Financial Markets and System

Question 1

serves three basic functions:
Medium of exchange
Measure of value
Store of value

Answer 1

Money

Question 2

such as BitCoin, are using the traditional concept of “money” but as an alternative to the established Federal Reserve System

Answer 2

virtual currencies

Question 3

regulate the money supply and the level of interest rates

To achieve these goals, the Fed can:
raise or lowerreserve requirements
raise or lower thediscount rate
conductopen market operations

Answer 3

monetary policy

Question 4

includes the most liquid forms of money, such as cash and checking-account funds

Answer 4

M1

Question 5

includes everything in M-1 plus near-cash items, such as savings accounts and time deposits below $100,000

Answer 5

M2

Question 6

goals include price stability, sustainable economic growth, and full employment

Answer 6

Federal Reserve

Question 7

is when a business owner uses his/her own money or seeks money from an angel investor or venture capital firm

Answer 7

early state capital

Question 8

If a firm’s revenues are greater than costs and they are earning profits, profits from the business arereinvested in equipment, structures, or research and development.

Answer 8

profits

Question 9

area way to raise capital through borrowing
used by corporations and governments
an investment for the bondholder that creates return through regular, fixed, or floating interest payments on the debt and the repayment of principal at maturity
traded on bond exchanges through brokers

Answer 9

Bonds

Question 10

area way to raise capital byselling ownership or equity; an investment for shareholders that creates return through the distribution of corporate profits as dividends or through gains in corporate value; traded on stock exchanges through member brokers

Answer 10

stocks