Answers26-27 Ignite Economics-KY-EconomicsBanking

Banking — Unit test Answers

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1
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Which best explains why banks consider interest on loans to be important?

A
Interest enables them to control the economy.
B
Interest helps them to satisfy customers.
C
Interest enables them to stockpile money.
D
Interest helps them cover business costs.
2
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This graph shows changes in GDP and the unemployment rate in the United States in recent years.In what year would someone looking for work have had the hardest time finding a job?

Question illustration
A
2008
B
2009
C
2011
D
2012
3

Which scenario is an example of cost-push inflation?

A
Consumers have more money to buy cars, and the prices of cars and car parts rise as a result.
B
An increase in workers’ wages raises the production cost of cars, and car prices rise as a result.
C
The demand for cars falls as consumers have less disposable income, and car prices fall as a result.
D
A government bailout helps car manufacturers lower their costs, and car prices fall as a result.
4

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.
5

What explains the difference between retail and commercial banking?

A
Commercial banks loan money to small businesses, while retail banks loan money to large corporations.
B
Retail banks loan money to small businesses, while commercial banks loan money to large corporations.
C
Commercial banks help small businesses make capital purchases, while retail banks help big businesses invest.
D
Retail banks help big businesses make capital purchases, while commercial banks help consumers invest.
6

Which unemployment rate do most economists consider to be acceptable in the United States?

A
0 percent
B
5 percent
C
10 percent
D
20 percent
7

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
8

Which best describes the purpose served by economic models within an economic system?

A
Models identify patterns.
B
Models determine the business cycle.
C
Models control change.
D
Models define global demand.
9

An increase in gross domestic product (GDP) is a sign that a country’s economy is

A
declining.
B
stagnant.
C
growing.
D
depressed.
10

The Federal Reserve Bank of the United States is also known as the

A
people’s bank.
B
central bank.
C
world bank.
D
retail bank.
11

Which scenario is an example of demand-pull inflation?

A
Consumers have more money to buy cars, and the prices of cars and car accessories rise as a result.
B
An increase in workers’ wages raises the production cost of cars, and car prices rise as a result.
C
The demand for cars falls as consumers have less disposable income, and car prices fall as a result.
D
A government bailout helps car manufacturers lower their costs, and car prices fall as a result.
12

Read the graph about mortgage interest rates and housing starts between 1978 and 1983.A conclusion that can be drawn from both graphs by looking at 1983 is that interest rates

Question illustration
A
dropped, which led to more home starts.
B
peaked, while home starts bottomed out.
C
climbed, which led to fewer home starts.
D
bottomed out, while home starts peaked.
13

In the United States, dollar bills, nickels, and dimes are

A
representative money.
B
commodity money.
C
various currencies.
D
different denominations.
14

Which is an advantage of using modern currency instead of a barter system?

A
risk of a loss in value or counterfeiting
B
difficulty in determining the value of goods
C
ability to store and use a form that is accepted everywhere
D
a limited amount of goods and services available
15

These circle graphs show information about Bolivia’s workforce and GDP.Which statement summarizes the information on these graphs?

Question illustration
A
Many Bolivians are farmers, but agriculture makes a modest contribution to the GDP.
B
Industry in Bolivia has grown faster than the labor force can supply workers.
C
Bolivia has invested large sums of money into education to encourage economic growth.
D
Bolivia must depend on agriculture to have a healthy economic future.
16

This circle graph shows historical information about Bolivia’s workforce. What does the graph indicate about Bolivia’s labor force in 2010?

Question illustration
A
Industry contributed to one-third of the country's total GDP.
B
Industry workers made up the smallest share of the workforce.
C
The majority of people at this time worked in agriculture.
D
The services sector provided the highest salary.
17

Read the graph that displays interest and total payments on a loan.Banks make the most money and take the most risk with an interest rate of

Question illustration
A
5 percent.
B
10 percent.
C
15 percent
D
18 percent.
18

In microeconomics, what occurs when equilibrium is reached?

A
Prices decline.
B
Prices increase.
C
Prices are set.
D
Prices fluctuate.
19

Which indicators do economists use to determine the state of the economy? Choose three answers.

A
prices
B
immigration levels
C
agricultural output
D
employment levels
E
gross domestic product (GDP)
20

Which body or group is most able to use money to influence the economy?

A
government
B
suppliers
C
firms
D
producers

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