Testbank
Economics of Koney, Banking and financial
markets
Frederick Mishkin 13th Edition
,Contents
Chapter 1 Why Study Money, Banking, and Financial Markets?................................................1
Chapter 2 An Overview of the Financial System.........................................................................20
Chapter 3 What Is Money?..............................................................................................................43
Chapter 4 Understanding Interest Rates.......................................................................................60
Chapter 5 The Behavior of Interest Rates......................................................................................78
Chapter 6 The Risk and Term Structure of Interest Rates ........................................................111
Chapter 7 The Stock Market, the Theory of Rational Expectations,
and the Efficient Market Hypothesis.........................................................................133
Chapter 8 An Economic Analysis of Financial Structure..........................................................150
Chapter 9 Financial Crises and the Subprime Meltdown.........................................................169
Chapter 10 Banking and the Management of Financial Institutions.........................................181
Chapter 11 Economic Analysis of Financial Regulation .............................................................208
Chapter 12 Banking Industry: Structure and Competition ........................................................229
Chapter 13 Central Banks and the Federal Reserve System.......................................................253
Chapter 14 The Money Supply Process ........................................................................................274
Chapter 15 Tools for Monetary Policy...........................................................................................319
Chapter 16 The Conduct of Monetary Policy: Strategy and Tactics..........................................343
Chapter 17 The Foreign Exchange Market ...................................................................................363
Chapter 18 The International Financial System ...........................................................................389
Chapter 19 The Demand for Money ..............................................................................................418
Chapter 20 The ISLM Model...........................................................................................................440
Chapter 21 Monetary and Fiscal Policy in the ISLM Model.......................................................466
Chapter 22 Aggregate Demand and Supply Analysis ................................................................493
Chapter 23 Transmission Mechanisms of Monetary Policy: The Evidence .............................511
Chapter 24 Money and Inflation ....................................................................................................529
Chapter 25 Rational Expectations: Implications for Policy ........................................................549
,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
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
3) Well-functioning financial markets promote
A) inflation.
B) deflation.
C) unemployment.
D) growth.
Answer: D
Ques Status: Previous Edition
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: New
5) Markets in which funds are transferred from those who have excess funds available to those
who have a shortage of available funds are called
A) commodity markets.
B) fund-available markets.
C) derivative exchange markets.
D) financial markets.
Answer: D
Ques Status: Previous Edition
, 2 Mishkin · The Economics of Money, Banking, and Financial Markets, 9th Edition
6) ________ markets transfer funds from people who have an excess of available funds to people
who have a shortage.
A) Commodity
B) Fund-available
C) Financial
D) Derivative exchange
Answer: C
Ques Status: Previous Edition
7) Poorly performing financial markets can be the cause of
A) wealth.
B) poverty.
C) financial stability.
D) financial expansion.
Answer: B
Ques Status: Previous Edition
8) The bond markets are important because they are
A) easily the most widely followed financial markets in the United States.
B) the markets where foreign exchange rates are determined.
C) the markets where interest rates are determined.
D) the markets where all borrowers get their funds.
Answer: C
Ques Status: Previous Edition
9) The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental
of $100 per year) is commonly referred to as the
A) inflation rate.
B) exchange rate.
C) interest rate.
D) aggregate price level.
Answer: C
Ques Status: Previous Edition
10) Compared to interest rates on long-term U.S. government bonds, interest rates on three -month
Treasury bills fluctuate ________ and are ________ on average.
A) more; lower
B) less; lower
C) more; higher
D) less; higher
Answer: A
Ques Status: Previous Edition
Economics of Koney, Banking and financial
markets
Frederick Mishkin 13th Edition
,Contents
Chapter 1 Why Study Money, Banking, and Financial Markets?................................................1
Chapter 2 An Overview of the Financial System.........................................................................20
Chapter 3 What Is Money?..............................................................................................................43
Chapter 4 Understanding Interest Rates.......................................................................................60
Chapter 5 The Behavior of Interest Rates......................................................................................78
Chapter 6 The Risk and Term Structure of Interest Rates ........................................................111
Chapter 7 The Stock Market, the Theory of Rational Expectations,
and the Efficient Market Hypothesis.........................................................................133
Chapter 8 An Economic Analysis of Financial Structure..........................................................150
Chapter 9 Financial Crises and the Subprime Meltdown.........................................................169
Chapter 10 Banking and the Management of Financial Institutions.........................................181
Chapter 11 Economic Analysis of Financial Regulation .............................................................208
Chapter 12 Banking Industry: Structure and Competition ........................................................229
Chapter 13 Central Banks and the Federal Reserve System.......................................................253
Chapter 14 The Money Supply Process ........................................................................................274
Chapter 15 Tools for Monetary Policy...........................................................................................319
Chapter 16 The Conduct of Monetary Policy: Strategy and Tactics..........................................343
Chapter 17 The Foreign Exchange Market ...................................................................................363
Chapter 18 The International Financial System ...........................................................................389
Chapter 19 The Demand for Money ..............................................................................................418
Chapter 20 The ISLM Model...........................................................................................................440
Chapter 21 Monetary and Fiscal Policy in the ISLM Model.......................................................466
Chapter 22 Aggregate Demand and Supply Analysis ................................................................493
Chapter 23 Transmission Mechanisms of Monetary Policy: The Evidence .............................511
Chapter 24 Money and Inflation ....................................................................................................529
Chapter 25 Rational Expectations: Implications for Policy ........................................................549
,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
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
3) Well-functioning financial markets promote
A) inflation.
B) deflation.
C) unemployment.
D) growth.
Answer: D
Ques Status: Previous Edition
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: New
5) Markets in which funds are transferred from those who have excess funds available to those
who have a shortage of available funds are called
A) commodity markets.
B) fund-available markets.
C) derivative exchange markets.
D) financial markets.
Answer: D
Ques Status: Previous Edition
, 2 Mishkin · The Economics of Money, Banking, and Financial Markets, 9th Edition
6) ________ markets transfer funds from people who have an excess of available funds to people
who have a shortage.
A) Commodity
B) Fund-available
C) Financial
D) Derivative exchange
Answer: C
Ques Status: Previous Edition
7) Poorly performing financial markets can be the cause of
A) wealth.
B) poverty.
C) financial stability.
D) financial expansion.
Answer: B
Ques Status: Previous Edition
8) The bond markets are important because they are
A) easily the most widely followed financial markets in the United States.
B) the markets where foreign exchange rates are determined.
C) the markets where interest rates are determined.
D) the markets where all borrowers get their funds.
Answer: C
Ques Status: Previous Edition
9) The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental
of $100 per year) is commonly referred to as the
A) inflation rate.
B) exchange rate.
C) interest rate.
D) aggregate price level.
Answer: C
Ques Status: Previous Edition
10) Compared to interest rates on long-term U.S. government bonds, interest rates on three -month
Treasury bills fluctuate ________ and are ________ on average.
A) more; lower
B) less; lower
C) more; higher
D) less; higher
Answer: A
Ques Status: Previous Edition
