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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 Drug Administration 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 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) 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 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. 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