Economic regulations help fulfill Adam Smith’s idea of a laissez faire economy. true false One of the main reasons for increasing economic regulations in the United States is the increasing population. true false Increasing the discount rate in order to decrease the money supply is an example of fiscal policy. true false In a recession, fiscal policy calls for the government to decrease taxes and increase spending. true false Monetary policy alone is the most effective economic policy. true false When the Federal Reserve sells government securities, it results in a decrease in the money supply. true false Which of the following is a function of our current banking system? lending money acting as a medium of exchange regulating the money supply determining the value of money The purpose of economic regulations in the United States is to undermine the free-market economy limit the individual freedoms of all Americans promote economic growth, stability, and equity control population growth and birth rates The Department of Defense is an important part of the economy because it provides consumers and businesses with protection and a sense of security when making economic decisions it protects human health and the environment so consumers and businesses will be safe it develops military strategies during times of war it provides banking insurance so depositors’ money is protected when it is placed in bank accounts The Environmental Protection Agency (EPA) impacts the economy by developing and enforcing regulations that protect human health and the environment providing consumers and businesses with protection and a sense of security when making economic decisions providing banking insurance so depositors’ money is protected when it is placed in bank accounts creating and enforcing truth-in-advertising laws to protect consumers Crazy Eight is very excited because he is opening a new business. He purchased a building, equipment, a license, and computers, and he remodeled his building. He also was able to acquire a patent for his new idea. He invested all his savings in the new business and he is hoping his new business will take off. Crazy Eight was able to open this new business because he is leasing the building from the government under an agreement he will manufacture what the government orders the government guarantees he is able to own property and ideas he is a good businessman and will succeed he is able to bypass all the government regulations in order to open an illegal business John Furry purchased a vacation package from a telephone solicitor. The person asked John for a two-hundred-dollar deposit via credit card in order to reserve his package. John gave the solicitor his credit card number, but he never received the vacation. The agency responsible for investigating this fraud is the Environmental Protection Agency the Consumer Product Safety Commission the Food and Dr.

1. Economic regulations help fulfill Adam Smith’s idea of a
laissez faire economy.
true
false
One of the main reasons for increasing economic regulations in
the United States is the increasing population.
true
false
Increasing the discount rate in order to decrease the money
supply is an example of fiscal policy.
true
false
In a recession, fiscal policy calls for the government to decrease
taxes and increase spending.
true
false

2. Monetary policy alone is the most effective economic policy.
true
false
When the Federal Reserve sells government securities, it results
in a decrease in the money supply.
true
false
Which of the following is a function of our current banking
system?
lending money
acting as a medium of exchange
regulating the money supply
determining the value of money
The purpose of economic regulations in the United States is to
undermine the free-market economy
limit the individual freedoms of all Americans

3. promote economic growth, stability, and equity
control population growth and birth rates
The Department of Defense is an important part of the economy
because
it provides consumers and businesses with protection and a
sense of security when making economic decisions
it protects human health and the environment so consumers and
businesses will be safe
it develops military strategies during times of war
it provides banking insurance so depositors’ money is protected
when it is placed in bank accounts
The Environmental Protection Agency (EPA) impacts the
economy by
developing and enforcing regulations that protect human health
and the environment
providing consumers and businesses with protection and a sense
of security when making economic decisions
providing banking insurance so depositors’ money is protected
when it is placed in bank accounts
creating and enforcing truth-in-advertising laws to protect

4. consumers
Crazy Eight is very excited because he is opening a new
business. He purchased a building, equipment, a license, and
computers, and he remodeled his building. He also was able to
acquire a patent for his new idea. He invested all his savings in
the new business and he is hoping his new business will take
off. Crazy Eight was able to open this new business because
he is leasing the building from the government under an
agreement he will manufacture what the government orders
the government guarantees he is able to own property and ideas
he is a good businessman and will succeed
he is able to bypass all the government regulations in order to
open an illegal business
John Furry purchased a vacation package from a telephone
solicitor. The person asked John for a two-hundred-dollar
deposit via credit card in order to reserve his package. John
gave the solicitor his credit card number, but he never received
the vacation. The agency responsible for investigating this fraud
is
the Environmental Protection Agency
the Consumer Product Safety Commission
the Food and Drug Administration

5. the Federal Trade Commission
In the United States, income tax is an example of a
tax, while sales tax is an example of a tax.
progressive; regressive
regressive; progressive
proportional; regressive
progressive; proportional
What economic concept do the Fourth and Fifth Amendments to
the Constitution identify?
private ownership of property
competition among businesses
regulation of monopolies
the organization of the Federal Reserve
John Maynard Keynes believed that all economic problems are
caused by
unemployment
inflation

6. decreases in business sector spending
the GDP
In order to control inflation, governments might
sell government securities
increase taxes
decrease government spending
all of the above
George Sparks has just been laid off. He had an excellent job as
a computer programmer, but due to company cutbacks he lost
his job. While looking for another job, he is able to collect
unemployment insurance. This is an example of
discretionary fiscal policy
monetary policy
an automatic stabilizer
taxation
The time period between when an economic policy is decided
and when it actually takes effect is called a(n)

7. lag
automatic stabilizer
waiting period
certification break
What is the purpose of the Federal Reserve?
to regulate the money supply in order to create a stable
economy
to control all business exchanges within the United States
to insure all money deposited within banks
to accept deposits and lend money to customers
The main duties of the Fed are to conduct monetary policy,
provide banking services to financial institutions, and
regulate the banking industry
conduct fiscal policy
raise and lower taxes
enforce all economic regulations passed by the government

8. When the Federal Reserve decides it is necessary to expand the
money supply, it might
increase the discount rate
decrease the reserve requirement
sell government securities
lower taxes
Hypothetical situation: The economy has been declining for six
months. The unemployment rate has increased by 2 percent in
the past six months, and many Americans are looking for work.
Production has decreased and many businesses are simply not
investing or hiring new workers. Consumers are saving (not
spending) their money because they are worried about current
events. What should the Federal Reserve Board do?
They should do nothing; the economic decreases are due to
regular business cycles and the economy will bounce back.
They should raise the reserve rate and sell government
securities in order to expand the money supply.
They should lower the discount rate and buy government
securities in order to expand the money supply.
They should lower taxes and increase government spending in
order to increase overall demand.

9. I completed the Government Regulatory Agencies Research
Activity at the end of objective 1.
true
false
I completed the Economic Advice to the President activity at
the end of objective 3.
true
false