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

Everything else held constant, a rise in interest rates will cause spending on housing to ________.

When tax revenues are greater than government expenditures, the government has a budget ________.

The stock market is important because it is ________.

The market where one currency is converted into another currency is called the ________ market.

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

Well-functioning financial markets promote ________.

The interest rate on long-term corporate bonds is ________, on average, than other interest rates. The spread between it an other rates ________ over time.

On ________, October 19, 1987, the market experienced its worst one-day drop in its entire history with the S&P/TSX Composite falling by 11 percent.

________ markets transfer funds from people who do not have a productive use for them to people who do.

When the total value of final goods and services is calculated using current prices, the resulting measure is referred to as ________.

Why is it important to understand the bond market?

To convert a nominal GDP to a real GDP, you would use ________.

Fluctuations in stock prices ________.

A bond is ________.

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

Canadian farmers who sell beef to Europe benefit most from ________.

Financial markets promote economic efficiency by ________.

GDP measured with constant prices is referred to as ________.

Describe the relationship between the aggregate price level and the growth rate in money supply. Can the relationship be used to explain inflation?

The most comprehensive measure of aggregate output is ________.