If interest rates are low, consumers are more likely to

borrow money to purchase a home or a car

The fundamental problem of economics is

scarcity ofresources dueto unlimited wants&limited resources

What is the difference btwn investing money and putting it in a savings account?

There is little risk in savings, while investment has some

Which of these would be an opportunity cost of going to college? The

money you could have earned at a job

Because of scarcity, strategies for allocating scarce resources must address

for whom to produce, how to produce,&what to produce

In a mixed economy, which of these would MOST likely be a basic function of government?

to correct market failures and redistribute income

What is generally the reason for a company to issue bonds? It

serves as a means to raise revenue (money)

As one of the factors of production, capital can be defined as the

equipment & factories needed to produce goods

For investments, how are risk and return related?

When the risk is high, the return is high

An opportunity cost is

the next-best choice that you give up to do something else

Mr.Spencer is trying todecide whetherto invest on bonds/stocks.Which BEST describes hisoptions?

Bonds offer fewer risks, but stocks offer higher returns

One weakness of market systems is that

they cannot guarantee security and fairness

What is the primary purpose of job specialization?

increased efficiency and production

A government that operates in a market economy MIGHT become involved in the economy to

provide public goods and services to its citizens

A market economy depends upon

private ownership & control of resources

What is a rational economic decision? One in which

marginal benefits exceed marginal costs

The purpose of this production possibilities graph is to show

how limited resources can be used to makeacombinationofitems

Buying stock through mutual funds is less risky than buying it in one company because

diversify your risk by buying small bits of many companies

Why is there a difference between interest charged and interest earned?

Banks are profit-making institutions

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1st 9 weeks exam review

34 termsStudBud Administration64 plays

review over the Fundamentals of Economics and part of Personal Finance

Flashcards34 cardsFPractice quizPHost liveL

Questions 34

Answers

1
If interest rates are low, consumers are more likely to
save more money
put off making large purchases
save less money
borrow money to purchase a home or a car
2
Over the long term, the investment that will provide the lowest real return is
stocks
savings accounts
savings bonds
bonds
3
The fundamental problem of economics is
to achieve a more equitable distribution of income
establish an equitable system of taxation
to establish a democratic system for the providing goods
scarcity ofresources dueto unlimited wants&limited resources
4
In a market economy, prices are established by
decree of gov't agencies
businesses which buy & sell the products
interaction of supply & demand
consumers and labor unions
5
Consumers determine possible costs/benefits of a financial choice using a
TINSTASFL
Production Possibilities Curve
supply curve
decision-making grid
6
What is the difference btwn investing money and putting it in a savings account?
You can increase funds in savings, but not with investment
greater risk if the money is deposited into asavings account
investment has a set interest rate, savings does not
There is little risk in savings, while investment has some
7
Which of these would be an opportunity cost of going to college? The
money you could have earned at a job
cost of housing and food
degree and money you will earn
cost of books and tuition
8
What would be a negative incentive?
$200 speeding ticket
a police car parked on the side of the interstate
speed limit sign on the highway
Keep off the Grass sign
9
Because of scarcity, strategies for allocating scarce resources must address
for whom to produce, how to produce,&what to produce
how to produce,& which resources to produce
when to produce which resources
for whom to produce, what to produce,&which resources
10
In a mixed economy, which of these would MOST likely be a basic function of government?
to correct market failures and redistribute income
to promote monopolies
to regulate who can purchase services
to ensure financial stability for all citizens
11
What is generally the reason for a company to issue bonds? It
prevents them from having to reveal their finances.
raises the value of their stock for stockholders
promotes good will with the public
serves as a means to raise revenue (money)
12
When Terrell cashes his paycheck, he puts 50% in his savings. How much is that?
$72.25
$50.00
$30.75
$62.50
13
As one of the factors of production, capital can be defined as the
equipment & factories needed to produce goods
goods and services a business produces
supply of labor needed to produce goods
people that purchase goods and services
14
For investments, how are risk and return related?
When the risk is low, the return cannot be calculated
When the risk is high, the return is high
When risk is high, the return is low
When risk is low, the return is high
15
An opportunity cost is
the next-best choice that you give up to do something else
only an issue when there is not a scarcity of resources
usually absent in a command economy
when goods are recycled into other goodsq
16
Mr.Spencer is trying todecide whetherto invest on bonds/stocks.Which BEST describes hisoptions?
Stocks offer fewer risks, but bonds offer higher returns
Bonds offer fewer risks, but stocks offer higher returns
Stocks offer fewer risks & higher potential rewards
Bonds offer fewer risks & higher potential rewards
17
One weakness of market systems is that
they do not respond quickly to change
they allow producers very little freedom
they cannot guarantee security and fairness
they provide very few choices for consumers
18
What is the primary purpose of job specialization?
increased efficiency and production
increased consumer income
increased marginal utility
regional self-sufficiency
19
Which point on the PPC shows a situation where resources are not being used efficiently?
Point C
Point D
Point A
Point B
20
A government that operates in a market economy MIGHT become involved in the economy to
eliminate income inequality among its citizens
make sure all products are produced the same way
increase the profits of a specific company
provide public goods and services to its citizens
21
Which type of gov't intervention promotes competition?
price regulations
public libraries
transfer payments
antitrust laws
22
A market economy depends upon
private ownership & control of resources
limited competition & profits
an equal distribution of wealth
gov't ownership & control of resources
23
Banks & other financial institutions use savings deposits to help borrowers by
using deposits to make loans
saving deposits in a secure vault
keeping deposits to earn interest
spending deposits to improve the bank's safety
24
According to the PPC, the opportunity cost of moving from point A to B is
20 submarines
2 aircraft carriers
8 submarines
6 aircraft carriers
25
Jan is risk-averse, but she wants the best return in 2 years, which would be the best choice?
certificates of deposit
stock-based mutual funds
stocks
bonds
26
What is a rational economic decision? One in which
marginal costs exceed marginal benefits
marginal benefits exceed marginal costs
there are no opportunity costs
the benefits are unknown, but costs are low
27
In what way does specialization increase productivity? Specialization
reduces the cost of production
workers are generally more highly educated
increases the demand for a product
reduces scarcity
28
The purpose of this production possibilities graph is to show
how limited resources can be used to makeacombinationofitems
whether the supply of goods is elastic or not
how supply & demand determine price
the number of workers required for a specific task
29
Workers on an assembly line are an example of
specialization
allocation
homogenization
entrepreneurs
30
Buying stock through mutual funds is less risky than buying it in one company because
investments made into mutual funds are insured by the FDIC
inflation is less likely to erode your investment
diversify your risk by buying small bits of many companies
individual companies usually go bankrupt
31
Tasha's mother rewards her w/ $5 for every A she gets on a report card. Which economic concept?
positive incentive
law of demand
negative incentive
scarcity
32
Williams makes $50 a week, how much can he put towards his computer fund?
$10
$5
$15
$20
33
The investment option with the highest rate of return and highest degree of risk is
common stock
investment-grade bonds
junk bonds
US treasury bills
34
Why is there a difference between interest charged and interest earned?
Banks must pay more than they receive
Banks are profit-making institutions
There is no difference between interest charged & earned
Banks are non-profit institutions

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