Economics Unit 2 Answers PHS
(Q1) Which answer is NOT a component of the free enterprise system?
the right to make consumers pay
(L4) When the Spanish and Portuguese discovered gold and silver in the Americas in the 1500s, ___.
the world's supply of gold and silver devalued because there was so much of it
(PT) A savings and loan association is an example of a(n) _____ institution.
thrift
(Q2) A(n) ________ deposit pays higher interest but restricts when funds may be withdrawn.
time
(L6) A(n) ___ is a savings instrument that pays higher interest but restricts when funds may be withdrawn.
time deposit
(Q2) Which of the following would NOT be an example of money?
your first credit card
(PT) All of the following are examples of money EXCEPT ___.
your first debit card
(L6) Select THREE facts about time deposits.
• Depositors benefit by receiving higher interest rates. • Banks benefit by knowing the money will not be withdrawn before a certain date. • Another name for a time deposit is a certificate of deposit (CD).
(L3) Select TWO facts about the Clayton Antitrust Act.
• It broke up some harmful monopolies while leaving others alone. • The Federal Trade Commission (FTC) was created by the Act.
(L3) Select THREE facts about the Sherman Antitrust Act.
• It established that the government had a duty and right to regulate the economy. • It was signed into law by President Harrison in 1890 • It only applied to interstate laws and was weak and easily avoidable.
(L6) Select THREE facts about the International Monetary Fund (IMF).
• It has 188 countries as members. • The fund seeks to secure international financial stability. • It seeks to promote growth and reduce poverty.
(L7) Select FOUR facts about the Federal Reserve.
• It moderates the ups and downs of the business cycle. • It is the central bank of the United States. • It is a private organization that works within the government. • Congress can review Fed activities and create laws to change its responsibilities.
(L1) Select THREE facts about the free enterprise system.
• People have the right to own their own businesses and to control the factors of their production. • It is another word for the capitalist system. • It must allow for competition and private property rights.
(L3) Select TWO ways that technology increases the likelihood of profit and economic growth.
• Technology spurs economic growth by helping workers find new, more efficient ways to produce. • Technology increases the productivity of workers. The more a worker can produce, the more profit can potentially be earned as a result.
(L5) Select TWO things that are considered money in the United States.
• the coins you used to buy a soda • a five-dollar bill in your pocket
(PT) Which term describes a function of money?
(all of these) unit of account none of these store of value medium of exchange
(Q2) Which of the following is a function that money serves?
(all of these) • medium of exchange • unit of account • none of these • store of value
(L7) President ___ was responsible for the dismantling of the first national bank of the United States.
Andrew Jackson
(L7) At the top of the Federal Reserve System is a seven-member panel known as the ___.
Board of Governors
(L5) Why are checks not money?
Checks only authorize banks to transfer money.
(L8) Choose T if the description is a function of the Fed or F if it is not a function of the Fed. Not a function Function Function Function Not a function Function Not a function Function
Choose T if the description is a function of the Fed or F if it is not a function of the Fed. prepares an annual budget that is presented to Congress lends money to banks and thrift institutions supervises banks and thrift institutions controls the money supply and issues currency negotiates financial treaties with other countries acts as the agent of the United States' economic policy establishes tax rates sets reserve requirements for banks
(L7) The part of the Fed that makes the economic policies that run the economy is the ___.
Federal Open Market Committee
(L2) The constitutional protection of private property is found within the _______ Amendment.
Fifth
(Q1) In which amendment can one find the "Takings Clause"?
Fifth Amendment
(L3) Which answer is an example of competitors colluding to artificially set prices?
Food vendors at a state fair agree to set similar prices.
(L1) In 2013, a controversy developed in Irwindale, California, between owners of a hot sauce factory and neighboring residents. The problem centered on strong smells that spread from the factory due to the processing of peppers to create the hot sauce. Residents reported a burning sensation in their throats and eyes caused by the pepper odors. The owner of the factory defended himself by pointing to the fact that his factory provided many jobs and much revenue for the city. What should the government consider before creating a regulation to resolve this situation?
Government regulation, if warranted, should have a specific and clear purpose.
(L9) Which actions did the Fed take during the 2008 "Great Recession"?
It reduced the reserve requirements and lowered the discount rate to stimulate economic growth.
