Test Bank - for Economics of Money, Banking and Financial Markets, The, Business School Edition 5th Edition (Frederic Mishkin, 2018), Chapter 1-25 | All Chapters

Economics of Money, Banking, and Financial Markets, 5e (Mishkin)
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: Previous Edition
AACSB: Reflective Thinking

2) Financial markets promote greater economic efficiency by channeling funds from
to .
A) investors; savers
B) borrowers; savers
C) savers; borrowers
D) savers; lenders
Answer: C
Ques Status: Previous Edition
AACSB: Reflective Thinking

3) Well-functioning financial markets promote
A) inflation.
B) deflation.
C) unemployment.
D) growth.
Answer: D
Ques Status: Previous Edition
AACSB: Reflective Thinking

4) A key factor in producing high economic growth is
A) eliminating foreign trade.
B) well-functioning financial markets.
C) high interest rates.
D) stock market volatility.
Answer: B
Ques Status: Previous Edition
AACSB: Reflective Thinking




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,5) Markets %rein %rewhich %refunds %reare %retransferred %refrom %rethose %rewho %rehave %reexcess %refunds
%reavailable %reto %rethose %rewho %rehave %rea %reshortage %reof %reavailable %refunds %reare %recalled

A) commodity %remarkets.
B) fund-available %remarkets.
C) derivative %reexchange %remarkets.
D) financial
%remarkets. %reAnswer:

% re D

Ques %reStatus: % r e Previous %reEdition
%reAACSB: % r e Application %reof

%reKnowledge




6) markets %retransfer %refunds %refrom %repeople %rewho %rehave %rean %reexcess %reof %reavailable
%refunds %reto %repeople %rewho %rehave %rea %reshortage.

A) Commodity
B) Fund-available
C) Financial
D) Derivative
%reexchange %reAnswer:

% re C

Ques %reStatus: % r e Previous %reEdition
%reAACSB: % r e Application %reof

%reKnowledge




7) Poorly %reperforming %refinancial %remarkets %recan %rebe %rethe %recause %reof
A) wealth.
B) poverty.
C) financial %restability.
D) financial
%reexpansion.

Answer: % r e B
Ques %reStatus: % r e Previous %reEdition
%reAACSB: % r e Reflective %reThinking




8) The %rebond %remarkets %reare %reimportant %rebecause %rethey %reare
A) easily %rethe %remost %rewidely %refollowed %refinancial %remarkets %rein %rethe %reUnited %reStates.
B) the %remarkets %rewhere %reforeign %reexchange %rerates %reare %redetermined.
C) the %remarkets %rewhere %reinterest %rerates %reare %redetermined.
D) the %remarkets %rewhere %reall %reborrowers %reget %retheir
%refunds. %reAnswer: % r e C

Ques %reStatus: % r e Previous %reEdition
%reAACSB: % r e Reflective %reThinking




9) The %reprice %repaid %refor %rethe %rerental %reof %reborrowed %refunds %re(usually %reexpressed %reas %rea
%repercentage %reof %rethe %rerental %reof %re$100 %reper %reyear) %reis %recommonly %rereferred %reto %reas %rethe

A) inflation %rerate.
B) exchange %rerate.
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,C) interest %rerate.
D) aggregate %reprice
%relevel. %reAnswer: % r e C

Ques %reStatus: % r e Previous %reEdition
%reAACSB: % r e Application %reof

%reKnowledge




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, 10) Compared %reto %reinterest %rerates %reon %relong-term %reU.S. %regovernment %rebonds, %reinterest
%rerates %reon %rethree- %remonth %reTreasury %rebills %refluctuate %re and %reare %re on %reaverage.
A) more; %relower
B) less; %relower
C) more; %rehigher
D) less;
%rehigher

%reAnswer:

% re A

Ques %reStatus: % r e Previous %reEdition
%reAACSB: % r e Reflective %reThinking




11) The %reinterest %rerate %reon %reBaa %recorporate %rebonds %reis %re , %reon %reaverage, %rethan
%reinterest %rerates %reon %reTreasuries, %reand %rethe %respread %rebetween %rethese %rerates %rebecame %re

in %rethe %re1970s.
A) lower; %resmaller
B) lower; %relarger
C) higher; %resmaller
D) higher;
%relarger

%reAnswer: % r e D

Ques %reStatus: % r e Previous %reEdition
%reAACSB: % r e Reflective %reThinking




12) Everything %reelse %reheld %reconstant, %rea %redecline %rein %reinterest %rerates %rewill %recause %respending %reon
%rehousing %reto

A) fall.
B) remain %reunchanged.
C) either %rerise, %refall, %reor %reremain %rethe %resame.
D) rise.
%reAnswer:

%reD

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%reAACSB: % r e Analytical %reThinking




13) High %reinterest %rerates %remight %re purchasing %rea %rehouse %reor %recar %rebut %reat %rethe
%resame %retime %rehigh %reinterest %rerates %remight %re saving.
A) discourage; %reencourage
B) discourage; %rediscourage
C) encourage; %reencourage
D) encourage;
%rediscourage %reAnswer:

% re A

Ques %reStatus: % r e Previous %reEdition
%reAACSB: % r e Analytical %reThinking




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%reEducation, %reInc.