Exam 2: Financial Systems, Monetary Units, and the Role of Money in the Economy

An example of a net lender is an economic unit which purchases U.S. Treasury Bills.

A corporation that decides to turn down a loan from a bank and borrow instead in the open market has switched from semi-direct finance to direct finance, according to the textbook.

Inflation

A financial asset is a claim against the income or wealth of a business firm, household or unit of government.

Postponing purchases, selling of existing assets, borrowing or issuance of new stock are alternatives available for a lack of:

A trademark of market-dominated financial systems

According to the text, the most important financial asset in the economy is:

A(n) _____ executes the sell order, while a _____ may buy the securities from the seller.

The euro is used as the home country monetary unit in Japan.

According to the text, the secondary securities issued by financial intermediaries include all of the following items except one. Which is not normally a secondary security?

_____ are subject to the risk of loss if securities decline in value.

A surplus-budget unit is a net lender of funds to the financial marketplace; that is, DFA > DD.

Transactions in the financial markets generally involve the exchange of money for financial claims.

Which one of the following is not a financial asset?

A derivative is so called because its value is derived from an underlying asset.

The M2 and M3 definitions of the U.S. money supply reflect mainly money's role as a store of value.

Today, relative to check writing volume, electronic payments are increasing.

The hedging principle refers to risk reduction by approximately matching the maturities of assets held with the maturities of liabilities taken on.

The financial asset which entitles its holder to a share of a business corporation's net earnings but carries no voting privileges is known as an indenture.

Nations with more fully developed financial systems