Economics Topic 6 Review Questions with Correct Answers (Grade
A+)
Question 1: Why did Antifederalists oppose a centralized bank system?
Answer: They believed the wealthy would take control of the bank and use it to increase their power
Question 2: Why would the sight of Federal Reserve officials carrying money into a bank calm people
down about the bank being out of money?
Answer: They would see that they weren't out of money
Question 3: How does compound interest encourage investment?
Answer: The money invested multiplies as time goes on, savers earn more on their investments
Question 4: What term describes a balanced group of investments?
Answer: diversification
Question 5: What is the benefit of a mutual fund?
Answer: Allows investors to invest in a variety of stocks and bonds, less risky
Question 6: Why is using money as a medium of exchange preferable over bartering?
Answer: It's constant, every dollar is the same; relative value is the same
Question 7: Why did Thomas Jefferson and other Anti Federalists believe central banks were
dangerous?
Answer: They were afraid the wealthy would take over and use it to gain power
Question 8: What happened to the level of subprime mortgages between 2003, and 2007?
Answer: tripled
Question 9: Why do people want to hold cash during a financial panic?
Answer: They don't want banks to give it to anyone else; less confident in banks and investments
Question 10: How did Federal Reserve Lending to Financial institutions change from 2007-2009?
Answer: lending increased to reduce impact of financial crises
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A+)
Question 1: Why did Antifederalists oppose a centralized bank system?
Answer: They believed the wealthy would take control of the bank and use it to increase their power
Question 2: Why would the sight of Federal Reserve officials carrying money into a bank calm people
down about the bank being out of money?
Answer: They would see that they weren't out of money
Question 3: How does compound interest encourage investment?
Answer: The money invested multiplies as time goes on, savers earn more on their investments
Question 4: What term describes a balanced group of investments?
Answer: diversification
Question 5: What is the benefit of a mutual fund?
Answer: Allows investors to invest in a variety of stocks and bonds, less risky
Question 6: Why is using money as a medium of exchange preferable over bartering?
Answer: It's constant, every dollar is the same; relative value is the same
Question 7: Why did Thomas Jefferson and other Anti Federalists believe central banks were
dangerous?
Answer: They were afraid the wealthy would take over and use it to gain power
Question 8: What happened to the level of subprime mortgages between 2003, and 2007?
Answer: tripled
Question 9: Why do people want to hold cash during a financial panic?
Answer: They don't want banks to give it to anyone else; less confident in banks and investments
Question 10: How did Federal Reserve Lending to Financial institutions change from 2007-2009?
Answer: lending increased to reduce impact of financial crises
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