AP®︎ Macroeconomics: Topic 4.1 Practice Test
Prepare for your quiz, test, or the AP exam with focused practice questions on Topic 4.1 of AP Macroeconomics – Financial Assets.
Questions List
Topic 4.1
Question 1 Easy
This question tests the following: MEA-3.A
What is the primary function of the financial sector?
What You’re Being Tested On:
Explore the learning objectives taken directly from the College Board’s AP® Macroeconomics Curriculum. Ensure you’re prepared for the exact topics covered on the AP® exam, in-class tests, and quizzes, and gain confidence in your mastery of the material.
Topic 4.1: Financial Assets
Learning Objective: MEA-3.A
a. Define the principal attributes—liquidity, rate of return, and risk— associated with various classes of financial assets, including money. b. Explain the relationship between the price of previously issued bonds and interest rates.
Essential Knowledge: MEA-3.A.1
The most liquid forms of money are cash and demand deposits.
Essential Knowledge: MEA-3.A.2
Other financial assets people can hold in place of the most liquid forms of money include bonds (interest-bearing assets) and stocks (equity).
Essential Knowledge: MEA-3.A.3
The price of previously issued bonds and interest rates on bonds are inversely related.
Essential Knowledge: MEA-3.A.4
The opportunity cost of holding money is the interest that could have been earned from holding other financial assets such as bonds.
