Study Guide: Semester Final Test

The three tools of monetary policy are: (1) changing the required reserve ratio, (2) adjusting the discount rate, and (3)

• using open-market operations

• influencing the currency exchange

• organizing democratic elections

• applying the law of supply and demand

Which is an example of debt financing?

• money from an angel investor

• scheduling an IPO

• bank loan

• sale of company shares

Which describes a bear market?

• when a stock market bubble develops

• when there is a decline or expected decline in stock prices

• when there is a rise or expected rise in stock prices

• when market trends are intensified by investors' behavior

Which is the purpose of the Securities and Exchange Commission (SEC)?

• issue government bonds

• protect bank depositors against losing their money

• prevent stock market fraud

• manage the growth of the U.S. economy

Which of the following best describes a dividend?

• percentage ownership of a corporation

• difference between costs and revenues

• share of a company's profit paid to each stockholder

• increase in a person's investment

Why is taxation necessary?

• protect domestic producers from foreign competition

• reduce demand for harmful activities

• provide money for government programs 

• control the money supply and manage economic growth

What is a progressive tax?

• a tax that charges more for higher incomes

• a tax that raises prices on imports

• a tax that pays for specific social programs

• a tax that promotes free trade

Who has to approve the budget of the U.S. government?

• citizens

• the president

• Congress

• the Fed

Which is an example of a public good?

• textbooks

• food

• a waterfall

• road building

Which describes the U.S. Postal Service?

• government agency

• government contractor

• government corporation

• unconnected to the government