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

________ theory relates the quantity of money and monetary policy to changes in aggregate economic activity and inflation.

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

The bond markets are important because they are

Evidence from the United States and other foreign countries indicates that

Fear of a major recession causes stock prices to fall,everything else held constant,which in turn causes consumer spending to

If real GDP in 2002 is $10 trillion,and in 2003 real GDP is $9.5 trillion,then real GDP growth from 2002 to 2003 is

The measure of the aggregate price level that is most frequently reported in the media is the

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

A rising stock market index due to higher share prices

The stock market is important because it is

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

What crucial role do financial intermediaries perform in an economy?

Budget deficits are important because deficits

An increase in stock prices ________ the size of people's wealth and may ________ their willingness to spend,everything else held constant.

From 1980-1985,the dollar strengthened in value against other currencies. Who was helped and who was hurt by this strong dollar?

High interest rates might ________ purchasing a house or car but at the same time high interest rates might ________ saving.

Banks,savings and loan associations,mutual savings banks,and credit unions

The measure of the aggregate price level that is frequently the focus of Federal Reserve officials is the

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

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