Money, Banking, and the Financial System, 3e (Hubbard/O'Brien)
Chapter 1 Introducing Money and the Financial System
1.1 Key Components of the Financial System
1) The financial system is primarily a means by which
A) funds are transferred from savers to borrowers.
B) money is put into circulation.
C) the government puts into operation its plans for the economy.
D) business firms distribute their goods.
Answer: A
Diff: 1 Page Ref: 4
Topic: financial system
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
2) Which of the following is NOT a financial asset?
A) a bond issued by Google
B) Wells Fargo Bank
C) a home mortgage loan
D) a certificate of deposit
Answer: B
Diff: 1 Page Ref: 2
Topic: financial assets
,Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
3) If you buy a bond issued by Intel, the bond is a(n)
A) liability to Intel and an asset to you.
B) liability to you and an asset to Intel.
C) liability to both you and Intel.
D) asset to both you and Intel.
Answer: A
Diff: 2 Page Ref: 4
Topic: financial assets
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
,4) Which of the following forms the largest share of household holdings of financial
assets?
A) corporate stocks
B) bonds
C) pension fund reserves
D) equity in unincorporated businesses
Answer: C
Diff: 1 Page Ref: 9-10
Topic: financial assets
Special Feature: Making the Connection: What Do People Do with Their Savings?
Objective: Identify the key components of the financial system
AACSB: Reflective Thinking
5) From 1978 to 2016, the percentage of wealth held by households decreased for all of
the following categories of assets EXCEPT
A) corporate stocks.
B) bonds.
C) deposits.
D) equity in unincorporated businesses.
Answer: A
Diff: 1 Page Ref: 9-10
Topic: financial assets
Special Feature: Making the Connection: What Do People Do with Their Savings?
Objective: Identify the key components of the financial system
AACSB: Reflective Thinking
6) Which of the following is NOT a key financial service provided by the financial
, system?
A) risk sharing
B) profitability
C) liquidity
D) information
Answer: B
Diff: 1 Page Ref: 13
Topic: financial system
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
Chapter 1 Introducing Money and the Financial System
1.1 Key Components of the Financial System
1) The financial system is primarily a means by which
A) funds are transferred from savers to borrowers.
B) money is put into circulation.
C) the government puts into operation its plans for the economy.
D) business firms distribute their goods.
Answer: A
Diff: 1 Page Ref: 4
Topic: financial system
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
2) Which of the following is NOT a financial asset?
A) a bond issued by Google
B) Wells Fargo Bank
C) a home mortgage loan
D) a certificate of deposit
Answer: B
Diff: 1 Page Ref: 2
Topic: financial assets
,Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
3) If you buy a bond issued by Intel, the bond is a(n)
A) liability to Intel and an asset to you.
B) liability to you and an asset to Intel.
C) liability to both you and Intel.
D) asset to both you and Intel.
Answer: A
Diff: 2 Page Ref: 4
Topic: financial assets
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
,4) Which of the following forms the largest share of household holdings of financial
assets?
A) corporate stocks
B) bonds
C) pension fund reserves
D) equity in unincorporated businesses
Answer: C
Diff: 1 Page Ref: 9-10
Topic: financial assets
Special Feature: Making the Connection: What Do People Do with Their Savings?
Objective: Identify the key components of the financial system
AACSB: Reflective Thinking
5) From 1978 to 2016, the percentage of wealth held by households decreased for all of
the following categories of assets EXCEPT
A) corporate stocks.
B) bonds.
C) deposits.
D) equity in unincorporated businesses.
Answer: A
Diff: 1 Page Ref: 9-10
Topic: financial assets
Special Feature: Making the Connection: What Do People Do with Their Savings?
Objective: Identify the key components of the financial system
AACSB: Reflective Thinking
6) Which of the following is NOT a key financial service provided by the financial
, system?
A) risk sharing
B) profitability
C) liquidity
D) information
Answer: B
Diff: 1 Page Ref: 13
Topic: financial system
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
