1. Which are functions of money? Select all that apply. (3 points)
store of value ••
producer of resources
unit of account ••
medium of exchange ••
record of finances
unit of output
2. What is the main advantage of using money instead of bartering? (1 point)
Things that people usually trade have very little value to anyone.
Not all countries use the same types of money in their economies.
Money comes in many different values to pay for goods and services.
People do not have to have a good or a service that another person wants. ••
3. What is it called when prices rise at a high rate? (1 point)
interest rate
net export
inflation ••
taxes
4. Which of these events would most likely lead to a rise in interest rates for home mortgages? (1 point)
The prices of homes for sale in a certain city rise by a great deal.
Many new lenders begin offering home mortgages.
Home sales increase greatly for several months in a row. ••
The average time needed to sell a house doubles.
5. Jayden opens a savings account with $100.00. His account earns 4% simple interest annually. How much money will be in his account one year later if he makes no deposits or withdrawals? (1 point)
$96.00
$100.00
$104.00 ••
$148.00
Rohan has $100.00 that he wants to save in a bank. Bank A offers two types of savings accounts. One has a 5% simple interest rate, and the other has a 4.8% compound interest rate. Bank B also offers two types of savings accounts. One has a 3% simple interest rate, and the other has a 4% compound interest rate.
Use the passage to answer the question.
6. Which account should Rohan choose in order to earn the most interest? (1 point)
Bank A simple interest account
Bank A compound interest account ••
Bank B simple interest account
Bank B compound interest account
7. What is the most likely effect on a person's income if he or she has little education and few skills? (1 point)
The person's income will vary greatly.
The person will earn a high income.
The person's income will decline over time.
The person will earn a low income. ••
8. Which of these is a non-monetary positive incentive for entrepreneurs? (1 point)
the need to hire and train workers
the risks of starting a new enterprise
the satisfaction of creating new products ••
the responsibilities of running a business
9. Which of these people is an example of an entrepreneur? (1 point)
Malia started selling jewelry she made in an online store. ••
Liam found a summer job walking dogs in his neighborhood.
Pavel worked hard to learn to speak a foreign language.
Ophelia took classes in painting and drawing at an art center.
10. Which of these actions would most help a worker improve her productivity? (1 point)
finding a new job in a different field
taking a training course related to her job ••
buying a laptop computer for home use
asking her employer to give her a raise
11. What increases when productivity increases? (1 point)
gross domestic product ••
interest rates on loans
national unemployment rates
interest rates on savings
12. Pete's Peanuts wants to grow its overall productivity. Which investment would best help the company achieve this goal? (1 point)
a larger building to store its peanuts
better advertisements for its products
new uniforms for company employees
an improved roasting and canning machine ••
Deepak’s city has grown quite a lot over the past ten years. The city council has been discussing the need for a second fire department so that one would serve the northern part of the city and the other would serve the southern part. The city doesn’t have much room in the budget, so some people have suggested privatizing the fire department. However, others argue that it’s critical, that this would not work, and that it should be a public service.
Use the passage to answer the question.
13. Why would it be best for the new fire department to be provided as a public service? (1 point)
Fire departments are too expensive for entrepreneurs to provide.
Demand for the fire department is greater than its supply.
The service should remain unlimited and accessible to all. ••
Not many people are interested in using the service.
14. Which of these is a source of only federal tax revenue? (1 point)
payroll taxes ••
property taxes
sales taxes
income taxes
15. What is the most likely result of new U.S. government programs beginning without any budget to pay for them? (1 point)
Citizens in the future will have fewer services or higher taxes. ••
Politicians will have less chance of being re-elected to office.
Americans will offer to pay higher taxes to balance the budget.
Goods and services will continue to become more expensive.
16. What is the best definition of gross domestic product, or GDP? (1 point)
money paid to the government in taxes to support public goods and services
the value of all goods and services produced within domestic borders ••
the value of exports minus the total value of imports
a period of decline in overall income and employment
17. In a circular flow diagram, what flows from households to businesses? (1 point)
income
land
expenditures ••
goods
18. What does a rise in per capita GDP indicate? (1 point)
increased productivity ••
better trade deals
more bank loans
increased population
19. Mr. Lee received a raise at a job this year, but he finds that he has less money to spend each month even though his spending habits are the same. What is the most likely reason for this situation? (1 point)
The supply of goods and services has risen.
