28 terms

CE.13 Government and the Economy

ways the government promotes marketplace competition
- enforcing anti-trust legislation
- engaging in global trade
- supporting business start ups
the purpose of anti-trust legislation
to discourage the development of monopolies
Federal Communications Commission
Environmental Protection Agency
Federal Trade Commission
Government Agencies that regulate business
Public goods and services
goods and services provided by the government because individuals acting alone could not provide them efficiently
examples of public goods and services
- interstate highways
- postal service
- national defense
ways government pays for public goods and services
- tax revenue
- borrowed funds
- fees
how the government influences economic activity
by taxing, borrowing and spending
effect of government tax increases
reduce funds available for private spending
effect of government tax decreases
increase funds for private spending
effects of increased government borrowing
reduces funds available for private borrowing
effects of decreased government borrowing
increases funds available for private borrowing
effects of increased government spending
- increases demand
- may raise taxes
increased demand may -
increase employment and production
effects of decreased government spending
- reduce demand
- may lower taxes
reduced demand may -
slow the economy
16th amendment
authorizes Congress to tax incomes
nation's central bank
Federal Reserve system
functions of the Federal Reserve system
- maintain value of the national currency
- regulate banks
- manages the amount of money in the economy
- acts as the government's bank
Why does the Federal Reserve regulate banks?
to ensure the soundness of the banking system and the safety of deposits
Why is it important that the Federal Reserve manages the amount of money in the economy?
to keep inflation low and prices stable
How does the government protect consumer rights?
by passing laws and creating agencies
What protects your right to own private property?
contracts which are enforceable by law
anything generally accepted as a method of payment
Why do people accept U.S. currency?
they have confidence in the government
three types of money
- coins
- Federal Reserve notes
- deposits in banks accounts accessed by checks and debit cards

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