1. 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.
2. If you were to start a business delivering documents, you might need to purchase cell phones, bicycles, desks, and
chairs.
a.
These purchases are called capital investment. If you raise the funds to purchase them from others you are a
saver.
b.
These purchases are called capital investment. If you raise the funds to purchase them from others you are a
borrower.
c.
These purchases are called consumption. If you raise the funds to purchase them from others you are a saver.
d.
These purchases are called consumption. If you raise the funds to purchase them from others you are a
borrower.
3. 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.
4. Institutions that help to match one person’s saving with another person’s investment are collectively called the
a.
Federal Reserve system.
b.
banking system.
c.
monetary system.
d.
financial system.
5. 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.
6. Given that Monika’s income exceeds her expenditures, Monika is best described as a
a.
saver or as a supplier of funds.
b.
saver or as a demander of funds.
c.
borrower or as a supplier of funds.
d.
borrower or as a demander of funds.
7. Norberto is opening a bicycle shop, and his monthly expenditures to get the shop up and running exceed his monthly
income. Norberto is best described as a
a.
saver or as a supplier of funds.
b.
saver or as a demander of funds.
c.
borrower or as a supplier of funds.
d.
borrower or as a demander of funds.
8. 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.
9. Rob wants to create a personal trainer program service and needs to pay for equipment and gym space. He can finance
this capital investment by
a.
borrowing money from a friend.
b.
selling shares of future profits.
c.
using his own savings.
d.
All of the above.
10. Bob’s new startup goes public and sells shares of future profits. Bob’s startup is best described as a
a.
saver or as a supplier of funds.
b.
saver or as a demander of funds.
c.
borrower or as a supplier of funds.
d.
borrower or as a demander of funds.
11. 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.