Econ Quiz 2

Question 1

What are the 3 ways the government protects your rights and private property rights?

Answer 1

• laws protect the people’s right to own things
• gov makes rules to make sure goods and services are safe to use
• people can go to court (sue) if someone takes their ideas

Question 2

What are the 3 ways the government promotes marketplace competition?

Answer 2

• government breaks up monopolies
• competing against businesses all around the world
• help people start new businesses

Question 3

What is the FTC and what do they do?

Answer 3

Federal Trade Commission - Enforcing antitrust legislation to discourage monopolies (most businesses)

Question 4

What is the FCC and what do they do?

Answer 4

Federal Communications Commission

- Enforcing antitrust legislation discourage media monopolies

Question 5

What is the EPA and what do they do?

Answer 5

Environmental Protection Agency

- Establish guidelines that protect the environment

Question 6

How does government taxing affect money available for individuals and businesses?

Answer 6

Gov taxes more, people have less money

Gov taxes less, people have more money

Question 7

How does government borrowing affect money available for individuals and businesses?

Answer 7

Gov borrows more, people have less to borrow

Gov borrows less, people have more to borrow

Question 8

How does money available for individuals and businesses affect the circular flow and the economy?

Answer 8

When there’s more money, it speeds up economy

when there’s less money. it slows down economy

Question 9

How does government spending affect employment and production?

Answer 9

Gov spends more, demand increases, employment production may increase
Gov spends less, demand decreases, employment production may decrease

Question 10

How can government spending affect the circular flow and the economy?

Answer 10

Gov spends more, speed up economy

gov spends less, slow down economy

Question 11

How should government spending affect taxes?

Answer 11

If gov spends more, it should raise taxes

If gov spends less, it should lower taxes

Question 12

What is the Federal Reserve?

Answer 12

US CENTRAL BANK

da bank’s bank; da gov’s bank

Question 13

What are the 3 main jobs of the Federal Reserve?

Answer 13

• maintain value of national currency ($)
• regulate banks to make all $ is safe
• manage $ in economy to control inflation

Question 14

How many reserve banks are there?

Answer 14

12

Question 15

What’s FOMC?

Answer 15

Federal Open Market Committee - A group that helps manage $ for Federal Reserve

Question 16

Who is always a member of the 12 person FOMC?

Answer 16

NY Fed President

Question 17

What is the IRS and what do they do?

Answer 17

Internal Revenue Service

collects taxes, enforces tax law

Question 18

Who establishes tax codes and laws?

Answer 18

CONGRESS

Question 19

Which Amendment allows for the taxation of incomes?

Answer 19

16th

Question 20

What is specialization and why do countries and states specialize?

Answer 20

Specialization - producing certain goods/services better and cheaper than others
Why - promotes efficiency and growth

Question 21

How does technology impact the global economy?

Answer 21

Increases flow of info, capital ($), goods and services

lowers cost of production

Question 22

List and define the three types of private financial institutions.

Answer 22

• Banks - for profit financial institution that provides financial services to its customers
• Savings&Loans - Financial institution that primarily provides home loans (mortgages) and savings accounts to its customers.
• Credit Unions - nonprofit financial institution that provides financial services at low rates to its members who are only eligible because of their organization

Question 23

What are the 3 characteristics of private financial institutions?

Answer 23

• Receive deposits, make loans
• encourage savings and investing by paying interest on deposits
• deposits are borrowed for business expansion and increase consumption

Question 24

What are 3 examples of money?

Answer 24

• Coins
• Federal reserve notes
• Deposits in banks that can be accessed by checks and debit cards

Question 25

Where does money come from and why?

Answer 25

Gov so to manage exchange of goods and services

Question 26

Why do people use / trust money?

Answer 26

confidence in gov

Question 27

What’s inflation?

Answer 27

When the cost of goods goes up (often uncontrollably)

Question 28

What are the four reasons nations engage in global trade?

Answer 28

• To get goods & services they cannot produce
• To buy goods at lower prices
• To export their own goods & services
• To create jobs