Econ Test 4

Question 1

What type of account guarantees a certain interest rate and has a specified maturity date?

Answer 1

C.D.

Question 2

What type of account allows limited transactions and pays an interest rate that changes with demand for loans?

Answer 2

Money Market

Question 3

What quality should money possess that shows its stability in value?

Answer 3

Constancy

Question 4

What quality should money possess that shows its availability in small or large units?

Answer 4

Divisibility

Question 5

What is a written order that authorizes a bank to remove funds from an account?

Answer 5

Check

Question 6

What type of investment allows an individual to vote at company meeting?

Answer 6

Common Stock

Question 7

What type of investment allows an individual to receive a fixed amount of dividend before other investors?

Answer 7

Preferred Stock

Question 8

What is the value asserted to the worth of a coin or bill?

Answer 8

Face Value

Question 9

What type of money consists only of transaction accounts traveler checks and all coins and paper money held only outside banks?

Answer 9

M1

Question 10

Payments for insurance.

Answer 10

Premiums

Question 11

Guarantees the amount of the original investment plus a specified rate of interest by a certain date.

Answer 11

Bonds

Question 12

Shares of corporations profit.

Answer 12

Dividens

Question 13

Coined metallic money.

Answer 13

Specie

Question 14

Bars of gold, silver or platinum.

Answer 14

Bullion

Question 15

The resources corporations gather by selling ownership in their business.

Answer 15

Stocks

Question 16

Any form of money that has been declared as ballad means of payment.

Answer 16

Legal Tender

Question 17

What did the apostle Paul say was the root of all evil?

Answer 17

Love of Money 🤑

Question 18

What principal refers to people hoarding stable forms of money while spending less stable forms?

Answer 18

Gresham’s Law

Question 19

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

Answer 19

Investment

Question 20

What term refers to one who borrows money?

Answer 20

Debtor

Question 21

What term refers to one who lends money or capital?

Answer 21

Creditor

Question 22

What corporation created by congress insures the money in each type of bank account?

Answer 22

Federal Deposit Insurance Corporation (F.D.I.C)

Question 23

What are The 3 key elements that determine how much the investments grow?

Answer 23

• Time
• Rate of Return
• Amount Invested

Question 24

What USA department is responsible for printing money?

Answer 24

Treasury Department

Question 25

What are the 3 principal purposes of money?

Answer 25

- Median of exchange - Measure of value - Store of value

Question 26

What is legal tender that is backed only by the governments promise?

Answer 26

Fiat Money

Question 27

What does CD stand for (banking)?

Answer 27

Certificate of Deposit

Question 28

A contract between two parties of perfection against certain types of loss in exchange for payments.

Answer 28

Insurance

Question 29

Perfects stock holders from paying the firm's creditors in event of failure or bankruptcy.

Answer 29

Limited Liability

Question 30

A louse for the investment of money in a wide variety of area's.

Answer 30

Mutual Funds

Question 30

Legal entity which is distinct from the people who own it.

Answer 30

Corporation

Question 31

An arrangement for the intent of providing from retirement from work.

Answer 31

Pension Plan

Question 32

Assets that flow easily because they can be converted into other investments.

Answer 32

Liquid Investments

Question 33

(T or F) In market economies most of the savings needed to fund R and D comes from the PUBLIC sector.

Answer 33

Private

Question 34

(T or F) The 3 main components of the Federal reserve system are the federal open market committee the federal reserve banks and the BOARD OF GOVERNORS.

Answer 34

True

Question 35

(T or F) The US money supply is managed by the TREASURY DEPARTMENT.

Answer 35

Federal Reserve

Question 35

(T or F) When too much money is in circulation the result is INFLATION.

Answer 35

True

Question 36

(T or F) Throughout history many governments have DEFLATED their currencies by adding lead copper and iron to their gold and silver coins.

Answer 36

Debased

Question 37

(T or F) TRADE is the exchange of one good for another good without a standard money from passing from hand to hand.

Answer 37

Barter

Question 38

(T or F) MONETARISM is the theory that the variation and the money supply is the main source of economic fluctuation.

Answer 38

True

Question 39

(T or F) In proverbs the bible instructs people to go to the GRASSHOPPER to learn how to work.

Answer 39

Ant 🐜

Question 40

(ESSAY) Why is the federal social security system a bad investment?

Answer 40

Spent by gov. Program is built on a pay as you go system. Much of the money could be lost. People could invest somewhere else. Not gov. Responsibility to provide money.

Question 41

(ESSAY) explain how the fractional reserve system of banking allows banks to hold less then 100% of deposited in reserve.

Answer 41

Banks need small fraction for day to day operations, not gonna need all the money at once. They found that by lending portions of their deposited money, banks are creating money that is not backed by bank assets.

Question 42

Property Belonging to an owner that he uses to secure a loan.

Answer 42

Collateral

Question 43

In which retirement savings fund are contributions taxable, but interest earned on the contributions is not taxable.

Answer 43

Roth IRA

Question 44

Action an investor would take to express a desire to own a stock.

Answer 44

Bid

Question 45

Organization that prohibits insider trading.

Answer 45

SEC

Question 46

(T or F) When one declares CHAPTER 7 bankruptcy, his debts are forgiven, but most of his property is sold.

Answer 46

True

Question 47

(T or F) IPO is an investment with a typically higher risk with potential for higher returns.

Answer 47

True