(PT) Which of these describes the major importance of the Sherman Antitrust Act of 1890?
It was the first move of the government to regulate the economy.
(L2) The power of the government to take private property was extended in 2005 with the ___ Supreme Court case.
Kelo v. New London
(L6) What is a criticism of the World Bank?
Many developing nations have been unable to repay loans.
(L3) Match the companies with the types of monopolies. ownership monopoly cartel legal monopoly natural monopoly
Match the companies with the types of monopolies. American Telephone and Telegraph (AT&T) OPEC U.S. Post Office Solomon's Mines, home of the world's only purple diamonds
(Q2) In which part of the world can one find the first evidence of banking-like institutions?
Mesopotamia
(L7) The most important of the Federal Reserve districts is the Federal Reserve Bank of ___.
New York
(Q3) The Federal Reserve bank responsible for beginning all Fed policy is based out of ___.
New York
(L9) By which time must Congress and the President pass a federal budget for the next fiscal year?
October 1st
(Q3) Congress and the President are responsible for passing a federal budget before ___ of each year.
October 1st
(Q1) _____ competition in a free enterprise system creates the best environment for consumers' freedom and security.
Perfect
(L3) ___ allows the greatest freedom and security for consumers.
Perfect competition
(L2) _________ is the right of Americans (or anyone) to own property and to sell it for profit.
Private property
(L7) The ___ movement resurrected the call for a new national bank.
Progressive
(Q3) The _____ movement was instrumental in the creation of the Federal Reserve System.
Progressive
(Q3) Which President was responsible for eliminating all connection between the dollar and gold?
Richard M. Nixon
(L9) President ___ took the United States off of the gold standard in 1971.
Richard Nixon
(PT) Which President eliminated any connection between the dollar and gold?
Richard Nixon
(Q2) Who was the major obstacle to the spread of banking in Europe during the 1500s?
Roman Catholic Church
(L5) ___ is the ability of money to hold its value while not being spent.
Store of value
(L2) The _______ Clause allows the government to confiscate private property if it provides "just compensation."
Takings
(PT) The ______ Clause involving eminent domain is seen within the Fifth Amendment.
Takings
(L3) Why is the pursuit of profit legitimate?
The pursuit of profit is legitimate because everyone has a right to earn a living, and entrepreneurs and companies take on risk when they provide goods and services.
(L9) Which of these was the result of the Fed lowering the reserve requirement during the 1950s?
The result was an economic boom.
(Q2) Paper money and coins are ________.
currency
(L7) The Federal Reserve System was created as part of the agenda of President ___.
Woodrow Wilson
(Q3) Who was responsible for the creation of the Federal Reserve System?
Woodrow Wilson
(L2) What was the result of the lack of property rights in the Soviet Union?
Workers and businesses were not very productive.
(L6) The Bank for Reconstruction and Development is simply known as the ___.
World Bank
(L2) In the "Economics in the News" article, the Idaho Court of Appeals said that the city of Emmitt had overstepped its bounds by confiscating property without attempting to gain ___.
a binding agreement
(PT) What is a startup?
a new business created by an entrepreneur
(Q1) What is a startup?
a new business created by an entrepreneur
(L7) In 2008, about how many banks participated in the Federal Reserve System?
about 3,040
(Q2) An agreed-upon scale of worth for goods is a unit of ______.
account
(L1) What is the main factor that limits an American's ability to own a successful business?
age
(Q1) What is the major obstacle for Americans to own their own businesses?
age
(L5) Which of these describes the function a debit or credit card serves when it is used to purchase something?
an identification card to approve transfers
(Q2) Which role do credit and debit cards play when they are used to make a purchase?
an identification card to approve transfers
(L2) Without private property rights, people ___.
do not have an incentive to invest or work
(Q2) An electronic version of paper money that is becoming more popular is called ____________.
e-cash
(Q1) A free market economy allows citizens to control the _______ of production.
factors
(Q3) Which government move would be an example of automatic fiscal policy?
an increase in welfare spending because more people qualify for benefits
(Q3) A(n) _____ budget exists when government revenues and expenses are the same.
balanced
(PT) Within a market economy, _____ ensures that consumers have access to reasonable prices and a variety of choices.
competition
(Q1) When there is a lack of ______, businesses are more likely to take advantage of consumers.
