Government regulations on credit aim to:

• A. reduce government spending on social programs
• B. eliminate all forms of borrowing in the economy
• C. protect consumers from unfair lending practices
• D. increase the profits of financial institutions

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the role of government regulations in credit markets. These regulations are typically designed to address market failures or protect certain groups, such as consumers, from potential harm.
2. Step 2: Recognize that government regulations on credit are not intended to reduce government spending on social programs directly, nor to eliminate all borrowing, as borrowing is a fundamental part of economic activity.
3. Step 3: Consider the purpose of protecting consumers. Regulations often aim to prevent unfair lending practices, such as excessively high interest rates, hidden fees, or deceptive terms, which can exploit borrowers.
4. Step 4: Note that increasing the profits of financial institutions is generally not a goal of government regulation; rather, regulations may sometimes limit profits to ensure fairness and stability.
5. Step 5: Conclude that the primary aim of government regulations on credit is to protect consumers from unfair lending practices, ensuring a fair and transparent credit market.