Federal Reserve Banks directly affect the national economy by

 administering consumer protection laws increasing and decreasing the money supply providing oversight and services for financial institutions raising and lowering interest rates

Which of the following circumstances usually comes before a period of economic contraction?

 Decreasing inflation High unemployment Low GDP Peak production

Question 2 (Multiple Choice Worth 5 points)

[04.05 HC]

Which are more popular with citizens, contractionary or expansionary government actions, and why?

 Contractionary, because they decrease the amount of money held by the government and put more in the hands of its citizens Contractionary, because they decrease the amount of money held by the people and put more in the hands of the government Expansionary, because they increase the amount of money held by the government and put less in the hands of its citizens Expansionary, because they increase the amount of money held by the people and put less in the hands of the government

Question 3 (Multiple Choice Worth 5 points)

[04.04 MC]

Lowering the discount rate can promote full employment because

 employees are more likely to apply for multiple jobs employees are able to get better offers for hourly wages companies are more likely to expand and hire more workers companies are less likely to sign up employees for unemployment insurance

Question 4 (Multiple Choice Worth 5 points)

[04.01 MC]

Inflation is low but the unemployment rate is the highest seen in several years. Economists report signs that show in six months the economy is likely to improve. The economy is likely in

 contraction expansion a peak a trough

Question 5 (Multiple Choice Worth 5 points)

[04.02 MC]

Why do governments regulate natural monopolies?

 To allow only certain consumers to have access to goods and services To have access to the resources when national security is at risk To prevent prices from rising too high and to increase efficiency To prevent single suppliers from continuing to dominate a market

Question 6 (Multiple Choice Worth 5 points)

[04.05 MC]

How does the U.S. government slow economic growth?

 By decreasing taxes and decreasing spending By decreasing taxes and increasing spending By increasing taxes and decreasing spending By increasing taxes and increasing spending

Question 7 (Multiple Choice Worth 5 points)

[04.02 LC]

Some products are produced most efficiently when there is a single supplier. What is this called?

 Natural monopoly Natural resources Price controls Wage controls

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