Econ Unit 2

Economic growth would most likely result from —

• decreased trade

• increased productivity

• increased employment

• decreased sales of stock

How does the introduction of new manufacturing technologies generally affect economic growth?

• It creates growth by creating safer work environments.

• It creates growth by increasing the productivity of labor.

• It restricts growth because workers have to learn the new technology.

• It restricts growth because of the additional expense of the new technology.

Which of the following best completes the graphic?

• Stock Exchange

• Federal Reserve System

• Treasury Department

• Washington, D.C.

Which phrase BEST completes this list? Duties of the Federal Reserve System: - Provides financial services to the government - Regulates interest rates - ___________?

• Oversees national banking institutions

• Manages foreign exchange rates

• Collects taxes from corporations

• Negotiates international trade agreements

The federal government uses monetary policy to

• determine tax rates on income.

• guarantee access to consumer credit.

• adjust interest rates based on currency supply.

• expand free trade to international markets.

If policy makers are concerned about inflation, which fiscal and monetary policies would be MOST effective?

• lowering taxes and buying bonds

• lowering taxes and raising the reserve requirement

• increasing taxes and lowering the discount rate

• increasing taxes and selling bonds

How would the Federal Reserve MOST likely respond when faced with low consumer confidence?

• by raising reserve requirements to increase the money supply

• by purchasing bonds to increase the money supply

• by raising the discount rate to decrease the money supply

• by lowering the federal funds rate to decrease the money supply

During an economic recession the Federal Reserve Banks will most likely react by —

• easing monetary policy making it easier to lend money

• raising the discount rate to affect the monetary supply

• tightening monetary policy making lending more difficult

• reducing open market transactions to reduce the money supply

Which scenario is most likely to result when the Federal Reserve raises the reserve requirement?

• More money is required to be kept in banks to loan out to businesses, so they can invest in their companies.

• More money is required to be kept in bank reserves, and less is available to be loaned out to businesses to invest in the economy.

• More money is required to be kept in the Federal Reserve banks to make it available for loans to member banks in poor economic times.

• More money is required to be kept in the Federal Reserve banks, which increases the amount of money in circulation and stimulates the economy.

Which statement describes a role of government in a free enterprise system?

• determining which goods should be produced

• encouraging citizens to become entrepreneurs

• deciding which businesses are needed

• controlling career paths for citizens