Reference no: EM132273475

1) Those who buy stock become ________.

Employees of the firm

Legally responsible for the firm

Shareholders of the firm

2) In a tiny village, on the coast of South America, early inhabitants used sea shells, as money. Some of these shells were very beautiful and fragile. Everyone agreed that the shells were valuable and the people utilized them in much the same way we use money today. The fragility of the shells and the fact that a shell is difficult to split into smaller denominations would make these sea shells unfit to act as money today because sea shells could not act as a ________.

Store of Value

Unit of Account

Medium of Exchange

3) The Federal Reserve lowers the reserve requirement from 7 percent to 6 percent. Consequently banks must set aside less money to meet the reserve requirement. They have more money to lend to their customers and are able to lower the rate of interest they charge. These conditions make it less expensive for people and businesses to borrow money. Because they can borrow more, they can spend more. If people are spending more, prices go up. With this action, the Fed has lessened the likelihood of ________.

inflation

free market

recession

4) A large publically traded company will receive a major financial benefit from the sell of its stock ________ .

each time a shareholder buys or sells the stock

when the stock is traded on the New York Stock Exchange

at the initial public offering