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