PSI Virginia Real Estate Practice Exam

What major law was passed in 1890 to promote competition in business?

1. Clayton Act

2. Sherman Act

3. Federal Trade Commission Act

4. Real Estate Settlement Procedures Act

The correct answer is: Sherman Act

The Sherman Act, passed in 1890, is a foundational piece of antitrust legislation in the United States. Its primary aim was to prevent monopolies and promote fair competition in the marketplace. By making it illegal to restrain trade or commerce through monopolistic practices or conspiracy, the Sherman Act laid the groundwork for regulating business practices that could harm competition and consumers. This law directly addresses issues related to competition, making it crucial in the effort to create a fair economic environment. Over the years, it has been the basis for various antitrust cases, influencing how businesses operate to ensure that they do not engage in anti-competitive behavior. This focus on maintaining competition has had lasting effects on market structures and consumer protection throughout American economic history. Other laws mentioned, such as the Clayton Act or the Federal Trade Commission Act, were indeed important developments in antitrust laws that followed the Sherman Act, but they were enacted later (in 1914 and 1914 respectively) and built upon the framework established by the Sherman Act. The Real Estate Settlement Procedures Act pertains specifically to the real estate industry and does not relate to the promotion of competition in business in a broader context.