Unemployment has dropped across the
country.
Mr. Lee is not tracking his finances.
Inflation was greater than Mr. Lee's raise. ••
20. Which of these are factors in determining whether a person is counted in the unemployment rate? Select all that apply. (2 points)
whether the person is actively looking for a job ••
whether the person has been employed for five
or more years
whether the person has the skills needed to find a job
whether the person is willing and able to work••
whether the person is over 21 years of age
21. New technology has made most of the jobs workers do at a particular factory obsolete, and they are laid off. Which type of unemployment are they experiencing? (1 point)
structural ••
casual
frictional
cyclical
22. Which type of investment are stocks? (1 point)
lending
ownership ••
cash equivalent
interest
23. Which is an example of an oligopoly? (1 point)
many different soap companies giving consumers choices
a few soda companies competing for business••
one shipping company with no competition
several grocery stores stocking different items
24. If the price of stock falls dramatically but an investor thinks it will go up again, what is the investor likely to do? (1 point)
trade shares
sell shares
buy shares ••
do nothing
25. Eddie has a credit card on which he makes monthly payments and tries not to carry a balance. What kind of credit is this? Select all that apply. (2 points)
non-revolving
revolving ••
secured
unsecured ••
flexible
Riya recently bought a new phone. She was taking a photo of her sister when she dropped the phone in the pool. The company that made the phone told her they wouldn’t replace it. Riya decides to call her credit card company to find out if they can help.
Use the passage to answer the question.
26. Which advantage of credit is Riya seeking to use? (1 point)
emergencies
purchase power
building a credit line
protection of purchases ••
27. What is a regular car payment an example of? (1 point)
fixed expense ••
variable expense
interest
ownership investment
I think they are all right.
1. The functions of money are:
- Store of value
- Unit of account
- Medium of exchange
2. The main advantage of using money instead of bartering is that people do not have to have a good or service that another person wants.
3. When prices rise at a high rate, it is called inflation.
4. The event that would most likely lead to a rise in interest rates for home mortgages is: home sales increase greatly for several months in a row.
5. If Jayden's savings account earns 4% simple interest annually, then he will have $104.00 in his account one year later if he makes no deposits or withdrawals.
6. Rohan should choose Bank A compound interest account in order to earn the most interest.
7. The most likely effect on a person's income if he or she has little education and few skills is that the person will earn a low income.
8. A non-monetary positive incentive for entrepreneurs is the satisfaction of creating new products.
9. Malia is an example of an entrepreneur because she started selling jewelry she made in an online store.
10. Taking a training course related to her job would most help a worker improve her productivity.
11. Gross domestic product (GDP) increases when productivity increases.
12. Investing in an improved roasting and canning machine would best help Pete's Peanuts grow its overall productivity.
13. It would be best for the new fire department to be provided as a public service because the service should remain unlimited and accessible to all.
14. Income taxes is a source of only federal tax revenue.
15. The most likely result of new U.S. government programs beginning without any budget to pay for them is that citizens in the future will have fewer services or higher taxes.
16. Gross domestic product (GDP) is the value of all goods and services produced within domestic borders.
17. Expenditures flow from households to businesses in a circular flow diagram.
18. A rise in per capita GDP indicates increased productivity.
19. The most likely reason for Mr. Lee having less money to spend each month despite receiving a raise is that inflation was greater than Mr. Lee's raise.
20. The factors in determining whether a person is counted in the unemployment rate are whether the person is actively looking for a job and whether the person is willing and able to work.
21. The type of unemployment experienced by workers whose jobs have become obsolete due to new technology is structural unemployment.
22. Stocks are an example of ownership investment.
23. A few soda companies competing for business is an example of an oligopoly.
24. If the price of stock falls dramatically but an investor thinks it will go up again, the investor is likely to buy shares.
