unit 4 econ eoc review. question 1 what is the purpose of the federal deposit insurance corporation...

Unit 4

Econ EOC Review

Question 1

What is the purpose of the Federal Deposit Insurance Corporation (FDIC)?

A. to make sure that banks do not failB. to make sure that customers do not lose money

if a bank failsC. to make sure that banks charge a fair amount of

interest on loansD. to make sure that the government has enough

gold to cover its expenses

Question 1

What is the purpose of the Federal Deposit Insurance Corporation (FDIC)?

A. to make sure that banks do not failB. to make sure that customers do not lose money

if a bank failsC. to make sure that banks charge a fair amount of

interest on loansD. to make sure that the government has enough

gold to cover its expenses

Question 2

What is a mortgage used to purchase?

A. carB. college tuitionC. real estateD. business expenses

Question 2

What is a mortgage used to purchase?

A. carB. college tuitionC. real estateD. business expenses

Question 3

Why is using coins as money easier than using gold bars?

A. coins are more durableB. coins are more uniformC. coins are more portableD. coins are more limited in supply

Question 3

Why is using coins as money easier than using gold bars?

A. coins are more durableB. coins are more uniformC. coins are more portableD. coins are more limited in supply

Question 4

Which of the following is NOT an example of M1 money?

A. currencyB. travelers’ checksC. a mutual fundD. a checking account

Question 4

Which of the following is NOT an example of M1 money?

A. currencyB. travelers’ checksC. a mutual fundD. a checking account

Question 5

The main advantage of diversification as an investment policy is that it

A. reduces risk to investors.B. increases investors’ access to their money.C. offsets the effects of inflation on investments.D. guarantees a fixed rate of return on an

investment.

Question 5

The main advantage of diversification as an investment policy is that it

A. reduces risk to investors.B. increases investors’ access to their money.C. offsets the effects of inflation on investments.D. guarantees a fixed rate of return on an

investment.

Question 6

Investing in a money market mutual fund is a higher risk than investing in a certificate of deposit because unlike CDs, money market funds

A. are not insured by the FDIC.B. are not protected by the Securities and

Exchange Commission.C. do not earn a fixed interest rate.D. must be held for a preset amount of time.

Question 6

Investing in a money market mutual fund is a higher risk than investing in a certificate of deposit because unlike CDs, money market funds

A. are not insured by the FDIC.B. are not protected by the Securities and

Exchange Commission.C. do not earn a fixed interest rate.D. must be held for a preset amount of time.

Question 7

The Dow Jones Industrial Average consists of

A. 500 different stocks that change annually.B. 30 stocks that are considered representative of

the market as a whole.C. the top-selling 250 stocks over a 10-year

period.D. 60 stocks selected from the NYSE, the

NASDAQ-AMEX, and the OTC market.

Question 7

The Dow Jones Industrial Average consists of

A. 500 different stocks that change annually.B. 30 stocks that are considered representative of

the market as a whole.C. the top-selling 250 stocks over a 10-year

period.D. 60 stocks selected from the NYSE, the

NASDAQ-AMEX, and the OTC market.

Question 8

Investment is

A. providing money for your family.B. the act of redirecting resources from being

consumed today so that they may create benefits in the future.

C. an institution that helps channel funds from savers to borrowers.

D. a collection of financial intermediaries.

Question 8

Investment is

A. providing money for your family.B. the act of redirecting resources from being

consumed today so that they may create benefits in the future.

C. an institution that helps channel funds from savers to borrowers.

D. a collection of financial intermediaries.

Question 9

What is the source of fiat money’s value?

A. it represents the value of another itemB. government decreeC. presidential pardonD. it is equal to the value of the stock market

Question 9

What is the source of fiat money’s value?

A. it represents the value of another itemB. government decreeC. presidential pardonD. it is equal to the value of the stock market

Question 10

The money supply of the United States is made up of which of the following?

(a) M1(b) M1 and parts of M2(c) all the money available in the economy(d) all the money available in the economy plus

money that the country could borrow

Question 10

The money supply of the United States is made up of which of the following?

(a) M1(b) M1 and parts of M2(c) all the money available in the economy(d) all the money available in the economy plus

money that the country could borrow

Question 11

A bond is a

(a) loan that represents debt that the government or a corporation must repay to an investor.

(b) portion of ownership in a corporation.(c) system that allows the transfer of funds

between savers and borrowers.(d) collection of financial assets.

Question 11

A bond is a

(a) loan that represents debt that the government or a corporation must repay to an investor.

(b) portion of ownership in a corporation.(c) system that allows the transfer of funds

between savers and borrowers.(d) collection of financial assets.

Question 12

What term matches the following definition?

coins and paper bills used as money

Question 12

What term matches the following definition?

coins and paper bills used as money

Answer: Currency

Question 13

What term matches the following definition?

the price paid for the use of borrowed money

Question 13

What term matches the following definition?

the price paid for the use of borrowed money

Answer: Interest

Question 14

What term matches the following definition?

a steady drop in the price of stocks over a period of time

Question 14

What term matches the following definition?

a steady drop in the price of stocks over a period of time

Answer: Bear Market

Question 15

What term matches the following definition?

spreading out your investments

Question 15

What term matches the following definition?

spreading out your investments

Answer: Diversification

Question 16

What term matches the following definition?

money pooled from small investors and used to purchase government or corporate bonds

Question 16

What term matches the following definition?

money pooled from small investors and used to purchase government or corporate bonds

Answer: Mutual Fund

Question 17

What term matches the following definition?

a steady rise in the stock market over a period of time

Question 17

What term matches the following definition?

a steady rise in the stock market over a period of time

Answer: Bull Market