Econ Unit 4 Test
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
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| What is commodity money? | Money with intrinsic value
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| What is fiat money? | Money without value outside of what the gov says
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| Characteristics of effective money | Portability, durability, divisibility, limited supply
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| Too much money causes what? | Decreased value
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| What are the three functions of money? | Medium of exchange, measure of value, store of value
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| What is a demand deposit account? | A deposit you can easily put in and get back
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| Name examples of an M1 account. | Cash, savings, Traveler's checks, checkable deposits
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| What is an M2 account? | An M1 account plus mutual funds
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| What is the purpose of the Federal Reserve? | Bank oversight and deposit insurance
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| What is a bank run? | When many depositors withdraw their money at the same time
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| What is the FDIC? | Federal Deposit Insurance Corporation
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| What does the FDIC do? | Insurances bank deposits (up to $250k)
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| Define liquidity | How easily accessible/convertible an asset it
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| Define the Inconvertible Fiat Money Standard. | Money isn't backed by gold or silver
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| When you get a paycheck, you can ________ or ________ it. | Save, spend
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| Saving money allows a bank to | Lend/borrow it
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| Name an example of a savings account. | Savings account, certificate of deposit, gov bonds, corporate bonds
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| The financial system is a network of.... | Savers, investors, and financial institutions
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| What is another word for financial middlemen? | Financial intermediaries
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| Name an example of brick and mortar intermediaries | Commercial banks, credit unions, savings banks, mutual savings banks
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| Name an example of nonbank financial intermediaries | Mutual funds, pension funds, finance companies, life insurance companies
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| With ________ you pay monthly premiums so that money goes to your beneficiary when you pass away | Life insurance
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| When you invest in something, you have to look at the _______ vs the _______ | Risk/return, reward
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| What is the riskiest investment? | Trading
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| ______ are a long-term IOU. | Bonds
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| What makes up a bond? | Coupon, maturity, par-value
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| Other investments include ________ and _________ | Savings bonds and gov bonds
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| When you retire, what are usually your 2 options? | 401(k) and IRA
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| Which retirement plan gives the highest return and most money? | 401(k)
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| True or false: You can have a 401(k) when you're self-employed | False, only an employer can provide a 401(k)
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| _______ are another word for stocks and they show ownership in corporations | Equities
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| What is the Efficient Market Hypothesis? | Argues that stocks are usually priced about right and bargains are hard to come by
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| The easiest way to buy stocks today is through the ________ or by hiring a ________ | Internet, stockbroker
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| What is it called when you invest in various types of stocks? | Portfolio diversification
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| What are places where stocks are bought and sold? | Stock exchanges
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| Name an example of stock exchanges | AMEX, NYSE
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| _________ is a popular stock exchange where over the counter stocks are bought and sold | NASDAQ
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| What is an over the counter market? | A large system of stock markets connected by a computer system
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| The _______ measures the performance of ___ of the best stocks. | DJIA, 30
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| What is a bull market? | A strong upward moving stock market
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| What is a bear market? | A strong downward moving stock market
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| An ______ contract is an agreement to buy/sell stock in the future | Futures market
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| The _________ option is the right to buy stock in the future | Call
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| The _________ option is the right to sell stock in the future | Put
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| What is the best interest rate for any investment? | 6%
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