AP Macro Unit 4 review

Front

What are considered tangible financial assets? Options: Loans, Bonds, Land, and Cars, Raw Materials and Machinery, Business Buildings, Factory Equipment

Back

Loans, Bonds, Land, and Cars

Front

What is the Primary Purpose of a Financial Sector?

Back

To link borrowers and lenders

Front

Which of the following is considered part of the financial sector? Retail stores, Manufacturing companies, Government Agencies

Back

Banks and mutual funds

Front

What does an interest rate represent?

Back

The "price" of borrowing money

Front

What are interest-bearing assets?

Back

Assets that earn interest over time

Front

A low interest rate will​ ____ Investment

Back

Increase

Front

If interest rates fall and new bonds offer a lower rate than an existing bond, what will likely happen to the price of the existing bond?

Back

It will rise

Front

In this example below, how much annual interest does a $1000 bond at 5% earn?

Back

$50

Front

Why would buyers be willing to pay more for an old bond when new bonds offer a lower interest rate?

Back

They want the higher return of the older bond

Front

What is the relationship between interest rates and bond prices?

Back

Inverse