Economics Unit 5 Review

One of the primary functions of financial institutions in an economy is to —

• offer incentives to businesses for investing

• prepare taxes for individuals and businesses

• create investment portfolios for venture capitalists

• provide access to capital for people and businesses

One effect of an increase in the amount of savings in an economy is —

• an increase in consumer spending

• a decrease in retirement investments

• a decrease in the production of goods and services

• an increase in financial resources for business investment

Which type of bank account is not insured?

• Checking account

• Savings account

• Mutual fund

• Money market fund

What is one advantage to placing savings in a high-risk investment as oppose to putting savings in a low-risk investment?

• The tax rate on high-risk investments is lower.

• The amount of money needed to invest is lower.

• The money is more secure in a high-risk investment.

• The potential rate of return on investment is higher.

One potential risk from investing in the stock market is the loss of —

• investor tolerance

• purchasing power

• earned interest income

• portfolio diversification

Which of the following retirement investment options is usually offered as a benefit of employment?

• Bonds

• 401(k)

• Mutual Funds

• College tuition reimbursement

Which investment is considered the most secure in a retirement plan?

• 401(k)

• Public bond

• Mutual fund

• Individual retirement account

A first step to beginning a savings program would most likely be to —

• obtain credit

• set financial goals

• open a checking account

• sign up for direct deposit

A line of credit that allows a borrower to repeatedly use it within a certain monetary amount is considered to be —

• a secured loan

• open-ended credit

• close-ended credit

• a retirement account

Loans that are obtained by offering an asset to guarantee repayment of the loan are considered —

• default loans

• secured loans

• unsecured loans

• repossession loans