Economic Policy Answers

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Which questions should Robert ask himself before investing the $10,000 he inherited? Select four options.How am I protected as an investor? Are my friends investing in a similar way? What guarantees are in place so I make money? What taxes will I have to pay on this investment?How do the risks compare to the potential gains? What are the chances that the investment will fail?

A
How am I protected as an investor?
B
Are my friends investing in a similar way?
C
What guarantees are in place so I make money?
D
What taxes will I have to pay on this investment?
E
How do the risks compare to the potential gains?
F
What are the chances that the investment will fail?
2
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Julie wants to buy a car and is deciding how she should invest her money. To best meet her needs, she should

A
keep her money in a checking account for easy access.
B
invest in US savings bonds because of its short term.
C
invest in a commodity because of its low risk.
D
keep her money in a savings account for easy access.
3

Which is an example of a short-term investment?

A
bonds
B
retirement funds
C
savings accounts
D
houses
4

Putting money into more than one kind of investment at a time is called

A
liquidity.
B
sunken cost.
C
diversification.
D
compound interest.
5

Bonds are considered to offer a guaranteed return, as they must be honored by law, but which is still a potential risk that investors face?

A
The issuer may not raise enough capital.
B
The issuer could refuse to pay dividends.
C
The issuer could go bankrupt.
D
The issuer may not make a profit.
7

During a recession, what is one way governments try to encourage growth?

A
by increasing unemployment benefits
B
by stopping government spending
C
by requiring firms to maintain production
D
by eliminating all tax breaks
8

To help encourage economic growth, a country can

A
stop selling goods to other countries.
B
invest in research and development.
C
lay off unneeded workers.
D
lower requirements for education.
9

Bank deposits help the nation’s economy by

A
providing protection for consumers from theft.
B
giving banks the money to loan and invest.
C
providing protection for banks on investments.
D
giving consumers the ability to save money.
10

Who regulates markets where investments are traded?

A
individual investors
B
the federal government
C
corporate entities
D
financial institutions
12

Which describes an investor’s primary goal of buying a loan?

A
to grow a business
B
to earn a profit off the interest
C
to bolster the economy
D
to provide capital to a business
13

Demand-pull inflation happens when the demand for goods

A
remains very low.
B
shifts up and down.
C
matches the supply.
D
increases.
14

The graph shows data for the years 2010 through 2012.Which might be a better title for this graph?

Question illustration
A
Total Exports for the United States and China
B
Trade Between China and the United States
C
Unemployment in the United States and China
D
The History of International Trade
15

Which best describes the role that government and business play in investments?

A
They both use taxes to support a country’s growth.
B
They both invest money to earn a profit.
C
They both receive capital to use for growth.
D
They both act as angel investors for start-ups.
16

The map shows GDP per capita in the United States for a given year.What conclusion can someone draw from the map?

Question illustration
A
States with the highest per capita GDP tend to be in the South.
B
Alaska has the lowest per capita GDP of any state.
C
States with the lowest per capita GDP tend to be in the South.
D
Florida has a higher per capita GDP than New York.
17

Since stocks can be traded online, which purpose is best served by markets?

A
Markets regulate transactions.
B
Markets are where the trades actually occur.
C
Markets sell the assets to be traded.
D
Markets ensure that the transactions are secure.
18

The graph shows examples of investments with high and low liquidity.

Question illustration
A
knows they will need cash in the near future.
B
knows they will need cash years from now.
C
wants to have a guaranteed source of income.
D
wants to have higher returns on their investment.
20

Which statement best describes why it is difficult to sell a home during a recession?

A
Mortgage rates are high.
B
Demand greatly decreases.
C
Mortgages become unavailable.
D
Housing prices increase.

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