AP Macro Unit 4 Review

Mark the investment options that represent HIGH LIQUIDITY:

• Stocks

• Real Estate

• Savings Account

• Cars

Which of the following describes a major difference between stocks and bonds?

• Stocks represent ownership in a corporation, and bonds represent a loan to a corporation.

• Bonds represent ownership in a corporation, and stocks represent a loan to a corporation.

• Stocks are counted in gross domestic product, and bonds are not counted.

• Bonds are counted in gross domestic product, and stocks are not counted.

• Bonds pay dividends, and stocks earn interest.

Is the nominal interest rate is 10% and the expected inflation rate is 8%, what is the real interest rate?

• 2%

• 18%

• 80%

• 5%

What function of money the picture represent? 

• Medium of Exchange
• Store of Value
• Unit of Account
• Acceptable 

What function of money the picture represents?

• Medium of Exchange
• Store of Value
• Unit of Account
• Durable 

What function of money the picture represents? 

• Medium of Exchange
• Store of Value
• Unit of Account
• Stable 

This term refers to the ease with which you can convert an asset to cash with little or no loss of purchasing power.

• legal tender
• acceptability
• liquidity
• uniformity

This classification of money includes coins, paper money, checkable deposits.

• M1
• M2
• M3

This classification includes all of M1 as well as savings depositis, money market deposits, and money market mutual funds.

• M1
• M2
• M3

If the Central banks sets the minimum reserve ratio for private banks at 25%, then the money multiplier is:

• 4

• 2.5

• 1

• 0