Econ Unit 4

What were “greenbacks”?
commodity money used by the Union during the Civil War

Which of the following is an example of money as unit of account?
checking the price of a camera at several stores before buying it at the lowest price

Which of the following is an example of the barter system?
Instead of paying rent, you celan the house for the owner

Which of the following is representative money?
an IOU note

An accurate statement about bonds would be that
they are usually a low-risk investment

The main advantage of diversification as an investment policy is that it
reduces risks to investors

What occured during the Free Banking Era?
Currency varied widely from state to state

What is a mortgage used to purchase?
real estate

What is the largest source of income for banks?
the intrest they recieve from loans

All of the following are basic components of bonds EXCEPT

To finance the building of a new police station, a local government is most likely to issue a
municipal bond

You do not have to pay state taxes on intrest earned on
treasury bills

The Dow Jones Industrial Average consists of
30 stocks that are considered representatice of the market as a whole.

A stock that reinvests its earnings in the business instead of paying regular dividends is called
a growth stock

Which of the following is the main disadvantage of using shells as money instead of coins?

Savings bonds differ from most other bonds in that
The buyer does not receive periodic intrest payments in exchange for a lower purchase price.

The most trades are made
on the OTC market

All of the following are examples of financial intermediaries EXCEPT
a stock certificate

When you invest in a mutual fund,
your money is invested in a variety of stocks and bonds

An example of equity is
a share of stock

Which of the following was NOT a cause of the Savings and Loans crisis of the 1980s?
the gold reserve act

What is the purpose of the FDIC?
to make sure that customers do not lose money if the bank fails.

Which of the following is NOT and example of a liquid asset?
a certificate of deposit.

What did the federalist believe about banking?
They believed that a centralized banking system was necessary.

An example of equity is
a share of stock

The intrest rate the bond issuer pays to the bondholder is called the
coupon rate

What happens during a bank run?
More customers withdraw money than the bank has on hand

What happens when you make a purchase using a credit card?
the credit card issuer pays the store

What condition is necessary for a fiat money system to work?
The government must control the money supply

Investing in money market mutual funds is a higher risk than investing in a certificate of deposit because unlike CDs, money market mutal funds
are not issued by the FDIC

Why is using money easier than using gold bars?
coins are more portable

Which of the following is NOT and example of M1 money?
a mutual fund

All of the following are low risk investments EXCEPT
junk bonds

A stock split is most likely to occur when
the price of a stock becomes too high

An example of a blue chip stock might be
a large, well known company traded on the NYSE.

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