competition
(Q1) The key to the market economy is that basic economic decisions are ultimately made by ___.
consumers
(Q2) The money that is established by law to be money is called ___.
fiat money
(Q1) A(n) _______ occurs when there are few competitors and high barriers to entry within an industry.
oligopoly
(Q3) The Fed's move to put more money into circulation in response to the 1969 recession led to ______ during the 1970s and 1980s.
inflation
(Q1) The Clayton Antitrust Act differed from the 1890 law in that ___.
it ended harmful monopolies and created the Federal Trade Commission
(Q1) The importance of the Sherman Antitrust Act of 1890 is that ___.
it established that the government has a right to regulate the economy
(Q3) President Andrew Jackson wanted to get rid of the Bank of the United States because ___.
it was not answerable to the public and had become too powerful
(L1) The U.S. government has gradually become more involved in the economy since the ___.
late 1800s
(Q1) When did the US government begin its involvement in the economy?
late 1800s
(PT) The National Football League enjoys a ___.
legal monopoly
(Q1) The National Football League enjoys a ___.
legal monopoly
(Q1) The importance of the right to private property is the ability to ___.
make profit in the sale or operation of private property
(PT) In a(n) _____ or free enterprise economy, consumers make the economic decisions.
market
(L7) The control and regulation of the amount of money in circulation, a key responsibility of the Fed, is known as ___ policy.
monetary
(Q1) The absence of any competition within a particular market of a good or service is a(n) ___________.
monopoly
(PT) When one company, due to some advantage, can offer a product at a lower price than other companies, it is said that it creates a ____.
natural monopoly
(Q1) When one company can offer a product at a lower price than other companies due to some advantage, it is said that it can create a ___.
natural monopoly
(Q1) The free enterprise system is based primarily upon the right of Americans to ___.
own their own business
(Q3) The Federal Open Market Committee sets economic ______ that runs the economy.
policy
(PT) The right to own ____ property is essential in the ability to sell or make a profit off this property.
private
(Q1) "...nor shall ________ property be taken for public use, without just compensation."
private
(L3) All Americans are allowed to pursue ___ as far as their creativity, talent, and hard work allow.
profit
(Q1) The pursuit of ________ is legitimate because entrepreneurs assume the risk of a business and need to provide for themselves and their families.
profit
(Q1) The Takings Clause allows the government to practice eminent domain, or the taking away of property if the government ___.
provides fair payment for the property
(L2) "...nor shall private property be taken for ___________ use, without just compensation."
public
(Q1) In a market or free enterprise economy, competition ensures ___.
reasonable prices and consumer choice
(L3) Which of these does competition ensure in a free enterprise economy?
reasonable prices and options for different goods and services
(Q3) The power of creating monetary policy is the power to ___.
regulate how much money is in circulation in order to influence the economy
(Q3) During the 2008 financial crisis, the Fed reduced _____ requirements and lowered the discount rate to encourage growth.
reserve
(L1) Americans have the ___ what they buy, without government pressure.
right to choose
(Q3) A(n) ___ is an increase of circulated money that is meant to stimulate economic growth.
stimulus
(Q2) The ability of money to hold its worth is a measure of its _________ of value.
store
(Q3) A budget ______ is the economic condition that exists when the government takes in more taxes than they expend.
surplus
(L7) Who appoints the members of the Board of Governors?
the President of the United States
(PT) Which event led to a more centralized banking system in the new United States?
the Revolutionary War
(Q2) Which event led to a more centralized banking system in the new United States?
the Revolutionary War
(PT) Who was the major obstacle to the spread of banking in Europe during the 1500s?
the Roman Catholic Church
(Q1) A lack of property rights contributed to the economic demise of ___.
the Soviet Union
(Q3) Which of these are the long-term effects of the total elimination of the gold standard?
the economy as a whole fluctuating much more unpredictably
(L5) Who authorizes fiat money?
the government
(L5) Which answer is NOT a function of money?
statement of deposit
(L5) In October 2010, the amount of money held by individuals and companies was $893.4 billion; checkable deposits owned by the same individuals and companies were $345.6 billion; money market funds were $1.9423 trillion; savings deposits were $989.4 billion; finally, time deposits were $243.8 billion. What is the M1 for October 2010?
