Download Lesson 11-1 Guided Reading Activity

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Lesson 11-1 Guided Reading Activity
Enter the appropriate word(s) to complete the statement.
Review Questions
Directions: Read each main idea and complete the statements below. Refer to your textbook as you
write the answers.
A. Saving and Economic Growth
Main idea: When people save, they make funds available for others to use. Businesses can borrow
these savings to produce new goods and services, build new plants and equipment, and create more
jobs. Saving thus makes economic growth possible.
1. People can save by opening a __________________ account, purchasing a
__________________, or making interest-bearing loan to a bank called a __________________ of
__________________.
2. The __________________ __________________ is a network of __________________ ,
investors, __________________ __________________ , and financials assets that work together to
transfer savings from savers to __________________.
3. The smooth flow of funds through the financial system ensures that savers have an outlet for their
__________________, and __________________ have a source of financial __________________
that they can invest.
Review Questions
Directions: Read each main idea and complete the statements below. Refer to your textbook as you
write the answers.
B. Basic Investment Considerations
Main idea: Before participating in the financial system, you should be aware of four basic investment
considerations.
4. By investing on a __________________ basis, small deposits accumulate quickly even at modest
interest __________________.
5. Successful investors suggest that you should __________________ any investment that seems
too __________________ , or that you don’t understand. You should also ignore any investment that
seems too good to be __________________ , because it probably is.
6. When investing, it is important to understand the relationship between __________________ and
__________________. As an investor, you need to consider the level of risk you can
__________________.
7. You should also consider your __________________ for investing, because that will affect how
you invest.
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Lesson 11-1 Guided Reading Activity
8. Detail: When investing, you should stick with what you understand and keep it simple. Most
investors advise ignoring any investments that seem too __________________ or too good to be
true.
9. Detail: The greater the __________________ you are willing to take, the higher the
__________________ you should expect as compensation.
10. Detail: You also need to consider your reason for investing. If you anticipate needing access to
liquidate cash, you should invest in __________________ that can be easily converted. If you are
saving for __________________, another type of investment may be better.
Summary and Reflection
Directions: Summarize the main ideas of this lesson by answering the question below.
11. Why does an economy need financial intermediaries?
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Lesson 11-1 Guided Reading Activity
Answer Key
1. savings; bond; certificate; deposit
2. financial system; savers; financial institutions; investors
3. savings; borrowers; capital
4. consistent; rates
5. ignore; true
6. risk; returns; tolerate/handle
7. reason
8. complicated
9. risk/return
10. financial assets/retirement
11. Financial intermediaries enable the circular flow of the financial system by providing an outlet for
savers in which to save their money and a source of money for borrowers looking for capital
formation.
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