Introductory Business Law CLEP Prep Practice Exam

What is the FTC Act?

1. A federal law that prohibits unfair or deceptive business practices

2. A federal law that protects the rights of consumers

3. A federal law that regulates the sale of goods and services

4. A federal law that regulates the manufacture of goods

The correct answer is: A federal law that prohibits unfair or deceptive business practices

The FTC Act, or Federal Trade Commission Act, is a federal law that prohibits unfair or deceptive business practices. This means that it regulates the way businesses advertise, sell goods and services, and communicate with consumers. Option B, while related to consumer rights, is not the main focus of the FTC Act, which mainly aims to promote fair competition and protect consumers from being misled. Option C is incorrect because while the FTC Act may impact the sale of goods and services, its main purpose is not solely to regulate these transactions. Option D is also incorrect as the FTC Act primarily addresses deceptive or unfair practices, rather than the manufacturing of goods.