Introduction to Finance

 1. 
(LO 2.1)
Briefl y discuss the developments that led to the 
2007–2008 fi nancial crisis.
 2. 
(LO 2.2)
How do surplus economic units and defi cit economic 
units diff er?
 3. 
(LO 2.2)
Describe the three basic ways whereby money is trans-
ferred from savers to business fi rms.
 4. 
(LO 2.2)
Identify economic units in addition to business fi rms 
who might need funds from savers.
 5. 
(LO 2.3)
Identify the major participants in the U.S. monetary system.
 6. 
(LO 2.4)
Indicate how real assets and fi nancial assets diff er.
 7. 
(LO 2.4)
Defi ne money and indicate the basic functions of money.
 8. 
(LO 2.4)
Describe how an individual’s net worth is determined.
 9. 
(LO 2.5)
Briefl y describe the development of money, from barter 
to the use of precious metals.
 10. 
(LO 2.5)
What is the diff erence between full-bodied money and 
token coins?
 11. 
(LO 2.5)
Describe how representative full-bodied money and fi at 
money diff er.
 12. 
(LO 2.5)
What is deposit money and how it is “backed”?
 13. 
(LO 2.5)
What are automatic transfer service (ATS) accounts?
 14. 
(LO 2.5)
What are debit cards and how are they used?
 15. 
(LO 2.6)
Defi ne money market securities and briefl y describe the 
major types of these securities.
 16. 
(LO 2.7)
Describe the M1 defi nition of the money supply and 
indicate the relative signifi cance of the M1 components.
 17. 
(LO 2.7)
How does M2 diff er from M1? What are money market 
mutual funds?