Answers26-27 Ignite Economics-KY-EconomicsInvesting and Financial Markets

Investing and Financial Markets — Unit test Answers

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1
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This graph shows changes in GDP and the unemployment rate in the United States in recent years.Which statement most accurately describes the trends shown on this graph?

Question illustration
W
When GDP falls, unemployment rises.
G
GDP and unemployment have little to do with each other.
W
When GDP rises, unemployment rises as well.
G
GDP and unemployment rise at times of world crises.
2
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What is the name of the period when an economy begins to shrink?

r
recession
d
depression
r
recovery
p
peak
3

What advantages does money have over bartered goods? Check all that apply.

A
Money is easy to earn, and bartering takes a lot of work.
B
Money has a set value, and bartered goods do not.
C
Money is more portable than bartered goods.
D
Money is always worth more than bartered goods.
E
Money allows people to easily store value they earn.
4

Which best describes the economic impact of defaulting on bank loans?

A
The economy suffers because banks have less money to loan to others.
B
The economy suffers because people have less money to spend.
C
The economy suffers because businesses are scared to take out loans.
D
The economy suffers because people are scared to take out loans.
5

Government officials in Country M have determined that they need to take action to encourage the growth of their economy. To do this, they have introduced an incentive policy that offers citizens free education. This is extended to all individuals who sign a contract agreeing to work within their specific industry for the next ten years.

e
education to reduce unemployment and increase production.
n
new technologies to produce goods that are in great demand.
r
resources that can be traded with other nations.
r
research to develop goods that can be sold on a global scale.
6

What role does the Federal Reserve play? Check all that apply.Regulate the banking industryLoan money to banksGive individual loansGive corporate loansTransfers any profits to the Treasury

R
Regulate the banking industry
L
Loan money to banks
G
Give individual loans
G
Give corporate loans
T
Transfers any profits to the Treasury
7

Which is the most liquid form of money?

A
cash and currency in circulation
B
investment accounts
C
savings accounts
D
demand accounts
8

In the circular flow model, factors of production flow to firms. Which of the following are the primary factors of production? Check all that apply.laborcapitalgoodslandservices

A
labor
B
capital
C
goods
D
land
E
services
9

best

M
Many people could not buy new homes during a weak economy.
M
Many homes could not sell because housing prices rose too fast.
M
Many homes could not sell because banks charged high interest.
M
Many people could not make home payments during a weak economy.
10

What term is used in macroeconomics to describe the total supply and the total demand?

c
capital
i
inflation
a
aggregate
e
equilibrium
11

are debt certificates that are purchased by an investor.

Answer not available
12

The graph shows the percentage changes in the investment rate and the gross domestic product (GDP) between 2008 and 2012.

Question illustration
A
can show if the economy is growing or shrinking.
B
occur only when the economy is shrinking.
C
occur only when the economy is growing.
D
have no relation to changes to the GDP.
13

The level of investment in markets often indicates

A
the stability of the government.
B
the state of the economy.
C
the success of individual companies.
D
the stability of a currency.
14

One fact about all currency is that it

A
loses value over time.
B
has a changing value.
C
maintains a stable value.
D
grows increasingly valuable.
15

What decisions does the business cycle help businesses make? Choose four answers.whether to stay at old facilities or move to new facilitieswhether to grow or shrink the businesswhether to keep or change productswhether to increase or decrease productionwhether to hire or lay off workerswhether to invest or save money

w
whether to stay at old facilities or move to new facilities
w
whether to grow or shrink the business
w
whether to keep or change products
w
whether to increase or decrease production
w
whether to hire or lay off workers
w
whether to invest or save money

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