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Name: Class: Date: 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. Powered by Cognero Page 1 Name: Class: Date: 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? Powered by Cognero Page 2 Name: Class: Date: 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. Powered by Cognero Page 3