What does the NYSE do?

arranges stock/bond trading of large/established companies

Why is the gold standard no longer used in the US?

Too much paper money and not enough gold to back it, Gold is scarce, It lead to bank runs

Why are funds in checking accounts called demand deposits?

they are available whenever the account holder wants them

How does a bank make most of its profit on its business?

by paying out less interest on deposits than it gets on loan

What is the difference between simple and compound interest?

simple paid on principal;compound on both principal/interest

What happens when you pay bills over the internet?

money is transferred from your account to your creditor's

When are savers and borrowers linked through financial institutions?

savers deposit money used to loan money to borrowers

What is a benefit of savings accounts?

liquidity, in case you need to use the money in a short time

What happened to the banking system after the Great Depression?

the banking system was taken off the gold standard

Credit unions usually offer their customers:

loans with lower interest rates

The main purpose of the FDIC is:

customers don't lose money if bank fails

Why do most societies NOT use commodity money?

it is often not portable, durable, or divisible

The Savings and Loan crisis of the 20th century was partially caused by which of these:

high interest rates, bad loans, and fraud

What is an important disadvantage of the"gold standard"?

it can lead to bank runs to convert money

What is fractional reserve banking?

banks keep some $ on hand and lend out the rest

What is a “bear market” when it comes to stocks?

many investors are selling in anticipation of lower profits

Why is a certificate of deposit (CD) a safe investment?

it is guaranteed by the federal government

What happens during a bank run?

customers take out more money than the bank has on hand

What is diversification?

spreading out investments to reduce risk

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Economics Unit 4 Review

23 termsStudBud Administration167 plays

Review of Chapters 10 and 11

Flashcards23 cardsFPractice quizPHost liveL

Questions 23

Answers

1
What does the NYSE do?
buys/sells stocks not bonds for wealthy private investors
handles stock/bond trading on the internet only
arranges the buying/selling of only blue chip stocks
arranges stock/bond trading of large/established companies
2
Why is the gold standard no longer used in the US?
Too much paper money and not enough gold to back it
because it is stupid
Gold is scarce
It lead to bank runs
3
Why are funds in checking accounts called demand deposits?
they go up in value as demand increases
they go down in value when demand increases
they are available whenever the account holder wants them
they are kept without interest by the bank
4
How does a bank make most of its profit on its business?
collecting fees from safe deposit boxes
by paying out less interest on deposits than it gets on loan
receiving fees from the government
collecting fees on credit card purchases
5
What is the difference between simple and compound interest?
simple goes to CC debt, compound goes to mortgage
simple has fixed rate, compound has adjustable interest rate
simple paid on principal;compound on both principal/interest
simple paid to customers, compound paid by corporations
6
What happens when you pay bills over the internet?
money from your account is issued as a check to creditor
money is transferred from your account to your creditor's
money is added to your account automatically
money is added to your debit card
7
When are savers and borrowers linked through financial institutions?
savers deposit money used to loan money to borrowers
they invest in the same markets
the financial institutions offer them the same rates
borrowers take money to invest with savers
8
What is one banking reform the government made during the Great Depression?
the gov't paid off loans for large corporations
they created the Federal Reserve System
they deregulated the banking industry
they created the FDIC
9
What is a benefit of savings accounts?
maximum interest earned
they are not a safe investment for the long term
liquidity, in case you need to use the money in a short time
taking risks
10
What happened to the banking system after the Great Depression?
the Federal Reserve Banks were closed
Banks were deregulated by the government
the banking system was taken off the gold standard
the govt bailed out large corporations
11
Credit unions usually offer their customers:
loans with lower interest rates
low paying savings accounts
higher service charges
insurance on loans
12
The main purpose of the FDIC is:
customers don't lose money if bank fails
gov't has enough gold to cover expenses
banks charge a fair amount of interest on loans
commercial and investment banks do not fail
13
Why do most societies NOT use commodity money?
it isn't backed by the government
it can't be used to pay taxes
it is not valuable in and of itself
it is often not portable, durable, or divisible
14
The Savings and Loan crisis of the 20th century was partially caused by which of these:
inadequate money supply
high interest rates, bad loans, and fraud
strict regulation, low interest rates
lack of checking accounts
15
What is an important disadvantage of the"gold standard"?
it allows the national bank to become all powerful
it can lead to bank runs to convert money
it can slow economic growth by limiting $ in circulation
allows the govt to print more $ than it can back with gold
16
What is fractional reserve banking?
banks keep some $ on hand and lend out the rest
banks lend only some $ as mortgages
only some deposits are paid on demand
people transfer $ and pay bills electronically
17
What is a “bear market” when it comes to stocks?
many investors buying in anticipation of higher profits
many investors are selling in anticipation of lower profits
profits are rising
profits are falling
18
Why is a certificate of deposit (CD) a safe investment?
it offers a high degree of liquidity
it pays a high rate of interest
it is guaranteed by the federal government
it is issued by a savings bank
19
What happens during a bank run?
the Federal government requires all banks to close
the price of gold specie suddenly increases
states charter more bank than their citizens need
customers take out more money than the bank has on hand
20
What happens to the price of a company’s stock when that company makes a profit?
the price goes up
the price goes down
the stock follows the market
the price stays the same
21
What is an important characteristic of M1 money?
flexibility
liquidity
durability
solidity
22
What is diversification?
putting all the $$ in one place
spreading out investments to reduce risk
not investing at all
spreading out investments to increase risks
23
Cost to finance (ex a new car) is equal to total interest paid
false
true

Economics Unit 4 Review Flashcards | StudBud