Government and Economics Unit 7 Quiz 2: Business and You

Select the five dangers of a monopoly.

-Higher prices -No rival competition or alternative markets -Lower quality -Limitation or elimination of certain goods -Poor service and attitude

Check the boxes that are TRUE.

-Monopolies are judged by how strong the competition is between the companies. -The Fed issues the nation's coin and paper currency. -Trusts were unofficial mergers formed to control prices and production in the marketplace.

Mark the boxes that are TRUE.

-One of the largest divestitures in American history occurred when the U.S. Government ruled that the AT & T ® Corporation was a monopoly that must be divided so that the telephone market might be more competitive. -The Federal Aviation Administration regulates the airlines. -The Securities and Exchange Commission regulates the stock market. -The Interstate Commerce Commission polices monopolistic practices.

In which three ways does the Fed manage the country's money supply?

-open-market operations (purchase or sale of government securities) -change the discount rate -change reserve requirements

Clayton Antitrust Act

1914 legislation that dealt against monopolies, particularly in the area of price-fixing

In 1914 the ________ prevented a merging of corporations to have intertwining boards of directors.

Clayton Antitrust Act

Which answer is NOT TRUE?

The Fed was started in 1933.

A bank might be seeing a hard pull on its deposits, so it borrows from the Federal Reserve Bank.

True

The Fed works to keep the balance of financial strength at a good level by keeping interest rates low in recessions and letting them rise in economic "boom " times.

True

The U.S. Treasury keeps a checking account with the Federal Reserve.

True

When banks borrow money from a Federal Reserve Bank, they are given a certain interest rate to pay back the loan. If the Federal Reserve System raises the rate of interest, the banks will find it harder to repay loans.

True

discount rate

a Federal reserve-set interest rate to determine the amount needed to pay back the loan.

government securities

a government investment in businesses, guaranteeing repayment

consumer protection law

a governmental regulation; a mandate which is instituted to safeguard the purchaser

ethic

a principle or value

reserve requirements

amount of money the Fed needs to have as a balance in its possession

A_______and the Federal Open Market Committee oversee the operation of the Fed.

board of governors

the Fed Banks

distribute the cash to financial institutions

Some monopolies do not drive prices up and competitors out; they serve the public. An example is

electric companies

The Fed is a(n)_______agency of the United States government.

independent

monopoly

one company or even a small group of companies has control of the supply of a product

After the trusts had eliminated the competition, they would cut back on production and

raise prices

Week by week the finances in this country can change, so the selling and buying of_______helps to maintain equilibrium.

securities

The Securities and Exchange Commission regulates the

stock market

merger

the combining of two or more corporations or businesses

trust

unofficial mergers formed to control prices and production in the marketplace