Answers26-27 Ignite Economics-KY-EconomicsBanking

Banking — Unit test Answers

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1
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Which statement best describes the main cause of the 2008 housing market crash in the United States?

A
Many people could not buy new homes during a weak economy.
B
Many homes could not sell because housing prices rose too fast.
C
Many homes could not sell because banks charged high interest.
D
Many people could not make home payments during a weak economy.
2
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As a result of decreased production, David lost his job designing cars. Which terms can be used to describe David? Select two options.

A
cyclically unemployed
B
domestically unemployed
C
frictionally unemployed
D
structurally unemployed
E
still employed
F
unemployed
3

Cost-push inflation occurs when

A
consumers begin purchasing more goods.
B
producers need more money to make and distribute goods.
C
the government prints more money and pushes prices up.
D
consumers have more money to spend on goods and services.
4

How do bank loans help the nation’s economy?

A
They ensure consumer spending and confidence.
B
They ensure the success of new businesses.
C
They allow businesses to expand and improve.
D
They allow consumers to quickly pay off debts.
5

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.
6

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
A
When GDP falls, unemployment rises.
B
GDP and unemployment have little to do with each other.
C
When GDP rises, unemployment rises as well.
D
GDP and unemployment rise at times of world crises.
7

Does a depression always follow a recession?

A
Yes, the trough is always considered a depression.
B
No, a depression is indicated when the recession is exceptionally long.
C
Yes, for recovery to occur, the trough must be reached.
D
No, the economy could decline quickly and bypass recession.
8

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.
9

What role does the Federal Reserve play? Check all that apply.

A
Regulate the banking industry
B
Loan money to banks
C
Give individual loans
D
Give corporate loans
E
Transfers any profits to the Treasury
10

What is the name of the period when an economy begins to shrink?

A
recession
B
depression
C
recovery
D
peak
11

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.
12

What decisions does the business cycle help businesses make? Choose four answers.

A
whether to stay at old facilities or move to new facilities
B
whether to grow or shrink the business
C
whether to keep or change products
D
whether to increase or decrease production
E
whether to hire or lay off workers
F
whether to invest or save money
13

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.
14

How do consumers’ feelings about the economy help contribute to growth?

A
Positive consumer attitudes influence spending habits.
B
Positive consumer attitudes increase job prospects.
C
Positive consumer attitudes inspire increased production.
D
Positive consumer attitudes can end a depression.
15

Which is an example of how a denomination is divisible?

A
An American dollar may equal one-half of one Euro.
B
An American dollar is equal to four quarters.
C
Three American dollars may buy a small snack.
D
Five American dollars may be worth less next year.

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Banking — Unit test Answers — 26-27 Ignite…