25. Eddie's credit card, on which he makes monthly payments and tries not to carry a balance, is a revolving and unsecured credit.
26. Riya is seeking to use the advantage of credit protection of purchases when she calls her credit card company for help with her phone.
27. A regular car payment is an example of a fixed expense.
1. The functions of money are:
- Store of value: Money can be saved and stored to be used later as a form of wealth.
- Unit of account: Money serves as a common measure of value for goods and services.
- Medium of exchange: Money is used as a widely accepted means of payment for transactions.
2. The main advantage of using money instead of bartering is that people do not have to have a good or service that another person wants. This makes transactions more convenient and efficient.
3. When prices rise at a high rate, it is called inflation.
4. The event that would most likely lead to a rise in interest rates for home mortgages is when home sales increase greatly for several months in a row. This indicates a high demand for homes, which can lead to higher interest rates.
5. Jayden's account will have $104.00 one year later if he makes no deposits or withdrawals. This is calculated by multiplying the initial amount ($100.00) by the interest rate (4%) and adding the result to the initial amount.
6. Rohan should choose the Bank A compound interest account in order to earn the most interest. Compound interest allows for the interest earned to be reinvested, resulting in higher overall returns compared to simple interest.
7. The most likely effect on a person's income if they have little education and few skills is that they will earn a low income.
8. The non-monetary positive incentive for entrepreneurs is the satisfaction of creating new products.
9. Malia, who started selling jewelry she made in an online store, is an example of an entrepreneur.
10. Taking a training course related to her job would most help a worker improve her productivity. Acquiring new skills and knowledge can make a worker more efficient and effective in their job.
11. Gross domestic product (GDP) increases when productivity increases. Increased productivity leads to higher production of goods and services, which contributes to GDP growth.
12. An improved roasting and canning machine would best help Pete's Peanuts grow its overall productivity. This investment would likely increase the efficiency and output of the peanut roasting and canning process.
13. It would be best for the new fire department to be provided as a public service because the service should remain unlimited and accessible to all. Privatizing the fire department may limit access to fire protection based on financial resources.
14. Income taxes are a source of only federal tax revenue.
15. The most likely result of new U.S. government programs beginning without any budget to pay for them is that citizens in the future will have fewer services or higher taxes. Without a budget, the government may need to cut back on services or increase taxes to cover the costs.
16. Gross domestic product (GDP) is defined as the value of all goods and services produced within domestic borders. It represents the total economic output of a country.
17. Expenditures flow from households to businesses in a circular flow diagram. This represents the spending by households for goods and services produced by businesses.
18. A rise in per capita GDP indicates increased productivity. Per capita GDP is the GDP divided by the population, so an increase indicates that each individual's share of the total output has grown.
19. The most likely reason why Mr. Lee has less money to spend each month despite receiving a raise is that inflation was greater than his raise. Inflation erodes the purchasing power of money, reducing the amount of goods and services that can be bought with a given amount of money.
20. The factors in determining whether a person is counted in the unemployment rate are whether the person is actively looking for a job and whether the person is willing and able to work.
21. The workers experiencing job loss due to new technology at a particular factory are experiencing structural unemployment. This type of unemployment occurs when there is a mismatch between the skills of workers and the available jobs in the economy.
22. Stocks are an example of ownership investment. When an individual owns stocks, they own a portion of the company and have certain rights associated with that ownership.
23. A few soda companies competing for business is an example of an oligopoly. An oligopoly is a market structure where a few large firms dominate the market and have significant control over prices and competition.
24. If the price of stock falls dramatically but an investor thinks it will go up again, the investor is likely to buy shares. This is because they believe that the stock's value will eventually increase, allowing them to sell it for a higher price in the future.
25. Eddie's credit card, on which he makes monthly payments and tries not to carry a balance, is an example of revolving credit and unsecured credit. Revolving credit allows the borrower to make charges, pay them off, and then use the credit again, while unsecured credit does not require collateral.
26. Riya is seeking to use the advantage of protection of purchases by calling her credit card company to see if they can help with replacing her phone.
27. A regular car payment is an example of a fixed expense. It is a predictable and recurring expense that remains the same over time.