Unit 4
Econ EOC Review
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
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
Question 2
 What is a mortgage used to purchase?
 A. car
 B. college tuition
 C. real estate
 D. business expenses
Question 2
 What is a mortgage used to purchase?
 A. car
 B. college tuition
 C. real estate
 D. business expenses
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
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
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
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
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.
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.
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.
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.
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.
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.
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.
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.
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
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
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
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
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.
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.
Question 12
 What term matches the following definition?
coins and paper bills used as money
Question 12
 What term matches the following definition?
coins and paper bills used as money
Answer: Currency
Question 13
 What term matches the following definition?
the price paid for the use of borrowed money
Question 13
 What term matches the following definition?
the price paid for the use of borrowed money
Answer: Interest
Question 14
 What term matches the following definition?
a steady drop in the price of stocks over a period of
time
Question 14
 What term matches the following definition?
a steady drop in the price of stocks over a period of
time
Answer: Bear Market
Question 15
 What term matches the following definition?
spreading out your investments
Question 15
 What term matches the following definition?
spreading out your investments
Answer: Diversification
Question 16
 What term matches the following definition?
 money pooled from small investors and used to
purchase government or corporate bonds
Question 16
 What term matches the following definition?
 money pooled from small investors and used to
purchase government or corporate bonds
 Answer: Mutual Fund
Question 17
 What term matches the following definition?
a steady rise in the stock market over a period of
time
Question 17
 What term matches the following definition?
a steady rise in the stock market over a period of
time
Answer: Bull Market