Lecture Topic 2Exam
Course CodeBIOL 1001
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Econ 2035 Spring 2015
Money and Banking
Exam 1 Version A
Write your name on the exam and scantron. Write your section number in the Period and test
version in the Test No. on the scantron sheet. Read each question carefully. Mark all your answers
on the exam as well as the scantron. You will not receive your scantron and exam back. If there is
difference between what you put on the scantron and what is on the exam, your scantron will be the
accepted answer. So be sure to mark your answer carefully on both. You cannot use calculator or
any other electronic equipment during the exam.
There are 30 multiple choice questions on the exam. You have 50 minutes to finish.
When you finished, bring me your scantron and exam. Show me your student ID when you hand in
All the best!
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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Compared to checks, paper currency and coins have the major drawbacks that they 1) _______
A) are not the most liquid assets. B) are hard to counterfeit.
C) are easily stolen. D) must be backed by gold.
2) In the bond market, the bond demanders are the ________ and the bond suppliers are the ________.
A) borrowers; lenders B) borrowers; advancers
C) lenders; borrowers D) lenders; advancers
3) Everything else held constant, when the government has higher budget deficits 3) _______
A) the supply curve for bonds shifts to the right and the interest rate rises.
B) the supply curve for bonds shifts to the right and the interest rate falls.
C) the demand curve for bonds shifts to the left and the interest rate rises.
D) the demand curve for bonds shifts to the left and the interest rate falls.
4) When we say that money is a stock variable, we mean that 4) _______
A) we must attach a time period to the measure.
B) money never loses purchasing power.
C) it is sold in the equity market.
D) the quantity of money is measured at a given point in time.
5) If Microsoft sells a bond in London and it is denominated in dollars, the bond is a 5) _______
A) British bond. B) foreign bond. C) currency bond. D) Eurobond.
6) If the interest rate on a bond is above the equilibrium interest rate, there is an excess ________ for bonds and
the bond price will ________. 6) _______
A) demand; rise B) supply; rise C) demand; fall D) supply; fall
7) Which of the following can be described as direct finance? 7) _______
A) You take out a mortgage from your local bank.
B) You buy shares of common stock in the secondary market.
C) You borrow $2500 from a friend.
D) You buy shares in a mutual fund.
8) Which of the following is a contractual savings institution? 8) _______
A) A savings and loan association B) A mutual fund
C) A credit union D) A life insurance company
9) If prices in the bond market become more volatile, everything else held constant, the demand curve for bonds
shifts ________ and interest rates ________. 9) _______
A) left; fall B) right; fall C) left; rise D) right; rise
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