Font size
WorksheetsEcon Topic 6 Review
Total questions: 36
Worksheet time: 18mins
Which of the following is an example of representative money?
Fiat Money
an IOU
Gold
Currency
Consists of objects that have value in and of themselves and that are also used as money
Commodity money
Representative Money
Fiat Money
Currency
Provides a means for comparing the values of goods and services:
Unit of account
Store of account
Medium of exchange
Money
Makes use of objects that have value solely because the holder can exchange them for something else of value,
Commodity money
Representative money
Fiat Money
Currency
An example of representative money might be:
Specie
Gold
IOU
Currency
Also called "legal tender", has value because a government has decreed that it is an acceptable means to pay debts.
Commodity money
Fiat money
Currency
Representative money
The fact that coins can last a long time in circulation shows which characteristic of money?
Money is portable
Money is durable
Money is divisible
Money is uniform
Which of these is NOT one of the three uses of money?
Medium of exchange
Store of value
A means of barter
Unit of account
Which of the following is a negative aspect of bartering rather than using currency?
Bartering requires you to find someone who wants what you have
Bartering does not require you to have any cash
Bartering usually takes less time than using currency
Bartering makes it easy to determine the relative value of items
Which of the following is an example of money's divisibility?
Coins and bills can last a long time in circulation
Twenty dollar bills are easy to carry around in a wallet or pocket
A ten dollar bill can purchase a five dollar item, with five dollars change coming back
If Jane and Ranita both have a ten dollar bill they can purchase the same $10 t-shirt
Which of the following is NOT a role of the Fed?:
Clearing Checks
Supervising Banking Practices
Issuing Stock
Acting as a lender of last resort
The amount of reserves that banks are required to keep on hand are called:
Minimum reserves
Maximum reserves
Total reserves
Reserve requirements
Which of the following situations would encourage people to invest their money in a savings account rather than keep it in cash?
Falling interest rates
Rising interest rates
Rising demand for money
Rising prices
The ability to be used as, or directly converted into, cash is called:
Currency
Liquidity
Money supply
Convertibility
All the money available in the United States economy:
M1 Money
M2 Money
Money Supply
Currency
When a borrower fails to pay back their loans:
Default
Renege
Foreclosure
Defraud
What kinds of money are included in M1?
Money Market Mutual Funds
Currency
Savings Deposits
Small-Time Deposits
What kind of interest is paid on both the principal and interest earned?
Compound interest
Simple interest
Fixed interest
Variable interest
The strategy of spreading out investments to reduce risk (so you're not putting "all of your eggs in one basket") is called:
Diversification
Buffering
Safety Net
Emergency fund
What kind of fund pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets?
Hedge fund
Balanced fund
Index fund
Mutual fund
Low-denomination bonds issued by the United States government are called:
Municipal Bonds
Corporate Bonds
Savings Bonds
Junk Bonds
Bonds issued by state and local governments and municipalities are called:
Municipal Bonds
Corporate Bonds
Savings Bonds
Junk Bonds
Name one advantage of bonds for their issuers.
Bondholders can't share in the profits of a company
Issuers must make fixed interest payments, even when it doesn't make a profit
Issuers can't change interest payments even when rates have dropped
Bonds have the potential to be downgraded
Which of the following is NOT a major bonds rating agency?
Moody's
Standard & Poor's
Lehman Brothers
Fitch
Why would someone sell their bond at a discount?
They need cash now and interest rates have gone up
They need cash now and interest rates have gone down
They want to save their money and interest rates have gone up
They want to save their money and interest rates have gone down
What type of bond might have been used to fund the construction of your school?
Corporate Bond
Savings Bond
Treasury Bond
Municipal Bond
If you invest in a $1000 bond that pays 5% for 10 years, what is the bond's par value?
$50
$1000
$1050
$1500
If you invest in a $1000 bond that pays 5% for 10 years, what is the bond's maturity?
10 years
5%
$50
$1000
The difference between the higher selling price and the lower purchase price of a stock is called:
Capital gain
Capital loss
Dividend
Market capitalization
Contracts to buy or sell commodities at a particular date in the future at a price specified today are called (think agriculture):
Call Option
Put Option
Futures
Shares
The option to sell shares of stock at a specified time in the future is called:
Call Option
Put Option
Futures
Shares
What types of stocks are traded on the NYSE (New York Stock Exchange)?
Preferred Stocks
Common Stocks
Blue Chip Stocks
Growth Stocks
Pick two major stock indexes:
New York Stock Exchange
Dow Jones Industrial Average
S&P 500
NASDAQ
How did the Fed contribute to the slow economic recovery during the Great Depression?
They lowered interest rates and increased money supply
They raised interest rates and limited money supply
They told President Hoover to do nothing
They lent out more money
To raise money, a company is selling shares of "dividend growth" stock. What does the company MOST LIKELY do with its earnings?
Pays it all out to stockholders, four times a year
Reinvests it quarterly in order to expand the company
Pays out some to stockholders and reinvests the rest in its business
Invests it in company stock, which it then sells at a discount to stockholders
What relationship does risk have to return?
With lower risk, the potential for a return disappears.
The higher the risk, the lower the potential for return.
The lower the risk, the greater the potential for return.
The higher the risk, the greater the potential for return.
