Question 1

Fluctuations in stock prices ________.

Accepted Answer

A)  have become less smaller since the year 2000 
B)  since the year 2000 are about the same as they were before the year 2000 
C)  have become more volatile since the year 2000 
D)  have been almost eliminated since the year 2000 
A)  have become less smaller since the year 2000 
B)  since the year 2000 are about the same as they were before the year 2000 
C)  have become more volatile since the year 2000 
D)  have been almost eliminated since the year 2000

Question 2

Evidence from Canada and other foreign countries indicates that ________.

Accepted Answer

A)  there is a strong positive association between inflation and growth rate of money supply over long periods of time 
B)  there is little support for the assertion that "inflation is always and everywhere a monetary phenomenon" 
C)  countries with low monetary growth rates tend to experience higher rates of inflation, all else being constant 
D)  money growth is clearly unrelated to inflation 
A)  there is a strong positive association between inflation and growth rate of money supply over long periods of time 
B)  there is little support for the assertion that "inflation is always and everywhere a monetary phenomenon" 
C)  countries with low monetary growth rates tend to experience higher rates of inflation, all else being constant 
D)  money growth is clearly unrelated to inflation

Question 3

Prior to all recessions, there has been a drop in ________.

Accepted Answer

A)  inflation 
B)  the money stock 
C)  the rate of money growth 
D)  interest rates 
A)  inflation 
B)  the money stock 
C)  the rate of money growth 
D)  interest rates

Question 4

If the price level increases from 200 in year 1 to 220 in year 2, the rate of inflation from year 1 to year 2 is ________.

Accepted Answer

A)  20 percent 
B)  10 percent 
C)  11 percent 
D)  120 percent 
A)  20 percent 
B)  10 percent 
C)  11 percent 
D)  120 percent

Question 5

Budget deficits can be a concern because they might ________.

Accepted Answer

A)  ultimately lead to higher inflation 
B)  lead to lower interest rates 
C)  lead to a slower rate of money growth 
D)  lead to higher bond prices 
A)  ultimately lead to higher inflation 
B)  lead to lower interest rates 
C)  lead to a slower rate of money growth 
D)  lead to higher bond prices

Question 6

The basic concepts used in the analytic framework of this text include all of the following EXCEPT

Accepted Answer

A)  the not-for-profit nature of most financial institutions. 
B)  a basic supply and demand analysis to explain the behavior of financial markets. 
C)  an approach to financial structure based on transaction costs and asymmetric information. 
D)  the concept of equilibrium. 
A)  the not-for-profit nature of most financial institutions. 
B)  a basic supply and demand analysis to explain the behavior of financial markets. 
C)  an approach to financial structure based on transaction costs and asymmetric information. 
D)  the concept of equilibrium.

Question 7

The fluctuation of interest rates ________.

Accepted Answer

A)  never occurs because the central bank is involved in setting the rate 
B)  is due to changes in stock prices 
C)  cannot occur because there is only one interest rate 
D)  impacts all Canadians 
A)  never occurs because the central bank is involved in setting the rate 
B)  is due to changes in stock prices 
C)  cannot occur because there is only one interest rate 
D)  impacts all Canadians

Question 8

Lower interest rates might cause a corporation to ________ building a new plant that would provide more jobs.

Accepted Answer

A)  complete 
B)  postpone 
C)  consider 
D)  start 
A)  complete 
B)  postpone 
C)  consider 
D)  start

Question 9

Why is the study of financial innovation important?

Accepted Answer

Financial innovation shows how

Question 10

Changes in stock prices ________.

Accepted Answer

A)  do not affect people's wealth and their willingness to spend 
B)  affect firms' decisions to sell stock to finance investment spending 
C)  are predictable 
D)  are unimportant to decision makers 
A)  do not affect people's wealth and their willingness to spend 
B)  affect firms' decisions to sell stock to finance investment spending 
C)  are predictable 
D)  are unimportant to decision makers

Question 11

When the total value of final goods and services is calculated using current prices, the resulting measure is referred to as ________.

