AnswersPersonal Finance - EL3403Investing and Financial Markets

Investing and Financial Markets — Unit test Answers

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21
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Which of the following best describes the circular flow model?

A
The model represents the movement of money throughout the economy.
B
The model represents the interactions within sectors.
C
The model represents the flow of goods and services between sectors.
D
The model represents the changing relationships between actors.
22
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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.
23

Read the paragraph.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.Country M hopes to encourage economic growth by investing in

A
education to reduce unemployment and increase production.
B
new technologies to produce goods that are in great demand.
C
resources that can be traded with other nations.
D
research to develop goods that can be sold on a global scale.
24

What is the difference between inflation and deflation?

A
Inflation can result from falling demand and boosts the value of money. Deflation can result from rising demand and reduces the value of money.
B
Inflation can result from rising demand and boosts the value of money. Deflation can result from falling demand and reduces the value of money.
C
Inflation can result from falling demand and reduces the value of money. Deflation can result from rising demand and boosts the value of money.
D
Inflation can result from rising demand and reduces the value of money. Deflation can result from falling demand and boosts the value of money.
25

[BLANK]

A
private
B
close
C
factor
26

Which is the most liquid form of money?

A
cash and currency in circulation
B
investment accounts
C
savings accounts
D
demand accounts
27

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.
28

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

A
capital
B
inflation
C
aggregate
D
equilibrium

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