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. ••
The correct answers are:
1. Functions of money: 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 a 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. Jayden's account will have $104.00 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. 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. The action that would most help a worker improve her productivity is taking a training course related to her job.
11. Gross domestic product increases when productivity increases.
12. An improved roasting and canning machine would best help Pete's Peanuts achieve its goal of growing 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 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.
16. The best definition of gross domestic product (GDP) is the value of all goods and services produced within domestic borders.
17. In a circular flow diagram, expenditures flow from households to businesses.
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 his raise.
To answer each question:
1. The functions of money are:
- Store of value
- Unit of account
- Medium of exchange
To earn the 3 points, select the options that apply:
- 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 a service that another person wants. The correct answer is: People do not have to have a good or a service that another person wants.
3. When prices rise at a high rate, it is called inflation.
4. A rise in interest rates for home mortgages would most likely occur if home sales increase greatly for several months in a row.
5. Jayden's account will have $104.00 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, who started selling jewelry she made in an online store, is an example of an entrepreneur.
10. To improve her productivity, a worker should take a training course related to her job.
11. Gross domestic product (GDP) increases when productivity increases.
12. An improved roasting and canning machine would best help Pete's Peanuts grow its overall productivity.
13. The new fire department should be provided as a public service because the service should remain unlimited and accessible to all.
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.
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 his raise.