Exam 1 Review

What economic condition is most likely to occur when consumer demand increases without a corresponding increase in supply?

• Deflation.

• Stagnation.

• Lower interest rates.

• Inflation.

• Increased production.

When consumer prices increase, which of the following is most likely to occur?

• Decrease in government spending.

• Increase in unemployment rates.

• Increase in interest rates.

• Decrease in consumer savings.

• Increase in foreign investments.

What is a likely effect of increased consumer spending?

• lower consumer prices.

• reduced employment levels.

• lower wages.

• lower interest rates.

• higher employment levels.

What are the phases in an adult's family and financial journey known as?

• financial planning process

• budgeting procedure

• personal economic cycle

• adult life cycle

• tax planning process

The study of how wealth is created and distributed is:

• financial planning

• opportunity cost

• inflation

• economics

• a market economy

What is a primary factor that can lead to inflation in an economy?

• fluctuations in currency exchange rates.

• increases in consumer savings.

• rises in production costs without a rise in supply.

• decreases in the money supply.

• increases in government regulations.

The Fed refers to:

• government regulation of business.

• congress.

• the Federal Reserve System.

• the Federal Deposit Insurance Corporation

• spending by the federal government.

What is one of the primary functions of the Federal Reserve?

• regulate the money supply.

• authorize federal expenditures.

• establish national tax policies.

• identify unlawful corporate practices.

• ensure a balanced federal budget.

Luna is considering some savings and investment choices that have the potential for higher earnings. However, she realizes that these may also be difficult to convert to cash when she needs the funds. This problem refers to:

• inflation risk

• interest rate risk

• income risk

• personal risk

• liquidity risk

As Olivia Wilson plans to set aside funds for her young children's college education, she is setting a(n) goal.

• intermediate

• long-term
• short-term

• durable