Question 1

Poorly performing financial markets can be the cause of

Accepted Answer

A)  wealth.
B)  poverty.
C)  financial stability.
D)  financial expansion.E) All of the above
F) B) and C)

Question 2

If your nominal income in 2002 was $50,000,and prices doubled between 2002 and 2011,to have the same real income,your nominal income in 2011 must be

Accepted Answer

A)  $50,000.
B)  $75,000.
C)  $90,000.
D)  $100,000.E) A) and D)
F) B) and C)

Question 3

Everything else constant,a stronger dollar will mean that

Accepted Answer

A)  vacationing in England becomes more expensive.
B)  vacationing in England becomes less expensive.
C)  French cheese becomes more expensive.
D)  Japanese cars become more expensive.E) C) and D)
F) B) and D)

Question 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

Accepted Answer

A)  commodity markets.
B)  fund-available markets.
C)  derivative exchange markets.
D)  financial markets.E) None of the above
F) C) and D)

Question 5

Everything else held constant,a weaker dollar will likely hurt

Accepted Answer

A)  textile exporters in South Carolina.
B)  wheat farmers in Montana that sell domestically.
C)  automobile manufacturers in Michigan that use domestically produced inputs.
D)  furniture importers in California.E) C) and D)
F) A) and C)

Question 6

What crucial role do financial intermediaries perform in an economy?

Accepted Answer

Financial intermediaries borro...

Question 7

The financial intermediaries that the average person interacts with most frequently are

Accepted Answer

A)  exchanges.
B)  over-the-counter markets.
C)  finance companies.
D)  banks.E) B) and D)
F) A) and D)

Question 8

Why is it important to understand the bond market?

Accepted Answer

The bond market supports econo...

Question 9

Evidence from the United States and other foreign countries indicates that

Accepted Answer

A)  there is a strong positive association between inflation and growth rate of money over long periods of time.
B)  there is little support for the assertion that "inflation is always and everywhere a monetary phenomenon."
C)  countries with low monetary growth rates tend to experience higher rates of inflation,all else being constant.
D)  money growth is clearly unrelated to inflation.E) B) and C)
F) All of the above A

Question 10

Which of the following items are not counted in U.S.GDP?

Accepted Answer

A)  your purchase of a new Ford Mustang
B)  your purchase of new tires for your old car
C)  GM's purchase of tires for new cars
D)  a foreign consumer's purchase of a new Ford MustangE) C) and D)
F) A) and C) C

Question 11

Banks are important to the study of money and the economy because they

Accepted Answer

A)  channel funds from investors to savers.
B)  have been a source of rapid financial innovation.
C)  are the only important financial institution in the U.S.economy.
D)  create inflation.E) None of the above
F) A) and C)

Question 12

A rising stock market index due to higher share prices

Accepted Answer

A)  increases people's wealth,but is unlikely to increase their willingness to spend.
B)  increases people's wealth and as a result may increase their willingness to spend.
C)  decreases the amount of funds that business firms can raise by selling newly-issued stock.
D)  decreases people's wealth,but is unlikely to increase their willingness to spend.E) A) and B)
F) A) and C)

Question 13

Prior to almost all recessions since 1900,there has been a drop in

Accepted Answer

A)  inflation.
B)  the money stock.
C)  the growth rate of the money stock.
D)  interest rates.E) B) and C)
F) C) and D)

Question 14

If the aggregate price level at time t is denoted by Pt,the inflation rate from time t - 1 to t is defined as

Accepted Answer

A)  πt = (Pt - Pt - 1) / Pt - 1.
B)  πt = (Pt + 1 - Pt - 1) /Pt - 1.
C)  πt = (Pt + 1 - Pt) /Pt.
D)  πt = (Pt - Pt - 1) /Pt.E) A) and C)
F) B) and C) A

Question 15

Evidence from business cycle fluctuations in the United States indicates that

Accepted Answer

A)  a negative relationship between money growth and general economic activity exists.
B)  recessions are usually preceded by declines in bond prices.
C)  recessions are usually preceded by dollar depreciation.
D)  recessions are usually preceded by a decline in the growth rate of money.E) All of the above
F) C) and D)

Question 16

Complete Milton Friedman's famous statement,"Inflation is always and everywhere a ________ phenomenon."

Accepted Answer

A)  recessionary
B)  discretionary
C)  repressionary
D)  monetaryE) A) and B)
F) A) and C)

Question 17

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

Accepted Answer

American consumers benefitted because im...

Question 18

From 1980 to 1985 the dollar appreciated relative to the British pound.Holding everything else constant,one would expect that,when compared to 1980,

Accepted Answer

A)  fewer Britons traveled to the United States in 1985.
B)  Britons imported more wine from California in 1985.
C)  Americans exported more wheat to England in 1985.
D)  more Britons traveled to the United States in 1985.E) A) and D)
F) A) and C)

Question 19

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

Accepted Answer

A)  investors; savers
B)  borrowers; savers
C)  savers; borrowers
D)  savers; lendersE) A) and B)
F) None of the above

Question 20

Which of the following is not a financial institution?

Accepted Answer

A)  a life insurance company
B)  a pension fund
C)  a credit union
D)  a business collegeE) A) and B)
F) A) and C)

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

Poorly performing financial markets can be the cause of

Correct AnswerverifiedShow Answer

If your nominal income in 2002 was $50,000,and prices doubled between 2002 and 2011,to have the same real income,your nominal income in 2011 must be

Correct AnswerverifiedShow Answer

Everything else constant,a stronger dollar will mean that

Correct AnswerverifiedShow Answer

Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called

Correct AnswerverifiedShow Answer

Everything else held constant,a weaker dollar will likely hurt

Correct AnswerverifiedShow Answer

What crucial role do financial intermediaries perform in an economy?

Correct AnswerverifiedFinancial intermediaries borro...View AnswerShow Answer

The financial intermediaries that the average person interacts with most frequently are

Correct AnswerverifiedShow Answer

Why is it important to understand the bond market?

Correct AnswerverifiedThe bond market supports econo...View AnswerShow Answer

Evidence from the United States and other foreign countries indicates that

Correct AnswerverifiedA

Which of the following items are not counted in U.S.GDP?

Correct AnswerverifiedC

Banks are important to the study of money and the economy because they

Correct AnswerverifiedShow Answer

A rising stock market index due to higher share prices

Correct AnswerverifiedShow Answer

Prior to almost all recessions since 1900,there has been a drop in

Correct AnswerverifiedShow Answer

If the aggregate price level at time t is denoted by Pt,the inflation rate from time t - 1 to t is defined as

Correct AnswerverifiedA

Evidence from business cycle fluctuations in the United States indicates that

Correct AnswerverifiedShow Answer

Complete Milton Friedman's famous statement,"Inflation is always and everywhere a ________ phenomenon."

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedAmerican consumers benefitted because im...View AnswerShow Answer

From 1980 to 1985 the dollar appreciated relative to the British pound.Holding everything else constant,one would expect that,when compared to 1980,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is not a financial institution?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Financial intermediaries borro...
View Answer

Correct Answer
verified

Correct Answer
verified
The bond market supports econo...
View Answer

Correct Answer
verified
A

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
American consumers benefitted because im...
View Answer

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified