In a less-developed economy, cattle is widely accepted as payment for goods and services. Nearly all goods and services are priced in terms of cattle; however, cows vary in quality, become less valuable with age, and are difficult to move over long distances. Which of the following functions of money do cattle provide? Select the two correct answers.(2 points)

Question

Responses

unit of account
unit of account

store of value
store of value

medium of exchange
medium of exchange

portability
portability

uniformity
uniformity
Question 2
How does the U.S. dollar differ from money used in the past?(1 point)
Responses

The U.S. dollar has no intrinsic value.
The U.S. dollar has no intrinsic value.

The U.S. dollar has intrinsic value and is redeemable for a valuable good.
The U.S. dollar has intrinsic value and is redeemable for a valuable good.

The U.S. dollar has no intrinsic value but is redeemable for a valuable good.
The U.S. dollar has no intrinsic value but is redeemable for a valuable good.

The U.S. dollar has intrinsic value.]
The U.S. dollar has intrinsic value.]
Question 3
By the end of the nineteenth century, the United States banking system transitioned from(1 point)
Responses

a centralized system of state banks to a centralized system of national banks.
a centralized system of state banks to a centralized system of national banks.

a decentralized system of state banks to a centralized system of state and national banks.
a decentralized system of state banks to a centralized system of state and national banks.

a centralized system of state and national banks to a decentralized system of state banks.
a centralized system of state and national banks to a decentralized system of state banks.

a decentralized system of national banks to a centralized system of state banks.
a decentralized system of national banks to a centralized system of state banks.
Question 4
The First Bank of the United States had characteristics that differ from those of the modern central bank of the United States. Which of the following is one such characteristic of the First Bank of the United States?(1 point)
Responses

The First Bank of the United States was partially owned by foreign investors.
The First Bank of the United States was partially owned by foreign investors.

The First Bank of the United States printed all of the nation's currency
The First Bank of the United States printed all of the nation's currency

The First Bank of the United States was issued an indefinite charter.
The First Bank of the United States was issued an indefinite charter.

The First Bank of the United States featured little corruption.
The First Bank of the United States featured little corruption.
Question 5
How does fractional-reserve banking influence the money supply in the United States?(1 point)
Responses

Fractional-reserve banks issue depositor funds to borrowers, increasing the number of claims made on the same dollars.
Fractional-reserve banks issue depositor funds to borrowers, increasing the number of claims made on the same dollars.

Fractional-reserve banks borrow and store funds from lenders, decreasing the number of physical dollars in circulation.
Fractional-reserve banks borrow and store funds from lenders, decreasing the number of physical dollars in circulation.

Fractional-reserve banks store the entirety of every depositor's funds, limiting the amount of currency in circulation.
Fractional-reserve banks store the entirety of every depositor's funds, limiting the amount of currency in circulation.

Fractional-reserve banks are permitted to print currency, increasing the number of physical dollars in circulation.
Fractional-reserve banks are permitted to print currency, increasing the number of physical dollars in circulation.
Question 6
Which of the following is a result of the Banking Act of 1935?(1 point)
Responses

Banks are required to keep the full amount of every deposit made in their vaults.
Banks are required to keep the full amount of every deposit made in their vaults.

The United States dollar can be exchanged for a fixed quantity of gold.
The United States dollar can be exchanged for a fixed quantity of gold.

Depositor funds are insured against potential loss in the event of a bank failure.
Depositor funds are insured against potential loss in the event of a bank failure.

Commercial and investment banking practices are strictly separated by law.
Commercial and investment banking practices are strictly separated by law.
Question 7
Individual stocks are popular investments that are easy to sell and have the potential to earn significant income for investors. However, they fluctuate wildly in price, increasing the likelihood that an investment fails. What is the risk, return, and liquidity on this type of investment?(1 point)
Responses

high risk, high return, and good liquidity.
high risk, high return, and good liquidity.

low risk, low return, and poor liquidity.
low risk, low return, and poor liquidity.

low risk, high return, and good liquidity.
low risk, high return, and good liquidity.

high risk, high return, and poor liquidity.
high risk, high return, and poor liquidity.
Question 8
Investing contributes to economic growth in which of the following ways?(1 point)
Responses

Investors earn returns money on their investments, which increases their economic well-being.
Investors earn returns money on their investments, which increases their economic well-being.