$1.24 trillion or $1,239 billion
(PT) In October 2010, the amount of money held by individuals and companies was $784.2 billion; checkable deposits owed by individuals and companies were $485.2 billion; money market funds were $1.908 trillion; savings deposits were $253.3 billion; and time deposits were $324.2 billion. What was the M1 amount in October 2010?
$1.27 trillion
(Q2) In October 2010, the amount of money held by individuals and companies was $987.1 billion; checkable deposits owed by individuals and companies were $567.3 billion; money market funds were $1.045 trillion; savings deposits were $562.3 billion; time deposits were $324.2 billion. What was the M1 amount in October 2010?
$1.55 trillion
(L5) In October 2010, the amount of money held by individuals and companies was $893.4 billion; checkable deposits owned by the same individuals and companies were $345.6 billion; money market funds were $1.9423 trillion; savings deposits were $989.4 billion; finally, time deposits were $243.8 billion. What is the M2 for October 2010?
$4.41 trillion or $4,414.5 billion
(L7) In which Federal Reserve district do you live?
(AMV)
(L6) Why is the United States concerned about China's devaluation of the yuan?
(AMV) // My Answer (From Text): The United States has said that large economies with undervalued currencies (like China) could have a devastating impact on smaller or weaker economies, creating inflation and false growth. These factors can not only cause recessions and depressions more quickly, but also make them last longer.
(L1) In 2013, a controversy developed in Irwindale, California, between owners of a hot sauce factory and neighboring residents. The problem centered on strong smells that spread from the factory due to the processing of peppers to create the hot sauce. Residents reported a burning sensation in their throats and eyes caused by the pepper odors. The owner of the factory defended himself by pointing to the fact that his factory provided many jobs and much revenue for the city. Write a solution to or a compromise for the controversy.
(AMV) // My Answer: A solution could be regulating the fumes, relocating the factory, or government regulation.
(L1) What good will you produce, or what service will you provide?
(AMV) // My Answer: I will provide Peer Counseling.
(L1) How will it be produced/provided?
(AMV) // My Answer: It will be provided through online meetings, text messages, emails, letters, or face-to-face communication.
(L1) For whom (your target audience) should it be produced/provided?
(AMV) // My Answer: My target audience is pre-teens and teenagers in the community.
(L7) In the United States, there are ___ Federal Reserve districts, each with its own bank that oversees the banking and financial institutions within its borders.
12
(L7) How many of the Federal Reserve bank presidents serve on the Federal Open Market Committee?
5
(L6) Choose True or False. True False False True False
Choose True or False. Commercial banks accept checkable deposits, savings deposits, and time deposits. Time deposits have a very low interest rate, and you can withdraw the money anytime you want. A savings and loan association is exactly like a commercial bank. A credit union is unique in that it is owned by members of a particular group of people, like teachers or federal employees. Thrift institutions refer to commercial banks like Wells Fargo or Bank of America.
(L1) Choose True or False. True False True True True
Choose True or False. In the United States, anyone can sell anything they want, within certain limits. The government often interferes in the economy on behalf of business owners. The free-market economy allows citizens to decide upon and control the factors of production. A certain amount of government regulation is a part of a true market economy. One factor that leads people to operate their own business is the pursuit of profit.
(L1) ___ is the struggle for supremacy between rivals that provide the same product or service as another company.
Competition
(Q3) Fiscal policy is the responsibility of ___.
Congress and the President
(L6) Why would a credit union appeal to a depositor?
Credit unions are member-owned and return any profit to members.
(L8) When the Fed buys securities, which of the following happens?
Economic growth increases.
(L4) What was the effect on European economies after banking grew more common?
European countries grew in wealth and power and in dominance over lesser developed areas.
(L9) Which of these was the result of the Fed responding to the 1969 recession by putting more money into circulation?
Inflation became a problem throughout the 1970s and 1980s.
(L8) When the Fed sells securities, which of the following happens?
Interest rates increase.
(Q1) What was the significance of the Supreme Court case Kelo v. New London (2005)?
It gave the government more power in practicing eminent domain.
(Q3) Which is NOT true of the Federal Reserve System?
It is responsible for the formulation of fiscal policy.
(Q2) Which of these differentiates a credit union from other financial institutions?
It only serves a certain group of people.
