Question 1

Sustained downward movements in the business cycle are referred to as

Accepted Answer

A) inflation. 
B) recessions. 
C) economic recoveries. 
D) expansions. 
A) inflation. 
B) recessions. 
C) economic recoveries. 
D) expansions.

Question 2

The most comprehensive measure of aggregate output is

Accepted Answer

A) gross domestic product. 
B) net national product. 
C) the stock value of the industrial 500. 
D) national income. 
A) gross domestic product. 
B) net national product. 
C) the stock value of the industrial 500. 
D) national income.

Question 3

Money is defined as

Accepted Answer

A) bills of exchange. 
B) anything that is generally accepted in payment for goods and services or in the repayment of debt. 
C) a risk-free repository of spending power. 
D) the unrecognized liability of governments. 
A) bills of exchange. 
B) anything that is generally accepted in payment for goods and services or in the repayment of debt. 
C) a risk-free repository of spending power. 
D) the unrecognized liability of governments.

Question 4

If the CPI in 2004 is 200,and in 2005 the CPI is 180,the rate of inflation from 2004 to 2005 is

Accepted Answer

A) 20%. 
B) 10%. 
C) 0%. 
D) -10%. 
A) 20%. 
B) 10%. 
C) 0%. 
D) -10%.

Question 5

A key factor in producing high economic growth is

Accepted Answer

A) eliminating foreign trade. 
B) well-functioning financial markets. 
C) high interest rates. 
D) stock market volatility. 
A) eliminating foreign trade. 
B) well-functioning financial markets. 
C) high interest rates. 
D) stock market volatility.

Question 6

When stock prices fall

Accepted Answer

A) an individual's wealth is not affected nor is their willingness to spend. 
B) a business firm will be more likely to sell stock to finance investment spending. 
C) an individual's wealth may decrease but their willingness to spend is not affected. 
D) an individual's wealth may decrease and their willingness to spend may decrease. 
A) an individual's wealth is not affected nor is their willingness to spend. 
B) a business firm will be more likely to sell stock to finance investment spending. 
C) an individual's wealth may decrease but their willingness to spend is not affected. 
D) an individual's wealth may decrease and their willingness to spend may decrease.

Question 7

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 8

On ________,October 19,1987,the stock market experienced its worst one-day drop in its entire history with the DJIA falling by 22%.

Accepted Answer

A) "Terrible Tuesday" 
B) "Woeful Wednesday" 
C) "Freaky Friday" 
D) "Black Monday" 
A) "Terrible Tuesday" 
B) "Woeful Wednesday" 
C) "Freaky Friday" 
D) "Black Monday"

Question 9

There is a ________ association between inflation and the growth rate of money ________.

Accepted Answer

A) positive;demand 
B) positive;supply 
C) negative;demand 
D) negative;supply 
A) positive;demand 
B) positive;supply 
C) negative;demand 
D) negative;supply

Question 10

When prices are measured in terms of fixed (base-year)prices they are called ________ prices.

Accepted Answer

A) nominal 
B) real 
C) inflated 
D) aggregate 
A) nominal 
B) real 
C) inflated 
D) aggregate

Question 11

The gross domestic product is the

Accepted Answer

A) the value of all wealth in an economy. 
B) the value of all goods and services sold to other nations in a year. 
C) the market value of all final goods and services produced in an economy in a year. 
D) the market value of all intermediate goods and services produced in an economy in a year. 
A) the value of all wealth in an economy. 
B) the value of all goods and services sold to other nations in a year. 
C) the market value of all final goods and services produced in an economy in a year. 
D) the market value of all intermediate goods and services produced in an economy in a year.

Question 12

What crucial role do financial intermediaries perform in an economy?

Accepted Answer

Financial intermediaries borro

Question 13

Well-functioning financial markets promote

Accepted Answer

A) inflation. 
B) deflation. 
C) unemployment. 
D) growth. 
A) inflation. 
B) deflation. 
C) unemployment. 
D) growth.

