1. Unit 4
Econ EOC Review

2. Question 1
What is the purpose of the Federal Deposit Insurance Corporation (FDIC)?
A. to make sure that banks do not fail
B. to make sure that customers do not lose money if a bank fails
C. to make sure that banks charge a fair amount of interest on loans
D. to make sure that the government has enough gold to cover its expenses

3. Question 1
What is the purpose of the Federal Deposit Insurance Corporation (FDIC)?
A. to make sure that banks do not fail
B. to make sure that customers do not lose money if a bank fails
C. to make sure that banks charge a fair amount of interest on loans
D. to make sure that the government has enough gold to cover its expenses

4. Question 2 What is a mortgage used to purchase? A. car
B. college tuition
C. real estate
D. business expenses

5. Question 2 What is a mortgage used to purchase? A. car
B. college tuition
C. real estate
D. business expenses

6. Question 3 Why is using coins as money easier than using gold bars?
A. coins are more durable
B. coins are more uniform
C. coins are more portable
D. coins are more limited in supply

7. Question 3 Why is using coins as money easier than using gold bars?
A. coins are more durable
B. coins are more uniform
C. coins are more portable
D. coins are more limited in supply

8. Question 4 Which of the following is NOT an example of M1 money?
A. currency
B. travelers’ checks
C. a mutual fund
D. a checking account

9. Question 4 Which of the following is NOT an example of M1 money?
A. currency
B. travelers’ checks
C. a mutual fund
D. a checking account

10. Question 5
The main advantage of diversification as an investment policy is that it
A. reduces risk to investors.
B. increases investors’ access to their money.
C. offsets the effects of inflation on investments.
D. guarantees a fixed rate of return on an investment.

11. Question 5
The main advantage of diversification as an investment policy is that it
A. reduces risk to investors.
B. increases investors’ access to their money.
C. offsets the effects of inflation on investments.
D. guarantees a fixed rate of return on an investment.

12. Question 6
Investing in a money market mutual fund is a higher risk than investing in a certificate of deposit because unlike CDs, money market funds
A. are not insured by the FDIC.
B. are not protected by the Securities and Exchange Commission.
C. do not earn a fixed interest rate.
D. must be held for a preset amount of time.

13. Question 6
Investing in a money market mutual fund is a higher risk than investing in a certificate of deposit because unlike CDs, money market funds
A. are not insured by the FDIC.
B. are not protected by the Securities and Exchange Commission.
C. do not earn a fixed interest rate.
D. must be held for a preset amount of time.

14. Question 7 The Dow Jones Industrial Average consists of
A. 500 different stocks that change annually.
B. 30 stocks that are considered representative of the market as a whole.
C. the top-selling 250 stocks over a 10-year period.
D. 60 stocks selected from the NYSE, the NASDAQ-AMEX, and the OTC market.

15. Question 7 The Dow Jones Industrial Average consists of
A. 500 different stocks that change annually.
B. 30 stocks that are considered representative of the market as a whole.
C. the top-selling 250 stocks over a 10-year period.
D. 60 stocks selected from the NYSE, the NASDAQ-AMEX, and the OTC market.

16. Question 8 Investment is A. providing money for your family.
B. the act of redirecting resources from being consumed today so that they may create benefits in the future.
C. an institution that helps channel funds from savers to borrowers.
D. a collection of financial intermediaries.

17. Question 8 Investment is A. providing money for your family.
B. the act of redirecting resources from being consumed today so that they may create benefits in the future.
C. an institution that helps channel funds from savers to borrowers.
D. a collection of financial intermediaries.

18. Question 9 What is the source of fiat money’s value?
A. it represents the value of another item
B. government decree
C. presidential pardon
D. it is equal to the value of the stock market

19. Question 9 What is the source of fiat money’s value?
A. it represents the value of another item
B. government decree
C. presidential pardon
D. it is equal to the value of the stock market

20. Question 10
The money supply of the United States is made up of which of the following?
(a) M1
(b) M1 and parts of M2
(c) all the money available in the economy
(d) all the money available in the economy plus money that the country could borrow

21. Question 10
The money supply of the United States is made up of which of the following?
(a) M1
(b) M1 and parts of M2
(c) all the money available in the economy
(d) all the money available in the economy plus money that the country could borrow

22. Question 11
A bond is a
(a) loan that represents debt that the government or a corporation must repay to an investor.
(b) portion of ownership in a corporation.
(c) system that allows the transfer of funds between savers and borrowers.
(d) collection of financial assets.

23. Question 11
A bond is a
(a) loan that represents debt that the government or a corporation must repay to an investor.
(b) portion of ownership in a corporation.
(c) system that allows the transfer of funds between savers and borrowers.
(d) collection of financial assets.

24. Question 12 What term matches the following definition?
coins and paper bills used as money

25. Question 12 What term matches the following definition?
coins and paper bills used as money
Answer: Currency

26. Question 13 What term matches the following definition?
the price paid for the use of borrowed money

27. Question 13 What term matches the following definition?
the price paid for the use of borrowed money
Answer: Interest

28. Question 14 What term matches the following definition?
a steady drop in the price of stocks over a period of time

29. Question 14 What term matches the following definition?
a steady drop in the price of stocks over a period of time
Answer: Bear Market

30. Question 15 What term matches the following definition?
spreading out your investments

31. Question 15 What term matches the following definition?
spreading out your investments
Answer: Diversification

32. Question 16 What term matches the following definition?
money pooled from small investors and used to purchase government or corporate bonds

33. Question 16 What term matches the following definition?
money pooled from small investors and used to purchase government or corporate bonds
Answer: Mutual Fund

34. Question 17 What term matches the following definition?
a steady rise in the stock market over a period of time

35. Question 17 What term matches the following definition?
a steady rise in the stock market over a period of time
Answer: Bull Market