Question

1. Most financial decisions involve two related elements

a)advice and consent.
b)investment and taxes.
c)time and risk.
d)saving and consumption.

2. The financial system

a)involves bank accounts, mortgages, stock prices, and many other items.
b)involves decisions and actions undertaken by people at a point in time that affect their lives in the future.
c)coordinates the economy’s saving and investment.
d)All of the above are correct.

3. When opening a print shop you need to buy printers, computers,
furniture, and similar items. Economists call these expenditures

a)capital investment
b)investment in human capital
c)business consumption expenditures
d)personal saving

4. When a country saves a larger portion of its GDP than it did before, it will have

a)more capital and higher productivity
b)more capital and lower productivity
c)less capital and higher productivity
d)less capital and lower productivity

5. Institutions that help to match one person's saving with another person's
investment are collectively called the

a)banking system
b)monetary system
c)financial system

6. The primary economic function of the financial system is to

a)keep interest rates low
b)provide expert advice to savers and investors
c)match one person’s consumption expenditures with another person’s capital expenditures
d)match one person’s saving with another person’s investment

7. Most entrepreneurs do not have enough money of their own to start their
businesses. When they acquire the necessary funds from someone else,

a)their consumption expenditures are being financed by someone else’s saving
b)their consumption expenditures are being financed by someone else’s investment
c)their investments are being financed by someone else’s saving
d)their saving is being financed by someone else’s investment

8. The financial system does NOT influence

a)long-run economic growth
b)saving and investment
c)the amount of capital in the economy
d)the amount of natural resources in the economy

9. The fact that borrowers sometimes default on their loans by declaring
bankruptcy is directly related to the characteristic of a bond called

a)credit risk
b)interest risk
c)term risk
d)private risk

10. As an alternative to selling shares of stock as a means of raising funds,
a large company could, instead,

a)invest in physical capital
b)use equity finance
c)sell bonds
d)purchase bonds

Answer 1

1.
c)time and risk.
Most financial decisions involve time and risk
2.
d)All of the above are correct.
A financial system is a system where borrowers can borrow money and lenders can lend their money it involves bank accounts, mortgages, stock prices etc.
3.
a)capital investment
Capital investment is the investment that a firm incurs in items for creating/expanding its business.
4.
a)more capital and higher productivity.
When a country saves a larger portion of its GDP than it did before, it will have more capital and higher productivity.
5.
c)financial system
A financial system is a system where borrowers can borrow money and lenders can lend their money it involves bank accounts, mortgages, stock prices etc.