FIL241-Practice Exam 1 with correct answers 2022

FIL241-Practice Exam 1 with correct answers 2022Financial markets become more efficient when competition forces underperforming banks out of the business. Which of the following statements is not correct? When there is dollar devaluation, the growth in DIJA understates the actual economic growth. Which of the following statements is correct? Financial markets can mitigate the effect of behavioral biases. Denomination intermediation is best exemplified by you deposit $100 in a bank and bank lends your money as part of one $15,000 loan. Which of the following statements is correct? The 1907 crisis (together with other events) led to the increased government intervention in financial markets including the creation of the fed. Which of the following statements is incorrect? The US is a good example of a capitalist country. The Fed independence and lack of transparency ensures that the Fed acts in the best interests of the country. False Which of the following statements is not consistent with the early Enlightenment period ethics? You are your brother's keeper. Which of the following statements is incorrect? People overconfidence does not change through time. Which of the following statement is correct? The Fed policies sometimes exaggerate economic cycles. Which of the following statements is incorrect? In the US, only private institutions can participate in financial markets. Which of the following are characteristic of the communist principle, from each according to his ability, to each according to his needs. Existence of a special group of people who have power over others, forced labor, lack of productive opportunities to improve one's life Since the creation of the Fed: Government control over currency increased. If the first economy is growing at 8% while and the second economy is growing at 4%, which of the following statements is true? In 50 years, the first economy will be 6.6 times larger than the second economy. The majority of people serving on the open market committee are appointed by politicians. True Which of the following statements is not correct? The maximization of stakeholder wealth is a better main goal for a firm than the maximization of shareholder wealth since it includes a broader group. In indirect financing, financial intermediaries buy financial claims with one set of characteristics and sell financial claims with a different set of characteristics. True Which of the following statements is incorrect? After buying insurance people tend to change their behavior in ways that reduce their risk taking. Which of the following statements is incorrect? Rationalizing is a behavioral bias that can be described as jumping to the conclusions one likes, ignoring facts supporting these conclusions, and paying too much attention to facts contradicting these conclusions. Growth in DIJA values is the best measure of economic growth. False During : No central bank in the US People use gold and silver coins as well as IOUs of banks as currency Significant economic progress Which of the following statement is incorrect? One of the Fed goals is to serve as lender of last resort during crises. Which of the following statement is incorrect? When the Fed raises discount rate, the amount of money in circulation increases. Pragmatism helps people achieve their long-term goals. False Which of the following statement is incorrect? When the Fed sells mortgage-back securities the amount of money in circulation increases. When the Fed increases the discount rate, the amount of money in circulation increases. Falses After the 2008 crash, the Fed started using a new way of increasing money supply as many people understand that excessive printing of money is harmful to the economy. True When we estimate DIJA growth using values in ounces of gold, we see that stock market prices grew faster before the creation of the Fed. True