Understanding Financial Sector Vocabulary

What is the primary difference between income and wealth?

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

• Income and wealth are the same and can be used interchangeably.

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

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

What happens when a government spends more than its tax revenue in a year?

• The government reduces its national debt.

• The government increases its national wealth.

• The government has a budget deficit.

• The government has a budget surplus.

Which of the following is considered a financial asset for a lender?

• A loan given to a borrower

• A loan taken from a bank

• A car loan

• A student loan

What is a bond in financial terms?

• A financial obligation to pay taxes

• A type of loan taken by individuals

• An IOU issued by the government or businesses

• A share of ownership in a company

How does the stock market generally behave in relation to the economy?

• It causes the economy to go up or down.

• It remains unaffected by economic changes.

• It is a direct indicator of economic health.

• It reacts to the economy going up or down.