Which is an example of the deregulation of a government-regulated natural monopoly?
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A new law allows consumers to choose between electricity providers.
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Unemployment is low and inflation is rising, but slowly. Gross Domestic Product is also rising. The Federal Reserve may increase the reserve requirement at this point in order to
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protect the public from the potential of inflation rising out of control
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The accumulation of years of spending more money than is collected in revenues over several years creates a budget
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debt
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In the diagram above, what will happen if the government sets the price for potatoes at point A?
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There will be a surplus of potatoes.
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Credit unions and other depository institutions differ from member banks of the Federal Reserve mainly in that they
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do not have stock in Federal Reserve Banks
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In the diagram above, what will happen if the government sets the minimum wage at Point A?
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There will be a surplus of workers.
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During a cold winter, there is a natural-gas shortage. The government sets a price ceiling on natural gas so that people can continue to afford heating. If the price ceiling remains in effect, what will happen?
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Quantity demanded will exceed the quantity supplied.
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Use this image to answer the following question. When the economy is operating at point B, the U.S. Congress is most likely to follow
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NOT expansionary fiscal policy
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Look at the graph. Does zone A represent the result of a price ceiling or price floor, and which scenario is an example of these conditions?
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A price floor and the large amount of corn stored in silos in the U.S. Midwest due to overproduction by farmers
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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
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A trough
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Which describes a benefit from government regulation of a natural monopoly?
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Livy's gas utility bill does not go up during a natural gas shortage.
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The government increases taxes. What might be a reason for this change in fiscal policy?
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NOT A surplus due to more government spending on building roads
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Banks that are members of the Federal Reserve have the benefit of
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earning dividends from stock in the Federal Reserve
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How do member banks of the Federal Reserve differ from other depository institutions?
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NOT They participate in the Federal Open Market Committee
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Which of these is required to balance the budget for the year?
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Revenue equal to spending
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The country of Lilliput has high unemployment and low consumer spending, and small businesses are closing. What should Lilliput's government do to improve the economy?
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Lower the income tax, which gives citizens more money to spend, and buy more services from civilian-owned businesses, which creates more jobs.
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How does the U.S. government slow economic growth?
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NOT By decreasing taxes and increasing spending
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Who may regulate a natural monopoly?
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Government
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In the business cycle, when is "deflation" most likely to occur?
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during a recession
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Explain how the Federal Reserve may use the discount rate and the reserve requirement to increase the money supply. What impact should these actions have on employment and why?
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Monetary policy leads to employment, price stability, and economic growth. Banks have more money to lend, and businesses borrowing this money can expand. This growth causes an increase in jobs which lowers unemployment and people with those jobs can make more purchases. Indicator of a growing economy is moderate inflation and the monetary prevents inflation from going out of control.
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