Econ Unit 5 Test Study Guide

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‭ CONOMICS Test Study Guide‬

E
‭Unit 5 - Banking and Finance‬
‭ elow is a list of topics that will be covered on the Unit 5 test. The unit test is open‬
B
‭book and open notes, so feel free to reference this document along with your unit‬
‭notes and your course content when answering test questions. Be sure to indicate the‬
‭unit #, lesson # and page # from the course. This will help with your time‬
‭management on test day. You are welcome to use a calculator as needed on this test.‬

‭3 Properties/characteristics of money‬
‭History of banking in the United States‬
‭Transition from states to national/centralized‬
‭Foreign ownership in 1‬‭st‬ ‭Bank of the United States‬
‭ etermine the shifts between centralized and decentralized banking before the‬
D
‭C ivil War and describe the stabilization of the banking system during the late‬
‭1800s.‬
I‭dentify developments in banking during the twentieth century and explain‬
‭functions of different types of financial institutions.‬
‭Fractional Reserve Banking‬
‭FDIC‬
‭The Financial system‬
‭Direct vs. Indirect financing‬
‭Objective of raising financial capital‬
‭*accessibility to start-ups‬
‭Investing and economic growth:‬
‭why we invest, what companies get in return‬
‭Stocks vs Bonds‬
‭Calculating bond yields‬
‭Calculating Annual Percentage Rate (APR) on loans‬
‭Capital gains/losses‬
I‭dentify the trade-offs among risk, liquidity and return and analyze how‬
‭investing contributes to the free enterprise system.‬
I‭dentify the connections between capital, stock markets, banks, and the‬
‭economy to explain how financial markets channel funds from savers to‬
‭investors.‬

‭TEST ESSAY QUESTIONS:‬


‭●‬ ‭Identify and explain the three main characteristics and uses of money. (medium‬
‭of exchange, store of value, unit of account)‬
‭●‬ C ‭ ompare the National Banking Acts of 1863 and 1864 with the chartering of the‬
‭First and Second Banks of the United States. Specifically, address the‬
‭motivations behind each and the impact that each had on 19th-century banking‬
‭in the United States. What did these acts attempt to do/resolve? Were these‬
‭acts successful? Cite evidence from the unit to support your answer.‬
‭●‬ ‭Assess the trade-offs that investors face when making investment decisions,‬
‭and provide one example of such a trade-off. (risk-return-liquidity)‬

‭ADDITIONAL STUDY TIPS‬


‭ ‬ I‭dentify all the characteristics of money.‬

‭●‬ ‭Determine all the developments in the banking industry during the twentieth‬
‭century.‬
‭●‬ ‭Make flashcards to test yourself on vocabulary words and their definitions from‬
‭this unit.‬
‭●‬ ‭Explain the banking system to a friend or family member.‬

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