Economics of Money, Banking, and Financial Markets (13th Edition) – Test Bank

Test Bank
For Economics of Money, Banking, and Financial Markets (13th Edition)



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, Chapter 1 x




Why Study Money, Banking, and Financial Markets?
x x x x x x




1.1 Why Study Financial Markets?
x x x




1) Financial markets promote economic efficiency by
x x x x x




A) channeling funds from investors to savers. x x x x x




B) creating inflation. x




C) channeling funds from savers to investors. x x x x x




D) reducing investment. x




Answer: C x




Question Status: Revised x x




2) Financial markets promote greater economic efficiency by channeling funds from
x x x x x x x x x to

A) investors; savers x




B) borrowers; savers x




C) savers; borrowers x




D) savers; lenders x




xAnswer: C x




Question Status: New x x




3) Well-functioning financial markets promote x x x




A) inflation.

B) deflation.

C) unemployment.

D) growth.

Answer: D x




Question Status: Revised x x




1|P a g e
x x x x x

,4) Markets in which funds are transferred from those who have excess funds available to those who have
x x x x x x x x x x x x x x x x


a shortage of available funds are called
x x x x x x x




A) commodity markets. x




B) fund-available markets. x




C) derivative exchange markets. x x




D) financial markets. x




Answer: D x




Question Status: Previous Edition
x x x




5) markets transfer funds from people who have an excess of available funds to people who have a
x x x x x x x x x x x x x x x x


shortage.
x




A) Commodity

B) Fund-available

C) Financial

D) Derivative exchange x




xAnswer: C x




Question Status: New x x




6) Poorly performing financial markets can be the cause of
x x x x x x x x




A) wealth.

B) poverty.

C) financial stability. x




D) financial expansion. x




Answer: B x




Question Status: Revisedx x




2|P a g e
x x x x x

, 7) The bond markets are important because they are
x x x x x x x




A) easily the most widely followed financial markets in the United States.
x x x x x x x x x x




B) the markets where foreign exchange rates are determined.
x x x x x x x




C) the markets where interest rates are determined.
x x x x x x




D) the markets where all borrowers get their funds.
x x x x x x x




Answer: C x




Question Status: Revised x x




8) The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental of $100
x x x x x x x x x x x x x x x x x x


per year) is commonly referred to as the
x x x x x x x x




A) inflation rate. x




B) exchange rate. x




C) interest rate. x




D) aggregate price level. x x




Answer: C x




Question Status: Previous Edition x x x




9) Compared to interest rates on long-term U.S. government bonds, interest rates on three-month Treasury
x x x x x x x x x x x x x


bills fluctuate and are
x x on average. x x




A) more; lower x




B) less; lower x




C) more; higher x




D) less; higher x




xAnswer: A x




Question Status: Previous Edition x x x




3|P a g e
x x x x x