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Quiz

ECON 2035 Test Bank (got 94% in the course)


Department
Economics
Course Code
ECON 2035
Professor
All
Study Guide
Quiz

This preview shows pages 1-3. to view the full 650 pages of the document.
Chapter!1
Why!Study!Money,!Banking,!and!Financial!Markets?
1.1 Why!Study!Financial!Markets?
1) Financial!markets!promote!economic!efficiency!by
A) channeling!funds!from!investors!to!savers.
B) creating!inflation.
C) channeling!funds!from!savers!to!investors.
D) reducing!investment.
Answer: C
Ques!Status:!Revised
2) Financial!markets!promote!greater!economic!efficiency!by!channeling!funds!from!________!to
________.
A) investors;!savers
B)
b
orrowers;!savers
C) savers;!borrowers
D) savers;!lenders
Answer: C
Ques!Status:!New
3) Well-functioning!financial!markets!promote
A) inflation.
B) deflation.
C) unemployment.
D) growth.
Answer: D
Ques!Status:!Revised
4) Markets!in!which!funds!are!transferred!from!those!who!have!excess!funds!available!to!those
who!have!a!shortage!of!available!funds!are!called
A) commodity!markets.
B) fund-available!markets.
C) derivative!exchange!markets.
D) financial!markets.
Answer: D
Ques!Status:!Previous!Edition

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

·
5) ________!markets!transfer!funds!from!people!who!have!an!excess!of!available!funds!to!people
who!have!a!shortage.
A) Commodity
B) Fund-available
C) Financial
D) Derivative!exchange
Answer: C
Ques!Status:!New
6) Poorly!performing!financial!markets!can!be!the!cause!of
A) wealth.
B) poverty.
C) financial!stability.
D) financial!expansion.
Answer: B
Ques!Status:!Revised
7) The!bond!markets!are!important!because!they!are
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.
Answer: C
Ques!Status:!Revised
8) The!price!paid!for!the!rental!of!borrowed!funds!(usually!expressed!as!a!percentage!of!the
rental!of!$100!per!year)!is!commonly!referred!to!as!the
A) inflation!rate.
B) exchange!rate.
C) interest!rate.
D) aggregate!price!level.
Answer: C
Ques!Status:!Previous!Edition
2!!!!!!!Mishkin!!Economics!of!Money,!Banking,!and!Financial!Markets,!Alternate!Edition

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Chapter!1!!!Why!Study!Money,!Banking,!and!Financial!Markets?!!!!!!! 3
9) Compared!to!interest!rates!on!long-term!U.S.!government!bonds,!interest!rates!on
three-month!Treasury!bills!fluctuate!________!and!are!________!on!average.
A) more;!lower
B) less;!lower
C) more;!higher
D) less;!higher
Answer: A
Ques!Status:!Previous!Edition
10) The!interest!rate!on!Baa!(medium!quality)!corporate!bonds!is!________,!on!average,!than!other
interest!rates,!and!the!spread!between!it!and!other!rates!became!________!in!the!1970s.
A) lower;!smaller
B) lower;!larger
C) higher;!smaller
D) higher;!larger
Answer: D
Ques!Status:!Previous!Edition
11) Everything!else!held!constant,!a!decline!in!interest!rates!will!cause!spending!on!housing!to
A) fall.
B) remain!unchanged.
C) either!rise,!fall,!or!remain!the!same.
D) rise.
Answer: D
Ques!Status:!Revised
12) An!increase!in!interest!rates!might!________!saving!because!more!can!be!earned!in!interest
income.
A) encourage
B) discourage
C) disallow
D) invalidate
Answer: A
Ques!Status:!New
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