Question
1. What is the role of the financial system? Name and describe two markets that are part of the financial
system in the U.S. economy. Name and describe two financial intermediaries.
2. What is the government budget deficit? How does it affect interest rates, investment, and economic
growth?
3. What benefit do people get from the market for insurance? What two problems impede the insurance
market from working perfectly?
4. Describe the efficient markets hypothesis and give a piece of evidence consistent with this hypothesis.
What does this say about using past price histories to predict future prices?
5. What are the three categories into which the Bureau of Labor Statistics divides everyone? How does the
BLS compute the labor force, the unemployment rate, and the labor force participation rate?
