Business Issues
Unit 4: Test Review Name: ______
Economics (chapter 19)
1. What a free enterprise economic system? One where individuals and businesses can buy and sell and set prices with little government influence
2. The field of study that tries to explain how people produce, distribute, and use goods and
services is called economics
3. Those who make or produce goods and services are called producers and
those who consume goods/services are called consumers .
4. What three things affect prices?
a. competition
b. supply/demand
c. production costs
5. The movement of the economy from good to bad and bad to good is known as the
business cycle
6. Label the four parts of the business cycle.
1. Peak/boom
2. contraction
3. depression
4. expansion
7. Using the letters above in #6, label the following descriptions for each part of the business cycle.
c businesses fail, prices fall, no one is buying, high unemployment
b business slows down, people start losing jobs, economy slows down
d economy is recovering during this stage, people start buying again,
unemployment rate falling
a this is the highest point, prosperity, growing economy, people are buying,
unemployment rate is low
8. If the demand for a product goes up, the supply will go a) down b) up therefore the
price will go a) down b) up
9. If the demand for a product goes down, the supply will go a) down b) up therefore the
price will go a) down b) up
10. True or False When the unemployment rate is high, this means the economy is doing good.
11. True or False Prices will tend to be higher when competition exists.
12. The phrase to describe the total value of all goods and services produced in the United States
is gross domestic product
13. Dishonest business practices used by businesses who are trying to trick or cheat you is called
consumer fraud
14. A type of consumer fraud where a company advertises a bargain, the product is sold out and then the business tries to sell you a product with a higher price is known as
bait and switch
15. What government agency enforces rules about labeling and advertising of products and makes sure commercials and ads are correct? Federal Trade Commission
16. What government agency protects consumers against dangerous products? This agency also
sets safety standards for equipment. Consumer Product Safely Commission
Budgeting (chapter 20)
1. A plan for saving and spending money based on expenses and income is called a
budget
2. List the 4 steps of creating a budget.
1. Define needs and goals
2. Make choices
3. Estimate income/expenses
4. Create budget
3. Give 2 examples of fixed expenses. Rent, car insurance, house payment, internet, cable TV
4. Give 2 examples of flexible expenses. Medical expenses, clothing, entertainment, cell phone bill
5. What is financial responsibility? Accountability in money matters
6. True or False Once you have set a budget, it can never be changed.
7. Record keeping is useful only when records are kept up to date
8. What is an emergency fund? Money set aside for needs you can’t anticipate
9. List two examples of personal life changes that may affect your budget. Marriage, death,
baby, divorce, inheritance
Savings Accounts
1. The most common type of savings account in which a booklet may be used to keep track of deposits and withdrawals: traditional
2. This type of account is where one deposits money for a certain amount of time in which it earns interest. If you withdraw early from this account, you will probably have a penalty.
CD
3. The longer the term of a CD, the higher the interest rate.
4. The most common types of bonds can be purchased from the government
5. True of False Money market deposit accounts will usually have a higher interest rate
than a traditional savings account.
6. What does FDIC stand for? Federal Deposit Insurance Corporation
7. Up to how much per account does the FDIC insure? $100,000
8. Savings account interest is compounded. What does this mean? Interest is calculated on deposits plus previous interest earned
9. How many times a year does a bank pay if it usually the following terms?
a. monthly 12
b. semi-annually 2
c. annually 1
d. quarterly 4
10. Create an interest chart for the following and calculate how much interest is earned.
Saved $500 for 2 years @ 1.5% interest compounded quarterly
1.5% / 4 = .375% = .00375
Beginning balance / Interest .00375 / Ending Balance1 / $500 / 1.88 / 501.88
2 / 501.88 / 1.88 / 503.76
3 / 503.76 / 1.89 / 505.65
4 / 505.65 / 1.90 / 507.55
5 / 507.55 / 1.90 / 509.45
6 / 509.45 / 1.91 / 511.36
7 / 511.36 / 1.92 / 513.28
8 / 513.28 / 1.92 / 515.20
Checking Accounts
1. True or False Checking accounts for all banks have the same features.
2. A written order of payment is called a check
3. A signature card is a bank’s record of a checking account which includes information such as account number, names, addresses, SSN, etc. This is used to open an account.
4. If you want to cash a check from your grandma, where do you endorse the check? On the back in the top 1.5”
5. A form used to deposit money into a checking account is called a deposit slip
6. What is the purpose of a keeping checkbook records such as a check register? Keep account up to date and accurate
7. To make your checkbook balance and the bank statement balance agree is called
reconciling
8. Payments or deposits that are listed on the bank statement are called
cancelled items.
9. Payments or deposits that are not listed on the bank statement but have occurred are called
outstanding items.
10. A bank statement is sent to you (usually monthly) from the bank which shows the
transactions that have occurred on your account within the last month.
11. The type of endorsement in which you sign just your name is called a: blank
12. The type of endorsement in which you sign the check over to another person is called a: endorsement in full
13. The type of endorsement in which you restrict the use of the check (such as For Deposit Only) is called a: restrictive
14. List two features that checking accounts may have. Service charge, minimum balance, online banking, debit card, interest
16. True or False You should write your checks in blue or black ink.
17. True or False You should sign your name in cursive rather than printing it on a check.
18. How often should you reconcile your checking account? Why? Monthly, could be errors by you or the bank
19. True or False You should always sign a deposit slip.
Be able to complete a deposit slip, a check, a check register and a reconciliation form.