Government Influence in the Economy - Unit 12

Multiple Select

Which of the following are examples of the government correcting market failures? Select all that apply (2 correct answers).

• setting rules limiting how much a factory pollutes

• making a loan to a struggling business

• outlawing the use of a toxic material in toys

• selling federal land to an oil company

Multiple Select

Why does the government prevent monopolies? Select all that apply (2 correct answers).

• to protect large businesses from failing

• to support market competition

• to prevent unreasonably high prices

• to increase corporate tax revenue

Match

Match the situation to the type of government action.

• A 2007 law sets requirements for how energy-efficient light bulbs must be.

• A 1974 lawsuit forced a company that provided most of the country's telephone service to split into multiple companies.

• Federal and state funding, much of which comes from income taxes, pays for Medicaid.

correcting market failures

preventing monopolies

redistributing wealth

• correcting market failures

• preventing monopolies

• redistributing wealth

Open Ended

Explain how the Federal Reserve uses monetary policy tools to either stimulate or cool down the economy. Provide specific examples of expansionary and contractionary approaches.