Accepted Answer

A)  real GDP 
B)  the GDP deflator 
C)  nominal GDP 
D)  the index of leading indicators 
A)  real GDP 
B)  the GDP deflator 
C)  nominal GDP 
D)  the index of leading indicators

Question 12

Poorly performing financial markets can be the cause of ________.

Accepted Answer

A)  wealth 
B)  poverty 
C)  financial stability 
D)  financial expansion 
A)  wealth 
B)  poverty 
C)  financial stability 
D)  financial expansion

Question 13

A security is also known as ________.

Accepted Answer

A)  a financial instrument 
B)  a contingent claim 
C)  the interest rate 
D)  a liability 
A)  a financial instrument 
B)  a contingent claim 
C)  the interest rate 
D)  a liability

Question 14

Everything else held constant, a stronger Canadian dollar benefits ________ and hurts ________.

Accepted Answer

A)  Canadian businesses; Canadian consumers 
B)  Canadian businesses; foreign businesses 
C)  Canadian consumers; Canadian businesses 
D)  foreign businesses; Canadian consumers 
A)  Canadian businesses; Canadian consumers 
B)  Canadian businesses; foreign businesses 
C)  Canadian consumers; Canadian businesses 
D)  foreign businesses; Canadian consumers

Question 15

Why is the real GDP a better measure of economic activity than nominal GDP?

Accepted Answer

Real GDP is a more r

Question 16

A share of common stock is a claim on a corporation's ________.

Accepted Answer

A)  debt 
B)  liabilities 
C)  expenses 
D)  earnings and assets 
A)  debt 
B)  liabilities 
C)  expenses 
D)  earnings and assets

Question 17

When tax revenues are greater than government expenditures, the government has a budget ________.

Accepted Answer

A)  crisis 
B)  deficit 
C)  surplus 
D)  revision 
A)  crisis 
B)  deficit 
C)  surplus 
D)  revision

Question 18

A bond is ________.

Accepted Answer

A)  not as good as investment as stocks 
B)  pays interest sporadically 
C)  never pays interest 
D)  makes payments periodically for a specified period of time 
A)  not as good as investment as stocks 
B)  pays interest sporadically 
C)  never pays interest 
D)  makes payments periodically for a specified period of time

Question 19

From 1968-2017 the price level in Canada increased more than ________.

Accepted Answer

A)  twofold 
B)  threefold 
C)  sixfold 
D)  ninefold 
A)  twofold 
B)  threefold 
C)  sixfold 
D)  ninefold

Question 20

Financial crises are characterized by ________.

Accepted Answer

A)  surging employment 
B)  hyperinflation 
C)  decline in asset prices 
D)  high profits in the financial sector 
A)  surging employment 
B)  hyperinflation 
C)  decline in asset prices 
D)  high profits in the financial sector

Exam 1: Why Study Money, Banking, and Financial Markets

Fluctuations in stock prices ________.

Evidence from Canada and other foreign countries indicates that ________.

Prior to all recessions, there has been a drop in ________.

If the price level increases from 200 in year 1 to 220 in year 2, the rate of inflation from year 1 to year 2 is ________.

Budget deficits can be a concern because they might ________.

The basic concepts used in the analytic framework of this text include all of the following EXCEPT

The fluctuation of interest rates ________.

Lower interest rates might cause a corporation to ________ building a new plant that would provide more jobs.

Why is the study of financial innovation important?

Changes in stock prices ________.

When the total value of final goods and services is calculated using current prices, the resulting measure is referred to as ________.

Poorly performing financial markets can be the cause of ________.

A security is also known as ________.

Everything else held constant, a stronger Canadian dollar benefits ________ and hurts ________.

Why is the real GDP a better measure of economic activity than nominal GDP?

A share of common stock is a claim on a corporation's ________.

When tax revenues are greater than government expenditures, the government has a budget ________.

A bond is ________.

From 1968-2017 the price level in Canada increased more than ________.

Financial crises are characterized by ________.

An Overview of the Financial System

What Is Money

The Meaning of Interest Rates

The Behaviour of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Financial Crises

Banking and the Management of Financial Institutions

Risk Management With Financial Derivatives

Central Banks and the Bank of Canada

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, Inflation, and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

Filters

Everything else held constant, a stronger Canadian dollar benefits and hurts .