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AP Macroeconomics 4.1 Financial Assets Questions

Compare money, deposits, stocks, and bonds, then use liquidity, opportunity cost, present value, and interest rates to evaluate asset choices.

Syllabus
Effective Fall 2022
Course
AP Macroeconomics

Exam points

  • distinguish money, deposit accounts, stocks, and bonds by their principal financial features
  • rank common financial assets by liquidity and recognise currency and demand deposits as most liquid
  • connect the opportunity cost of cash to the interest forgone on alternative assets
  • apply the inverse relationship between prevailing interest rates and previously issued bond prices
  • compare a payment today with a future payment using the return available over time

Covered syllabus points

MEA-3.A—a. Define the principal attributes—liquidity, rate of return, and risk—associated with various classes of financial assets,…

Question 1

[Maximum number: 1]

Assume the economy of Jenland is in short-run equilibrium at a real output level above full-employment real output.

Based on the change in the interest rate shown on your graph in part B, will each of the following increase, decrease, or remain the same in Jenland in the short run?

The price of previously issued bonds

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