(L4) Match the definitions with the terms. bank deposit representative money money security usury commodity money withdrawal
Match the definitions with the terms. an institution that safeguards, lends, and exchanges money an addition of new capital (money) to an account (includes checkable, savings, and time deposits) backed by a valuable item such as gold anything that is generally accepted by a society as a means of payment a representation that shows ownership of a business or loan; includes stocks and bonds the practice of lending money at extreme interest something such as livestock that has a value apart from its value as money in banking, the removal of capital (money) from a bank
(L9) Match the definitions with the terms. expansionary fiscal policy automatic fiscal policy balanced budget discretionary fiscal policy federal budget fiscal policy budget deficit dollar-gold convertibility stimulus budget surplus contractionary fiscal policy
Match the definitions with the terms. fiscal policy that combines increased government spending and tax cuts to spur economic growth fiscal policy that is created in response to the state of the economy an economic condition in which government expenditures exceed revenue fiscal policy that is created by an act of Congress an annual account of government revenue and expenditures the manner by which Congress and the President use the federal budget to direct the national economy an economic condition in which government expenses are equal to revenue the circulation of dollars that are supported by gold reserves an injection of money into circulation to try and stimulate economic growth an economic condition in which government revenue exceeds expenditures fiscal policy that combines a reduction of government spending with tax hikes to curtail economic growth
(L5) Match the definitions with the terms. currency barter M2 e-cash e-check fiat M1 means of payment money
Match the definitions with the terms. paper money (notes) and coins an exchange of a good or service for another good or service; depends upon a double coincidence of wants M1 plus savings deposits, time deposits, and money market funds, as well as any other type of deposit an electronic version of paper money an electronic version of a paper check money that is recognized and ordered to be such by a government the total amount of money held by individuals and companies, as well as travelers' checks and checkable deposits owned by individuals and companies a way in which to pay off a debt this term refers to anything that is generally accepted by a society as a means of payment
(L4) Match the descriptions with the words. flying money the Federal Deposit artisan bankers Mesopotamian civilizations Great Britain's American colonies Hamilton's creation of a national bank Gramm-Leach-Bliley Act
Match the descriptions with the words. allowed Chinese merchants to keep money in safe places and use it elsewhere guaranteed American depositors' money if their bank closed the first bankers in Europe who held gold in safes and rented space in their safes the place where banking, in its truest sense, first developed lacked a common, central banking system until the Revolutionary War led to the organization of banking in the United States allowed insurance and securities companies to offer banking services
(Q2) Match the historical events with the statements. emergence of artisant bankers intro of the Gramm-Leach-Bliley Act invention of "flying money" creation of the FDIC
Match the historical events with the statements. Space inside safes was rented to others in order to protect gold. Insurance and securities companies were allowed to offer banking services Chinese merchants stored money in one place and used it in another. If a bank closed, American depositors' money was guaranteed.
(L8) Match the statements with the Fed tools. Some answers will be used more than once. discount rate required reserve ratio discount rate open market operations required reserve ratio open market operations
Match the statements with the Fed tools. Some answers will be used more than once. This determines the rate at which the Fed will lend reserves to commercial banks and thrift institutions. This regulates the amount of deposits a bank keeps on hand in the form of money. The Fed lowers this to spur spending or increases this to fight inflation. This is the selling and buying of government securities to manage the economy and money supply. Reducing this increases the amount of money banks have to lend. This affects the amount of money that is in circulation.
(L6) Match the statements with the types of banks. savings and loan association commercial bank savings bank credit union
Match the statements with the types of banks. This member-owned financial institution encourages saving by accepting checkable and savings deposits and making loans. A traditional bank, it is authorized by the Comptroller of the Currency of the U.S. Department of the Treasury, accepts deposits, and makes loans. This financial institution only accepts savings deposits and makes loans to individuals. This member-owned financial institution provides banking services to a particular group of people, such as a steelworkers union.
