FBLA Economics and Personal Finance 2

Question 1

What is the 'law of supply' in economics?

Accepted Answer

As price increases, quantity supplied increases

Answer

The law of supply states that producers will offer more of a good at higher prices, all else being equal.

Question 2

Which type of account typically offers the highest interest rate but requires keeping money deposited for a fixed term?

Accepted Answer

Certificate of Deposit (CD)

Answer

A Certificate of Deposit locks in funds for a set period in exchange for a guaranteed, often higher, interest rate.

Question 3

What is 'diversification' in personal investing?

Accepted Answer

Spreading investments across different asset types to reduce risk

Answer

Diversification reduces risk by distributing investments across various assets, so poor performance in one area is offset by others.

Question 4

What does GDP stand for and what does it measure?

Accepted Answer

Gross Domestic Product; total value of goods and services produced in a country

Answer

GDP (Gross Domestic Product) measures the total monetary value of all goods and services produced within a country in a given period.

Question 5

Which of the following is considered a 'liquid' asset?

Accepted Answer

Cash in a checking account

Answer

Cash in a checking account is immediately accessible and can be used for transactions without conversion, making it highly liquid.

FBLA - Future Business Leaders of America Practice Test