Question 1

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

Accepted Answer

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

Question 2

Everything else held constant,a decrease in the value of the dollar relative to all foreign currencies means that the price of foreign goods purchased by Americans

Accepted Answer

A) increases 
B) decreases. 
C) remains unchanged. 
D) either increases,decreases,or remains unchanged. 
A) increases 
B) decreases. 
C) remains unchanged. 
D) either increases,decreases,or remains unchanged. A

Question 3

Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called

Accepted Answer

A) commodity markets. 
B) fund-available markets. 
C) derivative exchange markets. 
D) financial markets. 
A) commodity markets. 
B) fund-available markets. 
C) derivative exchange markets. 
D) financial markets. D

Question 4

Financial institutions search for ________ has resulted in many financial innovations.

Accepted Answer

A) higher profits 
B) regulations 
C) respect 
D) higher risk 
A) higher profits 
B) regulations 
C) respect 
D) higher risk

Question 5

Countries that experience very high rates of inflation may also have

Accepted Answer

A) balanced budgets. 
B) rapidly growing money supplies. 
C) falling money supplies. 
D) constant money supplies. 
A) balanced budgets. 
B) rapidly growing money supplies. 
C) falling money supplies. 
D) constant money supplies.

Question 6

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%. 
B) 10%. 
C) 11%. 
D) 120%. 
A) 20%. 
B) 10%. 
C) 11%. 
D) 120%.

Question 7

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 8

During a recession,output declines result in

Accepted Answer

A) lower unemployment in the economy. 
B) higher unemployment in the economy. 
C) no impact on the unemployment in the economy. 
D) higher wages for the workers. 
A) lower unemployment in the economy. 
B) higher unemployment in the economy. 
C) no impact on the unemployment in the economy. 
D) higher wages for the workers.

Question 9

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) occur in regular patterns. 
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) occur in regular patterns. 
D) are unimportant to decision makers.

Question 10

Stock prices are

Accepted Answer

A) relatively stable trending upward at a steady pace. 
B) relatively stable trending downward at a moderate rate. 
C) extremely volatile. 
D) unstable trending downward at a moderate rate. 
A) relatively stable trending upward at a steady pace. 
B) relatively stable trending downward at a moderate rate. 
C) extremely volatile. 
D) unstable trending downward at a moderate rate.

Question 11

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

Accepted Answer

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

Question 12

If the price of a euro (the European currency)increases from $1.00 to $1.10,then,everything else held constant

Accepted Answer

A) a European vacation becomes less expensive. 
B) a European vacation becomes more expensive. 
C) the cost of a European vacation is not affected. 
D) foreign travel becomes impossible. 
A) a European vacation becomes less expensive. 
B) a European vacation becomes more expensive. 
C) the cost of a European vacation is not affected. 
D) foreign travel becomes impossible.

Question 13

If the prices would have been much higher ten years ago for the items the average consumer purchased last month,then one can likely conclude that

Accepted Answer

A) the aggregate price level has declined during this ten-year period. 
B) the average inflation rate for this ten-year period has been positive. 
C) the average rate of money growth for this ten-year period has been positive. 
D) the aggregate price level has risen during this ten-year period. 
A) the aggregate price level has declined during this ten-year period. 
B) the average inflation rate for this ten-year period has been positive. 
C) the average rate of money growth for this ten-year period has been positive. 
D) the aggregate price level has risen during this ten-year period.

Question 14

The bond markets are important because they are

Accepted Answer

A) easily the most widely followed financial markets in the United States. 
B) the markets where foreign exchange rates are determined. 
C) the markets where interest rates are determined. 
D) the markets where all borrowers get their funds. 
A) easily the most widely followed financial markets in the United States. 
B) the markets where foreign exchange rates are determined. 
C) the markets where interest rates are determined. 
D) the markets where all borrowers get their funds.

Question 15

The Dow reached a peak of over 11,000 before the collapse of the ________ bubble in 2000.

Accepted Answer

A) housing 
B) manufacturing 
C) high-tech 
D) banking 
A) housing 
B) manufacturing 
C) high-tech 
D) banking

Question 16

________ markets transfer funds from people who have an excess of available funds to people who have a shortage.

Accepted Answer

A) Commodity 
B) Fund-available 
C) Financial 
D) Derivative exchange 
A) Commodity 
B) Fund-available 
C) Financial 
D) Derivative exchange

Question 17

An increase in interest rates might ________ saving because more can be earned in interest income.

Accepted Answer

A) encourage 
B) discourage 
C) disallow 
D) invalidate 
A) encourage 
B) discourage 
C) disallow 
D) invalidate

Question 18

Which of the following is most likely to result from a stronger dollar?

Accepted Answer

A) U.S.goods exported aboard will cost less in foreign countries,and so foreigners will buy more of them. 
B) U.S.goods exported aboard will cost more in foreign countries and so foreigners will buy more of them. 
C) U.S.goods exported abroad will cost more in foreign countries,and so foreigners will buy fewer of them. 
D) Americans will purchase fewer foreign goods. 
A) U.S.goods exported aboard will cost less in foreign countries,and so foreigners will buy more of them. 
B) U.S.goods exported aboard will cost more in foreign countries and so foreigners will buy more of them. 
C) U.S.goods exported abroad will cost more in foreign countries,and so foreigners will buy fewer of them. 
D) Americans will purchase fewer foreign goods.

Question 19

Banks

Accepted Answer

A) provide a channel for linking those who want to save with those who want to invest. 
B) produce nothing of value and are therefore a drain on society's resources. 
C) are the only financial institutions allowed to give loans. 
D) hold very little of the average American's wealth. 
A) provide a channel for linking those who want to save with those who want to invest. 
B) produce nothing of value and are therefore a drain on society's resources. 
C) are the only financial institutions allowed to give loans. 
D) hold very little of the average American's wealth.

Question 20

Channeling funds from individuals with surplus funds to those desiring funds when the saver does not purchase the borrower's security is known as

Accepted Answer

A) barter. 
B) redistribution. 
C) financial intermediation. 
D) taxation. 
A) barter. 
B) redistribution. 
C) financial intermediation. 
D) taxation.

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

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

Everything else held constant,a decrease in the value of the dollar relative to all foreign currencies means that the price of foreign goods purchased by Americans

Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called

Financial institutions search for ________ has resulted in many financial innovations.

Countries that experience very high rates of inflation may also have

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

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

During a recession,output declines result in

Changes in stock prices

Stock prices are

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

If the price of a euro (the European currency)increases from $1.00 to $1.10,then,everything else held constant

If the prices would have been much higher ten years ago for the items the average consumer purchased last month,then one can likely conclude that

The bond markets are important because they are

The Dow reached a peak of over 11,000 before the collapse of the ________ bubble in 2000.

________ markets transfer funds from people who have an excess of available funds to people who have a shortage.

An increase in interest rates might ________ saving because more can be earned in interest income.

Which of the following is most likely to result from a stronger dollar?

Banks

Channeling funds from individuals with surplus funds to those desiring funds when the saver does not purchase the borrower's security is known as

An Overview of the Financial System

What Is Money

The Meaning of Interest Rates

The Behavior 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

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Financial Crises

Central Banks and the Federal Reserve System

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

Web 1:financial Crises in Emerging Market Economies

Web 2:the Islm Model

Web 3:nonbank Finance

Web 4:financial Derivatives

Web 5:conflicts of Interest in the Financial Services Industry

Filters

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