(L3) Match the terms with the definitions. pursuit of profit competition monopoly oligopoly collusion cartel perfect competition natural monopoly legal monopoly startup
Match the terms with the definitions. a component of a free enterprise system that creates incentive for business owners to provide products and services rivals that deal in similar products or services complete control over a product or market with little or no competition an industry with few competitors and high entry barriers a situation in which competitors work together to artificially set prices an international monopoly creates a large market with many options for the consumers a competitive advantage not legally or purposefully created competitive advantage created or protected by law a new company started by an entrepreneur
(PT) Match the words with the descriptions. credit card e-cash bank credit union the Bank of the United States the Federal Reserve System Board of Governors monetary policy Federal Open Market Committee fiat money
Match the words with the descriptions. serves as identification card for purchases growing in popularity and might be considered money one day must be sanctioned by the U.S. Department of the Treasury serves a particular group only destroyed by Andrew Jackson created by Woodrow Wilson members serve 14-year terms policy that controls money in circulation creates Fed policy money according to law
(L5) ___ is something that is accepted in return for a good or service.
Medium of exchange
(L4) What prevented banking services from emerging sooner in Europe?
The Catholic Church did not approve of charging interest on borrowed money.
(L9) Which statement is a criticism of the Fed's actions to stabilize the economy during the 2008 financial crisis?
The Fed might have moved into a position where there will be little it can do during the next crisis.
(L9) Which of these was the Fed's response in the early stages of the Great Depression?
The Fed took no action.
(L9) According to the "Economics in the News" article, which of the following has happened to the U.S. economy since the elimination of the gold standard?
The United States has experienced higher unemployment, slower growth, and a general decline in economic stability.
(Q2) What was the impact of the gold and silver the Spanish and Portuguese discovered in the Americas during the 1500s?
The amount of gold and silver devalued the worth of the world supply of the materials.
(Q3) According the chart, which of the following would NOT happen if the Fed were to buy securities?
The dollar gains strength against foreign currency.
(PT) Which of the following would happen if the Fed were to buy securities?
The dollar loses strength against foreign currency.
(L7) The central bank only deals with ___.
U.S. banks
(L9) Which government move would be an example of automatic fiscal policy?
Unemployment benefit payments decrease as employment increases.
(L5) ___ is an agreed-upon scale of worth for goods and services.
Unit of account
(PT) The new federal ______ goes into effect each year on October 1st.
budget
(Q3) The federal _____ is an annual document created by Congress detailing government taxes and spending.
budget
(Q3) Which answer is NOT an economic tool of the Federal Reserve?
budget line-item veto
(PT) The free enterprise system is dependent upon the right of Americans to own their own _____.
businesses
(Q2) A(n) _________ is not money, but merely authorizes banks to transfer money.
check
(Q1) Consumers have the right to __________ what to buy in a market economy.
choose
(Q2) Which of the following would be considered currency?
coins
(Q2) In order to operate, a _______ bank must be authorized by the Comptroller of the Currency of the U.S. Department of the Treasury.
commercial
(L3) When there is a lack of ___, entrepreneurs and companies may try to take advantage of consumers.
competition
(Q3) A recipe for fixing a budget deficit is for the government to __________.
cut expenditures
(L9) One way the government can fix a budget deficit is by ___.
cutting back on spending
(Q3) Which would be an example of contractionary fiscal policy?
decrease in government spending
(Q3) When Congress creates an act that affects fiscal policy, it is considered a(n) ________________ fiscal policy.
discretionary
(PT) The Supreme Court case Kelo v. New London (2005) affirmed the government's power of _______ domain.
eminent
(L2) The term ________ refers to the government taking private property for the benefit of the community and city as a whole.
eminent domain
(Q2) A medium of _______ is something accepted in return for a good or service.
exchange
(PT) An example of a(n) ____ fiscal policy is cutting taxes on lower-income earners.
expansionary
(Q3) A(n) _____ fiscal policy encourages economic growth through tax cuts, a decrease in industrial regulation, increased government spending, or a combination of factors.
expansionary
(L2) The protection of private property is essential to the ______ system.
free enterprise
(PT) Competition, the pursuit of profit, and private property are parts of the _____ system.
free enterprise
(Q1) If there are no private property rights, people have no ________ to invest or work.
incentive
(L6) Which type of bank was created to encourage people to save for large purchases such as homes?
savings and loan associations
(L6) Which of these falls under the category of thrift institution?
savings bank
(Q2) Which of the following would be an example of a thrift institution?
savings bank
(PT) If the Fed wanted to slow down inflation, it would ___.
sell securities in the open market
(Q3) If the Fed wanted to slow down inflation, it would ___.
sell securities in the open market
(PT) A means of payment is a way of ___.
settling a debt
(Q2) A means of payment is a way of ___.
settling a debt