Question 1

Money market funds held in US financial institutions went from zero in 1970 to just over $_______ in

Accepted Answer

A)  $100 billion 
B)  $1 trillion 
C)  $2 trillion 
D)  $10 trillion 
E)  $500 billion 
A)  $100 billion 
B)  $1 trillion 
C)  $2 trillion 
D)  $10 trillion 
E)  $500 billion

Question 2

Within the United States financial system the largest borrower of money in 2006 were individuals, borrowing $950 billion.

Accepted Answer

A) True 
 B)False

Question 3

In the United States financial system M2Z is a

Accepted Answer

A)  Money measure 
B)  Close to the transactions demand for money 
C)  Developed by the St. Louis Federal Reserve Bank 
D)  Was over $6.9 trillion in 2006 
E)  All of the above 
A)  Money measure 
B)  Close to the transactions demand for money 
C)  Developed by the St. Louis Federal Reserve Bank 
D)  Was over $6.9 trillion in 2006 
E)  All of the above

Question 4

Within the United States financial system the largest borrower of money in 2006 was the local and state governments.

Accepted Answer

A) True 
 B)False

Question 5

Money market funds held in US financial institutions went from zero in 1970 to just over $_5 trillion in 2006.

Accepted Answer

A) True 
 B)False

Question 6

On January 1, 1999, a new currency joined the world financial system. This currency is:

Accepted Answer

A)  The Eurodollar 
B)  The Gold Standard 
C)  The Euro 
D)  The Euro Yen 
A)  The Eurodollar 
B)  The Gold Standard 
C)  The Euro 
D)  The Euro Yen

Question 7

The biggest borrowers in 2006 were

Accepted Answer

A)  Pension funds 
B)  Individuals 
C)  Governments (local, state and federal) 
D)  Households 
E)  A and B 
A)  Pension funds 
B)  Individuals 
C)  Governments (local, state and federal) 
D)  Households 
E)  A and B

Question 8

Can you distinguish between inflation and deflation? What do they have to do with money, if anything?

Accepted Answer

- Inflation refers to a rise in the aver

Question 9

Which financial institutions are the largest within the financial system? Why do you think these are the largest financial institutions?

Accepted Answer

- In most countries, banks are the domin

Question 10

Between the 1982-84 base period and 2006, the cost of living index, which measures the prices of consumer goods, increased

Accepted Answer

A)  100 to 200 
B)  100 to 150 
C)  200 to 300 
D)  100 to 300 
E)  0 to 100 
A)  100 to 200 
B)  100 to 150 
C)  200 to 300 
D)  100 to 300 
E)  0 to 100

Question 11

In the evolution of the financial system, which came first - direct, indirect or semi-direct finance? Why do you think this is so?

Accepted Answer

- Most financial systems in hi

Question 12

In the United States, banks hold approximately one quarter of the total resources of all US financial institutions, which in 2006 was $9.5 trillion.

Accepted Answer

A) True 
 B)False

Question 13

The sum of all U.S. currency and coin held by the public, NOW accounts and Automatic Transfer Services at all commercial banks, credit unions and thrift institutions is which definition of the U.S. money supply?

Accepted Answer

A)  M1 
B)  M2 
C)  MZ2 
D)  L 
E)  None of the above 
A)  M1 
B)  M2 
C)  MZ2 
D)  L 
E)  None of the above

Question 14

The value of M2 in 2006 was just over

Accepted Answer

A)  $6.8 trillion 
B)  $10 trillion 
C)  $68 billion 
D)  $12.2 trillion 
E)  None of the above 
A)  $6.8 trillion 
B)  $10 trillion 
C)  $68 billion 
D)  $12.2 trillion 
E)  None of the above

Question 15

The household sector is typically a net lender of funds in the financial marketplace.

Accepted Answer

A) True 
 B)False

Question 16

The sum of all U.S. currency and coin held by the public, travelers checks, NOW accounts and automatic funds transfer services represents the M2Z definition of the U.S. money supply.

Accepted Answer

A) True 
 B)False

Question 17

U.S. savings bonds would be an example of what kind of financial asset (as defined in the textbook)?

