AP Economics Unit 4: Financial Sector Review 5/14/21

the interest rate is-

• the opportunity cost of lending money

• the price borrowers pay for the use of lenders' savings

• a percentage of the amount saved by borrowers

• the rate charged by bank to hold savings for one year

which of the following identities is true in a smiplified economy with no government and no interation with other countries?

• total income=consumer spending-investment spending

• savings=investment spending

• investment spending = total spending-savings

a budget surplus exist when the government does which of the following?

• saves

• collects less tax revenue than it spends

• has a negative budget balance

which of the following is a task of an economy's financial system

• enhancing the efficiency of financial markets

• eliminating liquidity

• decreasing diversification

a financial intermediary that resells shares of a stock portfolio is a -

• mutual fund

• pension fund

• loan backed security

which of the following assets is most liquid?

• cash

• mutual fund

• stock

when money acts as a means of holding purchasing power over time, it is serving which function?

• medium of exchange

• source of liquidity

• store of value

which of the following is an example of using money as a unit of account?

• buying a t shirt

• purchasing $10 worth of candy

• putting money into your savings account

which of the following is a desirable characteristic of money?

• backed by commodities

• widely accepted

• fixed supply

fiat money derives its value from which of the following?

• its official status

• the good being used as a medium of exchange

• gold or silver