Econ Test LAST ONE!!!!!!!

How does the tax-exempt status of municipal bonds benefit consumers throughout the U.S. free enterprises system?

It makes people more likely to buy municipal bonds.

Which of the following is a tool that the Fed uses to regulate the money supply?

Reserve requirements

What service is available through home banking on the Internet?

Checking account balances.

Which of these is NOT one of the three uses of money?

A means to barter

Why do some people invest in hedge funds?

Because they might make a huge profit

What purpose does the FDIC serve?

To insure customer deposits if a bank fails

The Federal Reserve System was created as a result of the need for financial stability shown by what event?

The Panic of 1907

What did Congress do in 1816 to eliminate the financial chaos of the early nineteenth century?

Chartered the Second Bank of the United States

What kinds of money are included in M1?

Currency

A prospectus tells you

how well your investment is performing.

What advantages do financial intermediaries offer an investor?

They share risks, provide information, and provide liquidity.

Which is not example of a stored-value card?

Credit card

Why does the United States government issue savings bonds?

To pay for government projects

The fact that coins can last a long time in circulation shows which characteristic of money?

Money is durable.

Which of the following is a negative aspect of bartering rather than using currency?

Bartering requires you to find someone who wants what you have.

Which of the following is an example of money's divisibility?

A ten dollar bill can purchase a five dollar item, with five dollars change coming back.

Which of the following is an example of commodity money put to use?

A cow used to purchase land

In the early 2000s, the number of home foreclosures increased because

many borrowers could not repay their mortgages.

Which of the following is a positive aspect of using a credit card?

Using a credit card allows consumers to buy goods even if they don't have cash.

When you evaluate an investment, you must balance

the risks involved with the rewards you expect to gain.

What kinds of financial assets are sold on secondary markets?

Stocks

Which aspect of the Federal Reserve System helps establish its independence from the government?

Ownership of Federal Reserve System by member banks

Which of the following situations would encourage people to invest their money in a savings account rather than keep it in cash?

Rising interest rates

Why do you think ratings are helpful to investors?

They help investors judge potential risk.

What relationship does risk have to return?

The higher the risk, the greater the potential for return.

Why did President Roosevelt want to take the United States off of the gold standard during the Great Depression?

He wanted to give the Fed more power.

The Federal Reserve System acts as lender of last resort to what group?

Financial institutions

In which situation would a family apply for a mortgage?

They want to buy a house.

Name one advantage of bonds for their issuers.

Bondholders can't share in the profits of a company.

In the early days of our nation, a strong centralized bank was favored by __________.

The Federalists