Financial Assets- Macro Topic 4.1

Mr. Clifford introduces key financial vocabulary, explaining the differences between income and wealth, assets and liabilities, and government budgeting concepts like surplus, deficit, and debt. He discusses financial assets, focusing on liquidity, loans, bonds, and stocks, and their roles in the economy. The video aims to prepare students for more complex topics in economics.

What is the primary difference between income and wealth?

• Income is the money saved, while wealth is the money spent.

• Income is the total value of assets owned, while wealth is the money earned from work.

• Income is the money earned from work, while wealth is the accumulated value of assets.

• Income is the total value of liabilities, while wealth is the total value of income.

What is a budget deficit?

• When government spending is unrelated to tax revenue.

• When government spending exceeds tax revenue.

• When government spending is less than tax revenue.

• When government spending equals tax revenue.

How is liquidity defined in financial terms?

• The difficulty of converting an asset into cash.

• The ease of converting an asset into cash without losing value.

• The total value of an asset.

• The interest rate of an asset.

For whom is a loan considered an asset?

• For neither the borrower nor the lender.

• For both the borrower and lender.

• For the lender.

• For the borrower.

What distinguishes stocks from bonds?

• Stocks and bonds are both shares of ownership.

• Stocks are shares of ownership, while bonds are IOUs.

• Stocks and bonds are both IOUs.

• Stocks are IOUs, while bonds are shares of ownership.