending. The economy will experience a slow down Businesses will have more difficulty starting up 16. If the government raises taxes, what effect will this have on business and private spending? A. B. C. D. Funds available for growth will increase Less money will be available for private and business spending The economy will be stimulated It will be easier to start a small business 17. Which of these is true when the United States government borrows money? A. B. C. D. A special tax on investments will be used to repay the money borrowed. The government will not be allowed to borrow again for five years. There will be less money available for businesses and individuals to borrow. The Federal Reserve takes control of the bank the money was borrowed from. 18. Increased government spending increases demand which may – A. B. C. D. decrease taxes. increase employment reduce production. raise interest. • • • Decrease in Demand Decrease in Employment Decrease in Production 19. What government action will most likely CAUSE the reaction shown in the box? A. less spending B. lower taxes C. less borrowing D. higher revenues 20. The amendment that authorizes personal and business income tax is the – A. B. C. D. 14th Amendment. 16th Amendment. 17th Amendment. 26th Amendment. 21. The right of private property is protected by – A. B. C. D. the First Amendment. the Federal Reserve System. government securities. negotiated contracts. 22. The Constitution guarantees individuals the right of private ownership. This right is protected by negotiated contracts which are enforceable by— A. B. C. D. public consent the law private handshakes consumer sovereignty 23. To protect consumers, federal agencies – A. B. C. D. write contracts for consumers. establish guidelines for public health and safety. ask the Supreme Court to research businesses. approve all consumer contracts before they take effect. 24. Kimberly buys a car and the dealership tells her it is brand new, but she later finds out the dealership misled her by altering the mileage reading on the car. What can Kimberly do to try and solve this problem? A. B. C. D. Send them more money. Take legal action. Threaten the company’s customer service personnel. There is nothing you can do about it. 25. If a consumer is harmed by a product, what is the consumer allowed to do as a result of laws created by the government? A. B. C. D. The consumer does not have any rights Have the government immediately shut down the company that made the product Take legal action against the company Arrest the store owner through the Citizen's Arrest Act of 1881 26. It is often called the “Banker’s Bank”, but what is the name for the central bank of the United States? A. B. C. D. The Federal Deposit Insurance Corporation The Federal Reserve System The Stock Market The Supreme Court 27. The Federal Reserve System does all of the following EXCEPT A. B. C. D. control interest rates. regulate the nation‘s money supply to keep inflation low and stable. regulate banks to ensure the soundness of the banking system and the safety of deposits. raise and collect taxes. 28. If the Federal Reserve lowers the discount rate what should happen? A. B. C. D. The economy should grow. The economy should slow down. The economy will not be affected. They cannot change the reserve rate. 29. If the Federal Reserve lowers the reserve requirement (rate) what should happen? A. B. C. D. The economy should grow. The economy should slow down. The economy will not be affected. They cannot change the reserve requirement. 30. The Federal Reserve can do all of the following to slow down the economy and keep inflation low EXCEPT – A. B. C. D. sell government securities. lower taxes. raise the discount rate. raise the reserve requirement. 31. This picture illustrates that one reason the government issues money is to – A. B. C. D. make it easier to exchange for goods and services. increase the value of currency. control inflation. encourage global trade. 32. People accept coins and currency issued by the United States government in exchange for goods and services because they – A. B. C. D. can no longer barter. refuse to use personal checks. have confidence in the government. have no other type of money. • Checks and Debit Cards • Coins • Federal Reserve notes 33. What is the best title for the list of items above? A. B. C. D. Money Public goods Securities Stocks and bonds