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Econ Unit 4 Flashcards | StudBud
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Econ Unit 4
Econ Unit 4
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1
A bank chartered, or licensed, by the national government is called
federal reserve
central bank
national bank
member bank
2
The annual rate of return on a bond bought on the open market is called the
par value
coupon rate
maturity
yield
3
The ability to be used as, or directly converted to, cash is
liquidity
money supply
interest
default
4
What is an example of commodity money?
precious stones
coins
currency
tractor
5
Standard & Poor's & Moody's are...
largest issuer of junk bonds
financial intermediaries
firms that publish bond ratings
part of the SEC
6
Compound interest is interest paid
by consumers when they withdraw funds from their accounts
by the bank on the deposits of a checking account.
on both principal and accumulated interest
on the principal only
7
The government agency that covers customer deposits if a bank fails is the
central bank
FDIC Federal Deposit Insurance Corporation
member bank
federal reserve system
8
Which bonds are issues by the US government?
junk
municipal
corporate
savings
9
All of the following are services provided by banks and other financial institutions EXCEPT
increasing the amount of money in circulation
paying interest
storing and saving money
providing mortgages
10
A claim on the property or income of a borrower is a(n)
financial asset
return
investment
mutual fund
11
What is the simple interest of a loan for $1,000 with 5% interest after 3 years?
$150
$50
$1150
$1050
12
Which one of the following is NOT one of the four common ways people can save money in banks?
certificates of deposit
checking accounts
money market accounts
fractional reserves
13
Fund that pools savings of many people and invests this money in a variety of stocks & bonds
prospectus
mutual fund
investment
financial system
14
Used to determine value during any exchange of goods and services...
unit of account
store of value
medium of exchange
barter
15
Barter is...
a means for comparing the values of goods and services
something that keeps its value if it is stored
direct exchange of one set of goods or services for another
anything that serves as a medium of exchange
16
Bonds are...
certificates of deposit
dividends
loans
stocks
17
The purpose of a financial intermediary is to help channel funds from
stocks to bonds
savers to borrowers
one bank to another
savings bonds to building projects
18
Objects that have value in themselves and that are also used as money...
money
commodity
representative
fiat
19
The price paid for the use of borrowed money is referred to as the
interest
liquidity
default
principal
20
Which of the following does NOT belong in the M2 category?
money market mutual funds
deposits in savings accounts
currency held in bank vaults
near money
21
State and local governments finance improvements on highways, state buildings by...
corporate bonds
municipal bonds
junk bonds
shares of stock in a public company
22
Central banking system for the United States that was set up in 1913 is known as the
federal reserve system
member bank system
central bank system
national bank system
23
Spreading out investments to reduce risk is
a financial system
a financial intermediary
diversification
a financial asset
24
Monetary system with paper money and coins equal to the value of a certain amount of gold?
federal reserve note
greenback
federal reserve system
gold standard
25
Money that has value because the government has ordered it
fiat
representative
uniformity
commodity
26
The option to sell shares of stock at a specified time in the future is called a
future
call option
put option
stock exchange
27
Investors who buy preferred stock
receive dividends after the common stock shareholders
last to get their investment back if the company fails
cannot trade their stock on the secondary market
are nonvoting owners of the company
28
The higher the potential return, the
higher the time risk for an investment
higher the risk for an investment
higher the inflation risk for an investment
higher the liquidity of an investment.
29
An investment report that is given to potential investors is called a(n)
financial report card
portfolio
annual report
prospectus
30
The fractional banking system
prevents excessive defaults
makes bankinig more secure
ensures growth in the economy
only works if there are a limited number of banks
31
A low-rated, potentially higher-paying bond is a
municipal bond
corporate bond
junk bond
savings bond
32
The type of currency used in the United States today is...
fiat
M1
representative
gold standard
33
In the financial system, who are the borrowers?
households, individuals, and businesses
individuals and households
governments and businesses
governments, households, and individuals
34
The index that shows how 30 specific industrial stocks have traded is called the
stock exchange
Dow Jones
OTCC Market
S & P 500
35
Which of the following is an example of an informal bank?
non-incorporated bank
individual loan to a friend
merchant who stores money for customers
non-member central bank
