Econ Unit 4 Answers – Flashcards
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What were "greenbacks"?
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commodity money used by the Union during the Civil War
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Which of the following is an example of money as unit of account?
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checking the price of a camera at several stores before buying it at the lowest price
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Which of the following is an example of the barter system?
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Instead of paying rent, you celan the house for the owner
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Which of the following is representative money?
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an IOU note
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An accurate statement about bonds would be that
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they are usually a low-risk investment
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The main advantage of diversification as an investment policy is that it
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reduces risks to investors
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What occured during the Free Banking Era?
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Currency varied widely from state to state
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What is a mortgage used to purchase?
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real estate
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What is the largest source of income for banks?
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the intrest they recieve from loans
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All of the following are basic components of bonds EXCEPT
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liquidity
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To finance the building of a new police station, a local government is most likely to issue a
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municipal bond
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You do not have to pay state taxes on intrest earned on
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treasury bills
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The Dow Jones Industrial Average consists of
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30 stocks that are considered representatice of the market as a whole.
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A stock that reinvests its earnings in the business instead of paying regular dividends is called
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a growth stock
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Which of the following is the main disadvantage of using shells as money instead of coins?
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uniformity
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Savings bonds differ from most other bonds in that
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The buyer does not receive periodic intrest payments in exchange for a lower purchase price.
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The most trades are made
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on the OTC market
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All of the following are examples of financial intermediaries EXCEPT
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a stock certificate
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When you invest in a mutual fund,
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your money is invested in a variety of stocks and bonds
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An example of equity is
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a share of stock
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Which of the following was NOT a cause of the Savings and Loans crisis of the 1980s?
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the gold reserve act
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What is the purpose of the FDIC?
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to make sure that customers do not lose money if the bank fails.
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Which of the following is NOT and example of a liquid asset?
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a certificate of deposit.
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What did the federalist believe about banking?
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They believed that a centralized banking system was necessary.
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An example of equity is
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a share of stock
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The intrest rate the bond issuer pays to the bondholder is called the
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coupon rate
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What happens during a bank run?
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More customers withdraw money than the bank has on hand
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What happens when you make a purchase using a credit card?
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the credit card issuer pays the store
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What condition is necessary for a fiat money system to work?
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The government must control the money supply
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Investing in money market mutual funds is a higher risk than investing in a certificate of deposit because unlike CDs, money market mutal funds
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are not issued by the FDIC
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Why is using money easier than using gold bars?
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coins are more portable
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Which of the following is NOT and example of M1 money?
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a mutual fund
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All of the following are low risk investments EXCEPT
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junk bonds
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A stock split is most likely to occur when
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the price of a stock becomes too high
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An example of a blue chip stock might be
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a large, well known company traded on the NYSE.
