Abhiram Akella

Unit 2: Personal & Family Finance Text

Questions
Review Questions
1. The three economic stances that a government may have are
neutral stance, expansionary stance, and contractionary stance. A
neutral stance leads to more tax revenue for the government, an
expansionary stance implies the government is spending or
allocating more money than it collects, and a contractionary stance
implies the government is collecting more money than it spends or
allocates.
2. The four types of economic resources are land, capital, labor, and
entrepreneurial ability. Land is natural resources we use like lumber,
minerals, oil, and so on, capital is all of the manufactured tools and
aids used to produce consumer goods, labor is the physical and
mental work needed to create goods and services, and
entrepreneurial ability is the human ability to find resources, make
business decisions, and create new products.
3. A stock market is a place where a company’s stocks or shares are
bought and sold. An example of a stock market would include New
York Stock Exchange.
4. An open outcry is an auction for stocks in which traders verbally
submit their offers.
5. Trading is the buying and selling of stocks. Some stock markets have
physical locations, such as the New York Stock Exchange. In these
physical stock markets, the buying, selling, and trading of stocks
often happens on the trading floor in what is known as an open
outcry. Another way is that investors go to a website and trade on
the computer.

Critical Thinking Questions

1. One current event that is affecting the economy severely is the
COVID-19 crisis. Countries had to be locked down due to the threat
of the virus, which till date, has no cure. Lots of businesses had to be
Abhiram Akella

shut down, causing numerous employees to lose their jobs. People

are spending less money. Imports and exports between countries
have been cut down. This is having a huge impact of individuals
and the society.
2. Freebie items are not really free. It is a strategy to obtain more from
the consumer. It is a form of advertising and the cost of free stuff is
added to the company’s products. Capital, resource, and labor are
used to produce these items and someone is paying for them
indirectly.
3. The stock market affects everybody whether or not they invest in
stocks. When there is a boom, it positively affects the economy by
means of more investments, more spending, more jobs, etc. When
there is a crash, however, companies and people lose money and
that has a negative affect on the economy. The economy affects
everyone in the country, even if they don’t invest.
4. The overall economic situation in the country is bad due to the
COVID-19 crisis. We are spending way less than usual, only sticking to
absolutely necessary expenses. We’re not spending on
entertainment like going to the cinemas, restaurants, amusement
parks, arcades, etc. We’re spending less money on transportation
and cancelled all our vacation travel plans. The income also takes
an impact because of the less movement of people and less
spending. Overall, we’re contributing less to the economy.
5. Taxes and trade policies of the government influence individual
finances. Taxes are taken directly from our income or money we
spend, and they also determine how much money is spent. Trade
policies affect individuals indirectly through expanding global
business. There could be more money made, but there could be
job loss due to corporations moving elsewhere.