Accepted Answer

A)  Money 
B)  Equities 
C)  Negotiable debt 
D)  Nonnegotiable debt 
E)  None of the above 
A)  Money 
B)  Equities 
C)  Negotiable debt 
D)  Nonnegotiable debt 
E)  None of the above

Question 18

According to the text, externally generated funds are the most important source of funds to acquire assets for most businesses and households.

Accepted Answer

A) True 
 B)False

Question 19

ITT Corporation in the most recent period reported current sales receipts of $542 million, current
operating expenditures of $577 million and net new debt issued of $5 million. What change in holdings of
financial assets must have occurred over the period? Was ITT a deficit-, surplus- or balanced-budget unit
in the most recent period? Explain why.

Accepted Answer

Current Operating Expenditures = $577 mi

Question 20

Current expenditures greater than current receipts characterizes a:

Accepted Answer

A)  Surplus budget unit 
B)  Classical theory of interest 
C)  A financial intermediary 
D)  The hedging principle 
E)  Deficit budget unit 
A)  Surplus budget unit 
B)  Classical theory of interest 
C)  A financial intermediary 
D)  The hedging principle 
E)  Deficit budget unit

Exam 2: Financial Assets, Money, Financial Transactions, and Financial Institutions

Money market funds held in US financial institutions went from zero in 1970 to just over $_______ in

Within the United States financial system the largest borrower of money in 2006 were individuals, borrowing $950 billion.

In the United States financial system M2Z is a

Within the United States financial system the largest borrower of money in 2006 was the local and state governments.

Money market funds held in US financial institutions went from zero in 1970 to just over $_5 trillion in 2006.

On January 1, 1999, a new currency joined the world financial system. This currency is:

The biggest borrowers in 2006 were

Can you distinguish between inflation and deflation? What do they have to do with money, if anything?

Which financial institutions are the largest within the financial system? Why do you think these are the largest financial institutions?

Between the 1982-84 base period and 2006, the cost of living index, which measures the prices of consumer goods, increased

In the evolution of the financial system, which came first - direct, indirect or semi-direct finance? Why do you think this is so?

In the United States, banks hold approximately one quarter of the total resources of all US financial institutions, which in 2006 was $9.5 trillion.

The sum of all U.S. currency and coin held by the public, NOW accounts and Automatic Transfer Services at all commercial banks, credit unions and thrift institutions is which definition of the U.S. money supply?

The value of M2 in 2006 was just over

The household sector is typically a net lender of funds in the financial marketplace.

The sum of all U.S. currency and coin held by the public, travelers checks, NOW accounts and automatic funds transfer services represents the M2Z definition of the U.S. money supply.

U.S. savings bonds would be an example of what kind of financial asset (as defined in the textbook)?

According to the text, externally generated funds are the most important source of funds to acquire assets for most businesses and households.

Current expenditures greater than current receipts characterizes a:

Functions and Roles of the Financial System in the Global Economy

The Financial Information Marketplace

The Future of the Financial System and the Money and Capital Markets

The Determinants of Interest Rates: Competing Ideas

Measuring and Calculating Interest Rates and Financial Asset Prices

Inflation and Deflation, Yield Curves, and Duration: Impact on Interest Rates and Asset Prices

The Risk Structure of Interest Rates: Defaults, Prepayments, Taxes, and Other Rate-Determining Factors

Interest-Rate Forecasting and Hedging: Swaps, Financial Futures, and Options

Introduction to the Money Market and the Roles Played by Governments and Security Dealers

Commercial Banks, Major Corporations, and Federal Credit Agencies in the Money Market

Roles and Services of the Federal Reserve and Other Central Banks Around the World

The Tools and Goals of Central Bank Monetary Policy

The Commercial Banking Industry: Structure, Products, and Management

Nonbank Thrift Institutions: Savings and Loans, Savings Banks, Credit Unions, and Money Market Funds

Mutual Funds, Insurance Companies, Investment Banks, and Other Financial Firms

Regulation of the Financial Institutions Sector

Federal, State, and Local Governments Operating in the Financial Markets

Business Borrowing: Corporate Bonds, Asset-Backed Securities, Bank Loans, and Other Forms of Business Debt

The Market for Corporate

Consumer Lending and Borrowing

The Residential Mortgage Market Stock

International Transactions and Currency Values

International Banking

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