Chapter 8

Question 1

the commitment of resources to a project or purpose that is expected to bring future profit to an investor

Answer 1

investment

Question 2

one who borrows money or capital

Answer 2

debtor

Question 3

one who lends money or capital

Answer 3

creditor

Question 4

an account that allows checks to be written up to the dollar amount that the account holder has deposited

Answer 4

transaction account\checking account

Question 5

an account holder’s written order that authorizes his bank to withdraw funds from his account

Answer 5

check

Question 6

a bank account that allows the account holder to earn interest on his deposits

Answer 6

savings account

Question 7

an account that guarantees a certain interest rate and has a specified maturity date

Answer 7

CD, certificate of deposit

Question 8

an account that allows limited transactions and pays an interest rate that changes with the demand for loans

Answer 8

money market account

Question 9

a contract between two parties in which one party protects the other against certain types of loss in exchange for payments called premiums

Answer 9

insurance

Question 10

an arrangement provided by an individual’s employer for the intent of providing for the employee’s retirement from work

Answer 10

pension plan

Question 11

the resources corporations gather by selling ownership in their businesses

Answer 11

stocks

Question 12

a legal entity which is distinct from the people who own it

Answer 12

corporation

Question 13

equal portions of a corporations stock

Answer 13

shares

Question 14

if a corporation fails or declares bankruptcy, the individidual stockholders do not personally have to pay the firm’s creditors

Answer 14

limited liabilty

Question 15

shares of a corporation’s profit

Answer 15

dividends

Question 16

a document that guarantees the bondholder the amount of his original investment plus a specified rate of interest by a certain date

Answer 16

bond

Question 17

investment companies that combine the resources of all their shareholders and invest the money in a wide variety of areas

Answer 17

mutual funds

Question 18

assets that flow easily since they can be converted into other investments or cash without much time or difficulty

Answer 18

liquid investments

Question 19

What are the 5 factors of production?

Answer 19

1. Natural Resources
2. Labor
3. Capital
4. Entrepreneurship
5. Information

Question 20

What is a system in which decisions involving the production, distribution, and consumption of goods are based upon custom, heredity, and caste?

Answer 20

Traditional Economy

Question 21

What is the centralized authority that determines the production and distribution of goods?

Answer 21

Command Economy

Question 22

What is the system in which people are free to make their own economic choices?

Answer 22

Free Enterprise Economy

Question 23

What is a system that combines a good measure of free enterprise in some areas with heavy state regulation in others?

Answer 23

Mixed Economy

Question 24

What is any work that contributes to the production of goods?

Answer 24

Labor

Question 25

The labor of free men and women is usually more ________ than the labor of slaves.

Answer 25

Productive

Question 26

What is an economic system that provides barely enough to keep a society alive?

Answer 26

Subsistence Economy

Question 27

Anyone who owns producer goods or owns a share of some business that produces goods is a __________

Answer 27

Capitalist

Question 28

Majority of a nation's capital is owned and controlled by private individuals and business is known as _____ ______

Answer 28

Private Capitalism

Question 29

A system in which the owner of much of the nation's capital is a powerful, centralized apparatus called the collectivist state is ______ ______

Answer 29

State Capitalism

Question 30

The intelligent direction and supervision of natural and human economic resources is known as ___________

Answer 30

Entrepreneurship

Question 31

A person who undertakes management of economic enterprises on a bold scale, with some danger of losing his investment of money and time is a __________

Answer 31

Entrepreneur

Question 32

Capitalism's basic rights:

Answer 32

1. property rights 2. freedom of enterprise and competition in a market environment 3. limited government

Question 33

What are the 3 types of property?

Answer 33

1. tangible 2. financial 3. intellectual

Question 34

Private households and private businesses make the __________ of economic decisions in the free market.

Answer 34

Majority

Question 35

Free enterprise is only possible in the presence of _______ ________

Answer 35

Limited Government

Question 36

What model illustrates how resources and products move through the market?

Answer 36

Circular Flow Model

Question 37

The product market is where what is sold?

Answer 37

Consumer Products

Question 38

The resource market is where what is sold?

Answer 38

Factors of Production