Question 14

To calculate the growth rate of a variable,you will

Accepted Answer

A) calculate the percentage change from one time period to the next. 
B) calculate the difference between the two variables. 
C) add the ending value to the beginning value. 
D) divide the increase by the number of time periods. 
A) calculate the percentage change from one time period to the next. 
B) calculate the difference between the two variables. 
C) add the ending value to the beginning value. 
D) divide the increase by the number of time periods.

Question 15

American companies can borrow funds

Accepted Answer

A) only in U.S.financial markets. 
B) only in foreign financial markets. 
C) in both U.S.and foreign financial markets. 
D) only from the U.S.government. 
A) only in U.S.financial markets. 
B) only in foreign financial markets. 
C) in both U.S.and foreign financial markets. 
D) only from the U.S.government.

Question 16

Budget deficits are important because deficits

Accepted Answer

A) cause bank failures. 
B) always cause interest rates to fall. 
C) can result in higher rates of monetary growth. 
D) always cause prices to fall. 
A) cause bank failures. 
B) always cause interest rates to fall. 
C) can result in higher rates of monetary growth. 
D) always cause prices to fall.

Question 17

Financial markets promote economic efficiency by

Accepted Answer

A) channeling funds from investors to savers. 
B) creating inflation. 
C) channeling funds from savers to investors. 
D) reducing investment. 
A) channeling funds from investors to savers. 
B) creating inflation. 
C) channeling funds from savers to investors. 
D) reducing investment.

Question 18

Financial markets promote greater economic efficiency by channeling funds from ________ to ________.

Accepted Answer

A) investors;savers 
B) borrowers;savers 
C) savers;borrowers 
D) savers;lenders 
A) investors;savers 
B) borrowers;savers 
C) savers;borrowers 
D) savers;lenders

Question 19

Banks and other financial institutions engage in financial intermediation,which

Accepted Answer

A) can hurt the performance of the economy. 
B) can benefit economic performance. 
C) has no effect on economic performance. 
D) involves borrowing from investors and lending to savers. 
A) can hurt the performance of the economy. 
B) can benefit economic performance. 
C) has no effect on economic performance. 
D) involves borrowing from investors and lending to savers.

Question 20

The interest rate on Baa corporate bonds is ________,on average,than interest rates on Treasuries,and the spread between these rates became ________ in the 1970s.

Accepted Answer

A) lower;smaller 
B) lower;larger 
C) higher;smaller 
D) higher;larger 
A) lower;smaller 
B) lower;larger 
C) higher;smaller 
D) higher;larger

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

Sustained downward movements in the business cycle are referred to as

The most comprehensive measure of aggregate output is

Money is defined as

If the CPI in 2004 is 200,and in 2005 the CPI is 180,the rate of inflation from 2004 to 2005 is

A key factor in producing high economic growth is

When stock prices fall

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

On ________,October 19,1987,the stock market experienced its worst one-day drop in its entire history with the DJIA falling by 22%.

There is a ________ association between inflation and the growth rate of money ________.

When prices are measured in terms of fixed (base-year)prices they are called ________ prices.

The gross domestic product is the

What crucial role do financial intermediaries perform in an economy?

Well-functioning financial markets promote

To calculate the growth rate of a variable,you will

American companies can borrow funds

Budget deficits are important because deficits

Financial markets promote economic efficiency by

Financial markets promote greater economic efficiency by channeling funds from ________ to ________.

Banks and other financial institutions engage in financial intermediation,which

The interest rate on Baa corporate bonds is ________,on average,than interest rates on Treasuries,and the spread between these rates became ________ in the 1970s.

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

There is a association between inflation and the growth rate of money .

Financial markets promote greater economic efficiency by channeling funds from to .

The interest rate on Baa corporate bonds is ,on average,than interest rates on Treasuries,and the spread between these rates became in the 1970s.