Corrected Unit 3 Study Guide

What role does the government play in the economy?

• Regulates markets to prevent monopolies and protect consumers.

• Increases inflation rates to boost spending.

• Reduces taxes for all income groups equally.

• Eliminates all forms of taxation.

How do fiscal and monetary policies influence economic conditions?

• Fiscal policy adjusts taxation and spending to influence economic growth.

• Monetary policy increases taxes to reduce inflation.

• Fiscal policy eliminates government spending.

• Monetary policy decreases interest rates to increase inflation.

How do different types of government regulations impact market activity?

• Protect consumers through safety standards.

• Increase monopolies by reducing competition.

• Remove all labor protections.

• Decrease environmental regulations.

How are taxes levied and used at different levels of government?

• Federal taxes fund national programs like defense and Social Security.

• State taxes are used only for education.

• Local taxes are used exclusively for healthcare.

• Federal taxes are used only for infrastructure.

What does fiscal policy involve?

• Management of money supply and interest rates

• Government actions involving taxation and spending

• Regulations to prevent monopolies

• A measure of price changes for consumer goods

What is the role of the Federal Reserve System?

• To manage government spending

• To regulate monetary policy

• To enforce safety standards

• To measure price changes

What does inflation refer to?

• A decrease in prices over time

• An increase in prices over time

• A measure of economic growth

• A type of tax system

What is the Consumer Price Index (CPI)?

• A measure of economic growth

• A measure of price changes for consumer goods and services

• A type of tax system

• A central bank policy

What does GDP stand for?

• Gross Domestic Product

• General Domestic Policy

• Government Development Plan

• Global Development Program

What is a corporation?

• A business owned by an individual

• A business owned by shareholders with legal rights separate from its owners

• A type of tax system

• A measure of price changes