5.04 Government and the Economy Review 2 .docx - Government & the ... - Free Printable

Let’s go through each question one by one. We’ll match the cause (on the left) with the correct effect (on the right). Think about how government actions or economic events connect to real-life results.

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1. The Federal Reserve lowers interest rates → ?

When the Fed lowers interest rates, it becomes cheaper for people and businesses to borrow money. That usually encourages spending and investing — which helps grow the economy. So this leads to:
→ *helps stimulate the economy*

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2. Private businesses need raw materials → ?

Businesses need things like steel, wood, oil, etc., to make products. They get these from natural resources. So:
→ *uses the nation's natural resources*

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3. The Federal Trade Commission enforces laws against unfair business practices → ?

The FTC stops companies from cheating customers or lying in ads. This protects buyers. So:
→ *protects consumers from fraud*

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4. Congress passes a law requiring all cars to have seat belts → ?

This is a safety rule made by the government to protect drivers and passengers. So:
→ *improves public safety*

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5. A company wants to compete in an international market → ?

To sell goods overseas, companies often need help from the government — like trade agreements or export support. But looking at the options, the best fit is:
→ *leads to increased exports*

*(Note: “Exports” means selling goods to other countries.)*

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6. The government sets up banking regulations → ?

Banking rules are meant to keep banks safe so they don’t collapse and hurt people’s savings. So:
→ *prevents bank failures*

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7. People want cheap gas because of high prices → ?

If gas is too expensive, people might drive less or look for alternatives. But if the government steps in, maybe they subsidize fuel or encourage alternatives. Looking at the choices:
→ *leads to alternative energy development*

*(Because high gas prices push us to find better, cheaper ways to power cars — like electric vehicles or biofuels.)*

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8. The Department of Defense spends billions on new weapons → ?

Spending big on military gear creates jobs for engineers, factory workers, scientists, etc. So:
→ *creates jobs in defense industries*

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9. Companies offer free Wi-Fi in cafes → ?

This isn’t directly caused by government — but it’s a business strategy to attract customers. However, none of the effects listed seem to fit perfectly… Wait — let’s re-read the options.

Actually, looking again:
“Companies offer free Wi-Fi” → probably to draw more customers into their stores. But that’s not listed. Hmm.

Wait — maybe we’re missing something. Let’s check the last few.

Actually, perhaps #9 is mismatched? Let’s skip and come back.

Wait — here’s a better approach: Let’s list all the effects and see which ones are left.

Effects available:

- helps stimulate the economy
- uses the nation's natural resources
- protects consumers from fraud
- improves public safety
- leads to increased exports
- prevents bank failures
- leads to alternative energy development
- creates jobs in defense industries
- increases competition among businesses ← this must be for #9!

Yes! If companies give away free stuff (like Wi-Fi), they’re trying to beat competitors — so it increases competition.

So:
→ *increases competition among businesses*

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10. The president signs a bill giving tax breaks to small businesses → ?

Tax breaks mean small businesses pay less money to the government — so they can hire more workers or expand. That helps create jobs. So:
→ *encourages job creation*

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11. The Environmental Protection Agency limits pollution from factories → ?

EPA makes rules to clean the air and water. Factories must follow them — which helps the environment. So:
→ *reduces environmental damage*

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12. The Supreme Court rules that a state law is unconstitutional → ?

That means the state law goes against the U.S. Constitution — so it gets thrown out. This shows the Court checking state power. So:
→ *limits state power*

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13. The Food and Drug Administration approves a new drug → ?

FDA checks if medicines are safe before letting them be sold. Approval means people can use it legally. So:
→ *allows new medicine to reach patients*

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14. The Department of Education gives grants to schools → ?

Grants = free money for schools to improve teaching, buy books, train teachers, etc. So:
→ *improves education quality*

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15. The Social Security Administration sends monthly payments to retirees → ?

Retirees get money every month to live on after stopping work. So:
→ *provides income for retired workers*

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Now let’s double-check everything matches logically.

✔ All pairs make sense now.

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Final Answer:

1. The Federal Reserve lowers interest rates → helps stimulate the economy
2. Private businesses need raw materials → uses the nation's natural resources
3. The Federal Trade Commission enforces laws against unfair business practices → protects consumers from fraud
4. Congress passes a law requiring all cars to have seat belts → improves public safety
5. A company wants to compete in an international market → leads to increased exports
6. The government sets up banking regulations → prevents bank failures
7. People want cheap gas because of high prices → leads to alternative energy development
8. The Department of Defense spends billions on new weapons → creates jobs in defense industries
9. Companies offer free Wi-Fi in cafes → increases competition among businesses
10. The president signs a bill giving tax breaks to small businesses → encourages job creation
11. The Environmental Protection Agency limits pollution from factories → reduces environmental damage
12. The Supreme Court rules that a state law is unconstitutional → limits state power
13. The Food and Drug Administration approves a new drug → allows new medicine to reach patients
14. The Department of Education gives grants to schools → improves education quality
15. The Social Security Administration sends monthly payments to retirees → provides income for retired workers