Macro Quiz Chapters 7,8,9

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1. The key indicator of a country's living standard and economic well being is?

real GDP per person

2. The payment of interest not only on the original deposit, but on all previously accumulated interest is called?

compound interest

3. A nation's standard of living, as measured by real GDP per person, increases?

if either average labor productivity and/or the share of population employed increase.

4. If the share of population employed in two countries is the same, average living standards will be higher in the country with?

higher average labor productivity

5. Growth in the share of population employed in the United States is likely to decline in the future because?

an increasing proportion of those currently employed will be retiring

6. The talents, training, and education of workers is called?

human capital

7. Getting a college degree is an example of investing in?

human capital

8. Which of the following is an example of investing in physical capital?

a firm purchases new equipment for a manufacturing process.

9. Increasing the capital available to the workforce, holding other factors constant, tends to __________ total output at a(n) __________ rate?

increase: decreasing

10. Usually an abundance of natural resources __________ average labor productivity?

increases

1. Savings equal?

current income minus spending on current needs.

2. Wealth equals?

assets minus liabilities.

3. The debt one owes are called?

liabilities

4. Which of the following is an asset of a family?

share of stock.

5. Which if the following is a liability of a family?

mortgage

6. Charles has the following assets and liabilities:
*Two cars= $10,000
*House= $200,000
*Mortgage= $100,000
*Cash= $1,000
*Car Loans= $3,000
*Checking Account Balance= $2,000
*Credit Card Balance= 1,000

* What is the value of Charles liabilities?

$104,000

7. Which of the following is a flow?

savings

8. Which of the following is a stock?

wealth

9. Capital gains are?

increases in the value of existing assets.

10. Jay owns a classic car he purchased for $50,000. At a car rally he is offered $75,000 for the car. Based on this information?

Jay has a $25,000 capital gain.

11. Savings for protection against unexpected setbacks, such as the loss of a job or a medical emergency, is called __________ savings?

precautionary

1. The financial system consists of financial __________, such as commercial banks, and financial __________, such as the stock market.

institutions: markets

2. Privately owned firms that accept deposits from individuals and businesses and use those deposits to make loans are called?

commercial banks

3. Banks help savers find productive uses for their funds because banks have specialized in?

gathering information about and evaluating potential borrowers.

4. Two reasons savers keep deposits at banks are to?

earn a return on their savings and to facilitate making payments.

5. The principal amount of a bond is the amount?

originally lent

6. The coupon rate is the?

interest rate promised when a bond is issued.

7. If the principal amount of a bond is $2,000,000, the coupon rate is 6%, and the inflation rate is 4%, then the annual coupon payment made to the holder of the bond is?

$120,000

8. When the interest rate on newly issued bonds increases, the price of existing bonds?

decreases

9. A regular payment received by stockholders for each share they own is called a?

dividend

10. A financial intermediary that sells shares in itself to the public, and then uses the funds to buy a wide variety of financial assets is called a?

mutual fund

11. Money serves as a medium of exchange when?

it is used to purchase goods and services.

12. The main disadvantage of using money as a store of value is that?

other assets pay relatively higher rates of interest than money.

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