Financial system MCQs(A+ Guaranteed)

Which of the following are not main participants in financial market transactions? (a) households (b) financial institutions (c) governments (d) all of the above are main participants in financial market transactions correct answers d 2. Financial markets (a) facilitate the flow of funds from deficit to surplus units. (b) facilitate the flow of funds from surplus to deficit units. (c) are markets in which financial assets such as stocks and bonds can be bought and sold. (d) only answers b and c are correct. correct answers d 3. What is the main difficulty with barter economy? (a) A household cannot consume more than what it earns. (b) The mis-match of desired quantity between buyers and sellers (c) Money does not exist (d) Double coincidence of wants correct answers d 4. What is (are) the primary role(s) of financial system? (a) An intermediary between the surplus agents and deficits agents (b) Transforming low risk claims to high risk claims (c) Transforming short-term claims to long-term claims (d) All of the above correct answers Answer: A. Note: The transforming performed by financial system is to reconcile the mis-matched preferences of lenders and borrowers. It is not the function of a financial system. It is what the financial system does to fulfil its most important function. 5. What is not an ideal characteristic for a good that can be used as money?