AnswersOC27 Economics-2102310-Sem-MeadowsUnit Test

Unit 3A Test Answers

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41
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Why do some lenders require borrowers to secure credit?

A
to prevent defaults
B
to guarantee full repayment
C
to avoid any losses
D
to reduce risk
42
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Once stocks are on the market, which best explains how their prices are set?

A
Prices are controlled by the issuing company.
B
Prices are set by the financial market.
C
Prices follow economic trends.
D
Prices fluctuate on the basis of demand.
43

The inflationary spiral explains the causes and effects of high inflation. The spiral usually begins with an increase in demand. What is the direct effect of this increase?

A
Producers raise prices to continue to make a profit.
B
The government prints more money, lowering the value of money.
C
Workers negotiate with employers to receive more money.
D
Consumers need higher wages to keep up with rising prices.
44

The circular flow model examines interactions between which sectors of the economy? Select THREE answers.privategovernmentforeigntechhouseholds

A
private
B
government
C
foreign
D
tech
E
households
45

Consumers having more money to purchase computers will most likely result in

A
a decrease in prices for computers and computer accessories.
B
an increase in prices for computers and computer accessories.
C
a decrease in prices for computers, but not computer accessories.
D
an increase in prices for computers, but not computer accessories.
46

Which of these affect real investment value? Check all that apply.

A
fees and expenses
B
inflation
C
nominal interest rate
D
pretax returns
E
taxes
47

Income reaches the highest level at the point of the business cycle.

Answer not available
48

Which statement best describes why a government’s actions are important in macroeconomics? Check all that apply.Government controls industry through policy.Government is both a consumer and a producer.Government can prevent changes and challenges.Government can use policy to influence the economy.Government can accurately predict economic trends.

A
Government controls industry through policy.
B
Government is both a consumer and a producer.
C
Government can prevent changes and challenges.
D
Government can use policy to influence the economy.
E
Government can accurately predict economic trends.
49

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.
50

Interest paid on a loan is calculated as a percentage of the

A
principal.
B
amount owed.
C
compounded principal.
D
collateral.
51

Which types of investments are securities?

A
both debt and equity
B
debt only
C
equity only
D
neither debt nor equity
52

Which best describes what occurs in the product market?

A
the exchange of labor for capital
B
the exchange of goods and services for factors of production
C
the exchange of goods and services for money
D
the exchange of money for factors of production
53

Which could be a negative factor of a barter system?

A
Both individuals easily agree on the value of their goods.
B
One person may not want or need what the other person is offering.
C
Goods can be exchanged without the need for any physical currency.
D
The process requires money so the two people involved can easily come to an agreement.
54

What do borrowers use to secure a mortgage loan? Check all that apply.

A
a credit card
B
a down payment
C
a house
D
land
E
a vehicle
55

Which statement best describes how an investor makes money off debt?

A
An investor makes money by issuing bonds.
A
An investor makes money by earning interest.
A
An investor makes money by raising capital.
A
An investor makes money by being repaid for the principal.
56

What might cause a change in the value of fiat money?

A
a change in the value of commodities
B
a change in government regulations
C
a change in materials used to make money
D
a change in individuals’ spending habits
57

The graph shows changes in GDP in the United States from 2009 to 2011.How did the contribution of the services sector to GDP change between 2009 and 2011?

Question illustration
A
It rose by less than 1 percent.
B
It fell significantly.
C
It rose significantly.
D
It stayed exactly the same.
58

How does time generally affect the risk of an investment?

A
Short-term investments are generally less risky than long-term investments.
B
Long-term investments are generally more risky than short-term investments.
C
Time has no effect on the risk of an investment.
D
Short-term investments are generally more risky than long-term investments.
59

Which is true about investments and risk?

A
Low-risk investments have a high return over the long run.
B
High-risk investments usually fail.
C
Safe investments are always somewhat profitable.
D
Every investment carries some degree of risk.
60

When might it be important to know a currency’s exchange rate?

A
when planning expenses for an overseas trip
B
when changing money into smaller denominations
C
when preparing to buy something expensive
D
when deciding which college is the best value

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