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Economics Topic 6 Review Flashcards | StudBud
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Economics Topic 6 Review
Economics Topic 6 Review
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1
Junk Bonds are a low-risk investment.
True
False
2
Which of these situations is most likely to cause the Fed to introduce a tight monetary policy?
The economy is prosperous with low inflation and low unemployment.
The economy is expanding quickly and inflation is a concern.
A recession has reduced aggregate demand and increased unemployment.
The federal government passes a new budget with a large deficit.
3
The time at which payment to the bondholder is due is called
Maturity
Yield
End of each year
Par Value
4
Which is
NOT
a power the National Banking Acts gave the federal government?
to charter banks
to require that banks hold adequate gold and silver reserves
to lend out all deposits they collect
to issue a single national currency
5
What results in a financial gain for the seller?
Depreciation
None of the above
Capital gain
Capital loss
6
Which is a stock market index featuring leading U.S. publicly-traded companies from various sectors and industry groups?
Dow Jones Industrial Average (DJIA)
Nasdaq
GB100
S&P 500
7
Check clearing is the process by which banks record whose account gives up or receives money.
True
False
8
Which is issued by a state or local governments to finance projects such as highways, libraries, parks, and schools?
Treasury Bond
Municipal Bond
Savings Bond
Corporate Bond
9
A specific type of loan that is used to buy real estate is called a
Mortgage
Principle
Commodity loan
Residential Loan
10
The money the government owes to bondholders is the
par value
yield
national debt
discount rate
11
A person loans money to the U.S. government when buying
a corporate bond
cryptocurrency
a hedge fund
a savings bond
12
A steady rise in the stock market over a period of time is a bull market.
False
True
13
This movie scene depicts which of the following?
A hedge fund
A bank run
A finance company
A barter system
14
Quarterly payments to stockholders based on company profits are
Futures
Commodities
Dividends
Fiat money
15
An accurate statement about bonds would be that
they entitle the holder to a share of ownership in a corporation
they are usually a low-risk investment
They provide liquidity
they are generally held for 3 or 6 months
16
A portion of stock is called a(n)
Income stock
Common stock
Dividend
Share
17
Which was passed by Congress in 1933, and partially repealed in 1999, that separated commercial and investment banking?
The Gold Standard
Glass-Steagall Act
Classical Economics Act
National Banking Acts
18
What type of money is an IOU?
Commodity money
Specie
Fiat Money
Representative money
19
All of the following are basic components of bonds EXCEPT
par value
liquidity
coupon rate
maturity
20
A stock that reinvests its earnings in the business instead of paying regular dividends is called a(n)
income stock
common stock
preferred stock
growth stock
21
What does it mean when there is a “bear market?”
profits from stocks are falling, making it a good time to buy
stock prices are falling and investors are selling off stock
many investors are buying stocks in anticipation of higher profits
profits from stocks are rising, making it a good time to buy
22
Which of the following is
NOT
a role played by the Federal Reserve?
Acting as the government's banker and issuing paper currency
Serving and regulating banks
Manipulating the economy to slow it down or help it grow
Setting the federal funds rate
23
A fund that pools money from many investors to purchase a portfolio of investments is a/an
mutual fund
future
credit union
savings and loan association
24
Appreciation is a decrease in the value of a currency.
True
False
25
The interest rate that a bond issuer will pay to a bond holder is known as
Par value
Discount rate
Yield
Coupon Rate
26
The interest rate the Federal Reserve charges for loans to commercial banks is known as the
Commercial rate
Coupon rate
Discount rate
Loaner rate
27
Which of the following is an online global marketplace for buying and trading securities?
Nasdaq
GB100
S&P 500
Dow Jones Industrial Average (DJIA)
28
What is a future?
pools of savings from many people to invest in a variety of assets
strategy to invest borrowed money in 10 years
income retirees earn after working for a certain amount of years
a contract to buy or sell an asset at a specified price at a later date
29
A direct exchange of goods or services for other goods or services is a
Fiat money system
Bartering system
None of the above
Exchange system
30
Which is a committee within the Federal Reserve System that meets to review economic and financial conditions?
U.S. Securities and Exchange Commission (SEC)
Federal Deposit Insurance Corporation (FDIC)
Federal Open Market Committee (FOMC)
Combined Finance and Revenue Accounts (CFRA)
31
Which is a stock market index with 30 specific stocks from blue-chip firms that represent the market as a whole?
Dow Jones Industrial Average (DJIA)
S&P 500
GB100
Nasdaq
32
Which entity ensures bank deposits?
U.S. Department of Commerce (DOC)
Basel Committee of Banking Supervision (BSCS)
Federal Deposit Insurance Corporation (FDIC)
United States Department of Justice (DOJ)
33
Which of the following was an issue during the Free Banking Era?
Bank Runs
Wildcat banks and fraud
Different currencies
All of the above
34
Which supported a stable currency and inspired public confidence in banks following the Free Banking Era?
The National Banking Acts
Glass Steagall Act
The Gold Standard
Federal Deposit Insurance Corporation (FDIC)
35
Why is The Federal Reserve a “lender of last resort”?
It will lend money to a bank in a financial emergency
It makes decisions about who a bank can lend money to
It decides interest rates for interbank loans
It has the power to decide how much money a bank can lend out
36
What condition is necessary for a fiat money system to work?
Money owed must be paid on time
Banks must hold sufficient gold to cover any paper money they give out
Customers with checking accounts cannot earn interest on those accounts
The government must control the money supply
37
What distinguishes a flexible exchange rate system and a fixed exchange rate system?
Flexible exchange rate system is determined by supply and demand
All of the above are true
Free market economies tend to have a flexible exchange rate system
Fixed exchange rate system governments try to keep values of their currency
38
Diversification increases risk to investors.
False
True
39
The use of assets to earn income or profits is called
Investment
Return
Interest
Yield
40
Which of the following statements is NOT true?
Money is a unit of account
Money serves as a store of value
Money is only physical currency
Money is a medium of exchange
41
Which of the following is
NOT
a tool used by the Federal Reserve to manipulate the economy?
Create an inside lag to alter the implementation of monetary policy
Adjust the amount of money banks are required to keep on hand
Buy or sell government securities in order to alter the supply of money
Adjust the interest rate the Fed charges if a bank needs to borrow money
42
The price paid for the use of borrowed money is called
Loan
Interest
Barter
Principle
43
Which of the following is the central bank of the U.S.?
Reserve Bank of Australia
The Federal Reserve
European Central Bank
Bank of England
44
How do appreciation and depreciation affect trade?
Depreciation causes a positive shift in the balance of trade
All of the above are true
Appreciation makes exports more expensive and imports less expensive
Appreciation causes a negative shift in the balance of trade