Investors diversify their portfolios to minimize risk in the economy. Investors can invest in a bunch of different stocks to minimize their risk which causes economic growth.
Investors diversify their portfolios to minimize risk in the economy. Investors can invest in a bunch of different stocks to minimize their risk which causes economic growth.

Investors pool their funds into financial intermediaries that earn them larger returns. Investors can invest their money into mutual funds to cause economic growth.
Investors pool their funds into financial intermediaries that earn them larger returns. Investors can invest their money into mutual funds to cause economic growth.

Investor funds are loaned to firms, who use borrowed funds to purchase capital which leads to economic growth.
Investor funds are loaned to firms, who use borrowed funds to purchase capital which leads to economic growth.
Question 9
What is an advantage to having a high credit score?(1 point)
Responses

Individuals with higher credit scores are able to lend money at higher interest rates
Individuals with higher credit scores are able to lend money at higher interest rates

Individuals with higher credit scores are able to access better stocks, bonds, and mutual funds
Individuals with higher credit scores are able to access better stocks, bonds, and mutual funds

Individuals with higher credit scores are able to pay lower prices for items like food and clothing when they purchase with cash.
Individuals with higher credit scores are able to pay lower prices for items like food and clothing when they purchase with cash.

Individuals with higher credit scores are able to borrow money at lower interest rates.
Individuals with higher credit scores are able to borrow money at lower interest rates.
Question 10
Which of the following are financial assets? Select the two correct answers.(2 points)
Responses

gold
gold

real estate
real estate

bonds
bonds

stocks
stocks

automobiles
automobiles
Question 11
A bond is sold at a face value of $200 with an annual yield of 3%. How much will the bondholder have received in payment from the bond issuer after the bond has reached its maturity date of one year?(1 point)
Responses

$200
$200

$406
$406

$6
$6

$206
$206
Question 12
Which of the following illustrates a capital gain?(1 point)
Responses

An investor earns a $20 return from a savings deposit.
An investor earns a $20 return from a savings deposit.

An investor purchase a stock for $30 and then later sells it for $25.
An investor purchase a stock for $30 and then later sells it for $25.

An investor earns a $20 return from a bond held until maturity.
An investor earns a $20 return from a bond held until maturity.

An investor purchases a stock for $25 and then later sells it for $30.
An investor purchases a stock for $25 and then later sells it for $30.
Question 13
Determine whether each of the following is direct financing or indirect financing.(4 points)
Direct Financing Indirect Financing
selling stock on the stock market

investing in a friend's new business

taking out a loan at a commercial bank

investing in a mutual fund

Answer 1

Here are the answers to your questions:

Question 1: Cattle provide the following functions of money:

• Unit of account (because goods and services are priced in terms of cattle)
• Medium of exchange (because cattle are accepted as payment for goods and services)

Question 2: The U.S. dollar differs from money used in the past in that:

• The U.S. dollar has no intrinsic value.

Question 3: By the end of the nineteenth century, the United States banking system transitioned from:

• a decentralized system of state banks to a centralized system of state and national banks.

Question 4: A characteristic of the First Bank of the United States that differs from that of the modern central bank is:

• The First Bank of the United States was partially owned by foreign investors.

Question 5: Fractional-reserve banking influences the money supply in the United States by:

• Fractional-reserve banks issue depositor funds to borrowers, increasing the number of claims made on the same dollars.

Question 6: A result of the Banking Act of 1935 is:

• Depositor funds are insured against potential loss in the event of a bank failure.

Question 7: The risk, return, and liquidity on individual stocks is:

• high risk, high return, and good liquidity.

Question 8: Investing contributes to economic growth in the following way:

• Investor funds are loaned to firms, who use borrowed funds to purchase capital which leads to economic growth.

Question 9: An advantage to having a high credit score is:

• Individuals with higher credit scores are able to borrow money at lower interest rates.

Question 10: The financial assets are:

• Bonds
• Stocks

Question 11: After a bond with a face value of $200 and an annual yield of 3% matures, the bondholder will receive:

• $206 (the face value plus the interest earned).

Question 12: A capital gain is illustrated by:

• An investor purchases a stock for $25 and then later sells it for $30.

Question 13:

• Selling stock on the stock market: Direct Financing
• Investing in a friend's new business: Direct Financing
• Taking out a loan at a commercial bank: Indirect Financing
• Investing in a mutual fund: Indirect Financing