AnswersPersonal Finance - EL3403Investing and Financial Markets

Investing and Financial Markets — Unit test Answers

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In the circular flow model, factors of production flow to firms. Which of the following are the primary factors of production? Check all that apply.laborcapitalgoodslandservices

A
labor
B
capital
C
goods
D
land
E
services
2
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private closefactor

A
private
B
close
C
factor
3

Which best describes why investing can be such a challenge?

A
It is impossible to ever earn a return on investments.
B
Investing always requires millions of dollars up front.
C
There are no guaranteed investments.
D
Most investments are insured by the government.
4

When individuals are looking for jobs but are unable to find work, they are said to be .

Answer not available
5

What advantages does money have over bartered goods? Check all that apply.Money is easy to earn, and bartering takes a lot of work.Money has a set value, and bartered goods do not.Money is more portable than bartered goods.Money is always worth more than bartered goods.Money allows people to easily store value they earn.

A
Money is easy to earn, and bartering takes a lot of work.
B
Money has a set value, and bartered goods do not.
C
Money is more portable than bartered goods.
D
Money is always worth more than bartered goods.
E
Money allows people to easily store value they earn.
6

Which of the following best describes the circular flow model?

A
The model represents the movement of money throughout the economy.
B
The model represents the interactions within sectors.
C
The model represents the flow of goods and services between sectors.
D
The model represents the changing relationships between actors.
7

What is the name of the period when an economy begins to shrink?

A
recession
B
depression
C
recovery
D
peak
8

The level of investment in markets often indicates

A
the stability of the government.
B
the state of the economy.
C
the success of individual companies.
D
the stability of a currency.
9

As a result of decreased production, David lost his job designing cars. Which terms can be used to describe David? Select two options.cyclically unemployeddomestically unemployedfrictionally unemployedstructurally unemployedstill employedunemployed

A
cyclically unemployed
B
domestically unemployed
C
frictionally unemployed
D
structurally unemployed
E
still employed
F
unemployed
11

This graph shows changes in GDP and the unemployment rate in the United States in recent years.Which statement most accurately describes the trends shown on this graph?

Question illustration
A
When GDP falls, unemployment rises.
B
GDP and unemployment have little to do with each other.
C
When GDP rises, unemployment rises as well.
D
GDP and unemployment rise at times of world crises.
13

How do consumers’ feelings about the economy help contribute to growth?

A
Positive consumer attitudes influence spending habits.
B
Positive consumer attitudes increase job prospects.
C
Positive consumer attitudes inspire increased production.
D
Positive consumer attitudes can end a depression.
14

What decisions does the business cycle help businesses make? Choose four answers.whether to stay at old facilities or move to new facilitieswhether to grow or shrink the businesswhether to keep or change productswhether to increase or decrease productionwhether to hire or lay off workerswhether to invest or save money

A
whether to stay at old facilities or move to new facilities
B
whether to grow or shrink the business
C
whether to keep or change products
D
whether to increase or decrease production
E
whether to hire or lay off workers
F
whether to invest or save money
15

The graph shows the percentage changes in the investment rate and the gross domestic product (GDP) between 2008 and 2012.

Question illustration
A
can show if the economy is growing or shrinking.
B
occur only when the economy is shrinking.
C
occur only when the economy is growing.
D
have no relation to changes to the GDP.
16

What is the difference between inflation and deflation?

A
Inflation can result from falling demand and boosts the value of money. Deflation can result from rising demand and reduces the value of money.
B
Inflation can result from rising demand and boosts the value of money. Deflation can result from falling demand and reduces the value of money.
C
Inflation can result from falling demand and reduces the value of money. Deflation can result from rising demand and boosts the value of money.
D
Inflation can result from rising demand and reduces the value of money. Deflation can result from falling demand and boosts the value of money.
17

[BLANK]

A
nominal measurement
B
consumer price index
C
annual rate
D
US Bureau of Labor statistic
18

Cost-push inflation occurs when

A
consumers begin purchasing more goods.
B
producers need more money to make and distribute goods.
C
the government prints more money and pushes prices up.
D
consumers have more money to spend on goods and services.
19

What are the signs of low inflation? Check all that apply.

A
Demand steadily rises.
B
Demand steadily falls.
C
Prices continue to increase.
D
Prices continue to decrease.
E
The economy grows in a healthy way.
F
The economy stagnates and struggles.
20

Does a depression always follow a recession?

A
Yes, the trough is always considered a depression.
B
No, a depression is indicated when the recession is exceptionally long.
C
Yes, for recovery to occur, the trough must be reached.
D
No, the economy could decline quickly and bypass recession.

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