1. What best describes the purpose of the Federal Trade Commission?
A. to regulate banks and supervise them
B. to monitor and stabilize domestic markets ***
C. to decrease foreign competition for resources
D. to identify and address unfair business practices
2. How might the government deal with a huge company that has no competitors and is charging high prices?
A. break the company into smaller competing firms
B. fine the company based on its profits for a given year
C. force the company to pay taxes at a higher rate ***
D. assign a government agent to observe the company's leadership
3. A new administration reforms a state's tax code. Corporate tax was increased by 3%, allowing the value-added tax to consumer goods to be reduced by 5%. This had no net effect on the state budget as the two tax changed balanced each other out. What is a likely effect of this change in tax policy?
A. High-income people will choose to leave the state.
B. Nonprofits will become a larger part of the economy.
C. Consumers in the state will choose to buy fewer things.
D. Financial institutions will be less likely to invest in the state's companies. ***
1. D. to identify and address unfair business practices
2. A. break the company into smaller competing firms
3. D. Financial institutions will be less likely to invest in the state's companies.
1. To get the answer to the question, it is important to understand what the Federal Trade Commission (FTC) is and its purpose. You can find this information by conducting a search on an online search engine or by visiting the official website of the FTC.
The FTC is an independent agency of the United States government that aims to protect consumers and promote fair competition in the marketplace. Based on this understanding, you can assess the given options:
A. To regulate banks and supervise them: This does not align with the purpose of the FTC as it is primarily focused on consumer protection and fair competition, not banking regulation.
B. To monitor and stabilize domestic markets: This is not the primary purpose of the FTC, although it does play a role in promoting fair competition, which indirectly contributes to market stability.
C. To decrease foreign competition for resources: While the FTC is concerned with competition, its primary focus is on domestic competition. It does not specifically aim to decrease foreign competition for resources.
D. To identify and address unfair business practices: This option aligns with the purpose of the FTC. It seeks to identify and address unfair business practices, such as deceptive advertising, antitrust violations, and scams.
Therefore, the correct answer is D. to identify and address unfair business practices.
2. To answer this question, you need to consider how the government can address a situation where a huge company has no competitors and is charging high prices. One approach to tackling this issue is through government intervention in the form of regulation or policies.
A. Break the company into smaller competing firms: This option, known as antitrust or anti-monopoly regulation, aims to promote competition by preventing the dominance of a single company in a market. It can encourage lower prices and greater consumer choice.
B. Fine the company based on its profits for a given year: While imposing fines might deter certain behaviors, it may not directly address the issue of high prices. Fines alone do not force the company to lower its prices or increase competition.
C. Force the company to pay taxes at a higher rate: This option does not directly address the high prices charged by the company. It primarily focuses on increasing the company's tax burden, which may only indirectly impact its pricing strategy.
D. Assign a government agent to observe the company's leadership: While monitoring and observation can provide insights into a company's practices, it does not directly address the issue of high prices or promote competition.
Therefore, the most effective option for the government to deal with a huge company with no competitors and high prices is A. break the company into smaller competing firms through antitrust regulation.
3. To assess the likely effect of the change in tax policy, it is necessary to understand the specific changes that were made. In this scenario, corporate tax was increased by 3% while the value-added tax (VAT) on consumer goods was reduced by 5%. The net effect on the state budget is stated to be neutral, meaning there is no significant change in revenue.
A. High-income people will choose to leave the state: It is not possible to determine whether high-income individuals will choose to leave the state based solely on the given information about tax changes.
B. Nonprofits will become a larger part of the economy: There is no direct relationship between tax policy changes and the growth of nonprofits. The information provided does not suggest any impact on nonprofit organizations.
C. Consumers in the state will choose to buy fewer things: The reduction in VAT on consumer goods may lead to lower prices, potentially encouraging consumer spending. However, the given information does not provide enough details to determine if consumers will choose to buy fewer things overall.
D. Financial institutions will be less likely to invest in the state's companies: This may be a likely effect. Increasing corporate tax rates can reduce after-tax profits and potentially discourage investment by financial institutions. The overall impact on investment in the state's companies would depend on various factors, including the state's overall business environment.
Therefore, the likely effect of this change in tax policy is D. Financial institutions will be less likely to invest in the state's companies. However, it is important to note that additional factors and considerations could influence the overall effects of these tax changes.
1. D. to identify and address unfair business practices
The purpose of the Federal Trade Commission (FTC) is to identify and address unfair business practices. The FTC is responsible for enforcing laws that protect consumers from fraudulent, deceptive, and unfair practices in the marketplace. It works to ensure fair competition and protect consumers from unethical business practices.
2. A. break the company into smaller competing firms
If a huge company has no competitors and is charging high prices, the government may choose to break the company into smaller competing firms. This is known as antitrust action and is aimed at promoting competition in the market and preventing monopolistic practices that can harm consumers through high prices and reduced choices.
3. C. Consumers in the state will choose to buy fewer things.
When corporate taxes are increased, it can lead to higher costs for businesses. To offset this, the reduction in the value-added tax on consumer goods may result in lower prices for consumers. However, this change in tax policy may still have an effect on consumer behavior. With higher corporate taxes, businesses may pass on some of the increased costs to consumers through higher prices. As a result, consumers may be inclined to buy fewer things due to the overall increase in prices.