Question 1

Lower financing costs (interest rates)

Accepted Answer

A)  Encourage businesses to invest more and demand more funds 
B)  Encourage surplus units to supply more funds to deficit units 
C)  Encourage businesses to invest less and demand fewer funds 
D)  All of the above 
A)  Encourage businesses to invest more and demand more funds 
B)  Encourage surplus units to supply more funds to deficit units 
C)  Encourage businesses to invest less and demand fewer funds 
D)  All of the above A

Question 2

The term financial system refers to

Accepted Answer

A)  Financial markets 
B)  Financial institutions 
C)  The payment system 
D)  All of the above 
A)  Financial markets 
B)  Financial institutions 
C)  The payment system 
D)  All of the above D

Question 3

State and local governments

Accepted Answer

A)  Are chronic deficit units 
B)  Are chronic surplus units 
C)  Tend to be neither surplus nor deficit units 
D)  Are not a basic economic unit 
A)  Are chronic deficit units 
B)  Are chronic surplus units 
C)  Tend to be neither surplus nor deficit units 
D)  Are not a basic economic unit C

Question 4

If government spending were to increase and taxes were unchanged

Accepted Answer

A)  Interest rates would increase 
B)  Private investment would decline 
C)  Saving would increase 
D)  All of the above 
A)  Interest rates would increase 
B)  Private investment would decline 
C)  Saving would increase 
D)  All of the above

Question 5

Which of the following is characteristic of the financial system?

Accepted Answer

A)  Participants dislike risk and require compensation for taking on risk 
B)  It is forward looking 
C)  Sovereign yields are benchmarks for the pricing of credit 
D)  All of the above 
A)  Participants dislike risk and require compensation for taking on risk 
B)  It is forward looking 
C)  Sovereign yields are benchmarks for the pricing of credit 
D)  All of the above

Question 6

An effective financial system

Accepted Answer

A)  Reallocates risk toward those most willing and able to manage it 
B)  Provides a variety of financial instruments that meet the objectives of heterogeneous surplus and deficit units 
C)  Provides a safe, reliable, and low-cost payment system 
D)  All of the above 
A)  Reallocates risk toward those most willing and able to manage it 
B)  Provides a variety of financial instruments that meet the objectives of heterogeneous surplus and deficit units 
C)  Provides a safe, reliable, and low-cost payment system 
D)  All of the above

Question 7

Households

Accepted Answer

A)  Are dis-savers in their early and later years 
B)  Are savers during most of their working years 
C)  On net are surplus or saving units 
D)  All of the above 
A)  Are dis-savers in their early and later years 
B)  Are savers during most of their working years 
C)  On net are surplus or saving units 
D)  All of the above

Question 8

Commercial banks

Accepted Answer

A)  Are surplus units 
B)  Are deficit units 
C)  Are not a basic economic unit 
D)  Are surplus units sometimes and deficit units other times 
A)  Are surplus units 
B)  Are deficit units 
C)  Are not a basic economic unit 
D)  Are surplus units sometimes and deficit units other times

Question 9

In a competitive financial system

Accepted Answer

A)  Surplus funds tend to get allocated to the highest valued uses through price rationing 
B)  Equilibrium does not ensure that surplus funds get allocated efficiently 
C)  The level of interest rates ensures that all projects of deficit units get funded 
D)  None of the above 
A)  Surplus funds tend to get allocated to the highest valued uses through price rationing 
B)  Equilibrium does not ensure that surplus funds get allocated efficiently 
C)  The level of interest rates ensures that all projects of deficit units get funded 
D)  None of the above

Question 10

If funds supplied by surplus units exceeded funds demanded by deficit units

Accepted Answer

A)  Interest rates would fall 
B)  Interest rates would rise 
C)  A permanent disequilibrium would develop 
D)  Interest rates would be unaffected 
A)  Interest rates would fall 
B)  Interest rates would rise 
C)  A permanent disequilibrium would develop 
D)  Interest rates would be unaffected

Question 11

Businesses

Accepted Answer

A)  Are deficit units because the profit-maximizing level of investment outlays exceeds their internally generated funds 
B)  Are deficit units because of managerial largesse 
C)  Are surplus units 
D)  None of the above 
A)  Are deficit units because the profit-maximizing level of investment outlays exceeds their internally generated funds 
B)  Are deficit units because of managerial largesse 
C)  Are surplus units 
D)  None of the above

Question 12

For the United States, the external sector has been for some time

Accepted Answer

A)  A deficit unit, drawing funds from the United States 
B)  A surplus unit, adding funds because imports are greater than exports 
C)  A surplus unit because exports are greater than imports 
D)  Neither a surplus nor deficit unit 
A)  A deficit unit, drawing funds from the United States 
B)  A surplus unit, adding funds because imports are greater than exports 
C)  A surplus unit because exports are greater than imports 
D)  Neither a surplus nor deficit unit

Lower financing costs (interest rates)

The term financial system refers to

State and local governments

If government spending were to increase and taxes were unchanged

Which of the following is characteristic of the financial system?

An effective financial system

Households

Commercial banks

In a competitive financial system

If funds supplied by surplus units exceeded funds demanded by deficit units

Businesses

For the United States, the external sector has been for some time

Overview of the Financial System

The Special Role of Commercial Banks

Factors Affecting Yields

Principles of Portfolio Selection and Efficient Markets

The Money Market

The Bond Market

Securitization

The Mortgage Market

The Equity Market

Central Banking and the Federal Reserve

Monetary Policy: The Basics

Monetary Policy: Challenges Faced by Policymakers

Financial Crises

The Foreign Exchange Market and Exchange Rate Regimes

Depository Institutions

The Pricing of Financial Assets

Mutual Funds

Hedge, Venture Capital, and Private Equity Funds

Large Institutional Investors

Filters

Exam 1: Introduction

Lower financing costs (interest rates)

The term financial system refers to

State and local governments

If government spending were to increase and taxes were unchanged

Which of the following is characteristic of the financial system?

An effective financial system

Households

Commercial banks

In a competitive financial system

If funds supplied by surplus units exceeded funds demanded by deficit units

Businesses

For the United States, the external sector has been for some time

Overview of the Financial System

The Special Role of Commercial Banks

Factors Affecting Yields

Principles of Portfolio Selection and Efficient Markets

The Money Market

The Bond Market

Securitization

The Mortgage Market

The Equity Market

Central Banking and the Federal Reserve

Monetary Policy: The Basics

Monetary Policy: Challenges Faced by Policymakers

Financial Crises

The Foreign Exchange Market and Exchange Rate Regimes

Depository Institutions

The Pricing of Financial Assets

Mutual Funds

Hedge, Venture Capital, and Private Equity Funds

Large Institutional Investors

Filters