Chapter 1 a3
Whya3Studya3 Money,a3Banking,a3anda3 Financiala3Markets?
1.1 Whya3Studya3Financiala3Markets?
1) Financiala3 marketsa3 promotea3 economica3 efficiencya3 by
A) channelinga3 fundsa3 froma3 investorsa3 toa3 savers.
B) creatinga3 inflation.
C) channelinga3 fundsa3 froma3 saversa3 toa3 investors.
D) reducinga3investmen
t.a3Answer:a 3 C
Quesa3Status:a 3 Previousa3Edition
2) Financiala3 marketsa3 promotea3 greatera3 economica3 efficiencya3 bya3 channelinga3 fundsa3 froma3
a3to
.
A) investors;a 3 savers
B) borrowers;a 3 savers
C) savers;a3 borrowers
D) savers;a3lender
sa3Answer:a 3 C
Quesa3Status:a 3 Previousa3Edition
3) Well-functioninga 3 financiala 3 marketsa 3 promote
A) inflation.
B) deflation.
C) unemployment.
D) growth.
Answer:a 3 D
Quesa3Status:a 3 Previousa3Edition
4) Aa3 keya3 factora3 ina3 producinga3 higha3 economica3 growtha3 is
A) eliminatinga3 foreigna3 trade.
B) well-functioninga 3 financiala 3 markets.
C) higha3 interesta3 rates.
D) stocka3marketa3volatili
ty.a3Answer:a 3 B
Quesa3Status:a 3 New
5) Marketsa3ina3whicha3fundsa3area3transferreda3froma3thosea3whoa3havea3excessa3fundsa3ava
ilablea3toa3thosea3whoa3havea3aa3shortagea3ofa3availablea3fundsa3area3called
A) commoditya3 markets.
B) fund-availablea3markets.
C) derivativea3 exchangea 3 markets.
D) financiala3 market
s.
Answer:a 3 D
Quesa3Status:a 3 Previousa3Edition
,2a 3 a 3 Mishkina3 ·a3Thea3 Economicsa3 ofa3 Money,a3 Banking,a3 anda3 Financiala3 Market
s,a 3 9tha3 Edition
6)
a3marketsa3transfera3fundsa3froma3peoplea3whoa3havea3ana3excessa3ofa3availablea3f
undsa3toa3peoplea3whoa3havea3aa3shortage.
A) Commodity
B) Fund-available
C) Financial
D) Derivativea3exchang
ea3Answer:a 3 C
Quesa3Status:a 3 Previousa3Edition
7) Poorlya3 performinga3 financiala3 marketsa3 cana3 bea3 thea3 causea3 of
A) wealth.
B) poverty.
C) financiala3 stability.
D) financiala3 expansio
n.
Answer:a 3 B
Quesa3Status:a 3 Previousa3Edition
8) Thea3 bonda3 marketsa3 area3 importanta3 becausea3 theya3 are
A) easilya3 thea3 mosta3 widelya3 followeda3 financiala3 marketsa3 ina3 thea3 Uniteda3 States.
B) thea3 marketsa3 wherea3 foreigna3 exchangea3 ratesa3 area3 determined.
C) thea3 marketsa3 wherea3 interesta3 ratesa3 area3 determined.
D) thea3marketsa3wherea3alla3borrowersa3geta3their
a3funds.a3Answer:a 3 C
Quesa3Status:a 3 Previousa3Edition
9) Thea3pricea3paida3fora3thea3rentala3ofa3borroweda3fundsa3(usuallya3expresseda3asa3aa3percenta
gea3ofa3thea3rentala 3 ofa3$100a3pera3year)a3isa3commonlya3referreda3toa3asa3the
A) inflationa3 rate.
B) exchangea3 rate.
C) interesta3 rate.
D) aggregatea3 pricea3 le
vel.
Answer:a 3 C
Quesa3Status:a 3 Previousa3Edition
10) Compareda3toa3interesta3ratesa3ona3long-
terma3U.S.a3governmenta3bonds,a3interesta3ratesa3ona3threea3-
montha 3 Treasurya3billsa3fluctuatea3 a3anda3area3 a3ona3average.
A) more;a3 lower
B) less;a3 lower
C) more;a3 higher
D) less;a3highe
ra3Answer:a 3 A
Quesa3Status:a 3 Previousa3Edition
, Chaptera3 1a 3 a 3 Whya3 Studya3 Money,a3 Banking,a3 anda3 Financiala3
Markets?a 3 a 3 3
11) Thea3interesta3ratea3ona3Baaa3(mediuma3quality)a3corporatea3bondsa3isa3
,a3ona3average,a3thana3
othera3interesta3rates,a3anda3thea3spreada3betweena3ita3anda3othera3ratesa3becamea3
a3ina3thea31970s.
A) lower;a3 smaller
B) lower;a3 larger
C) higher;a3 smaller
D) higher;a3large
ra3Answer:a 3 D
Quesa3Status:a 3 Previousa3Edition
12) Everythinga3 elsea3 helda3 constant,a3 aa3 declinea3 ina3 interesta3 ratesa3 willa3 causea3 spendinga3 ona3 hous
inga3 to
A) fall.
B) remaina3 unchanged.
C) eithera3 rise,a3 fall,a3 ora3 remaina3 thea3 same.
D) rise.
Answer:a 3
D
Quesa3Status:a 3 Previousa3Edition
13) Higha3interesta3ratesa3mighta3
a3purchasinga3aa3housea3ora3cara3buta3ata3thea3samea3timea3higha3interes
ta3ratesa3mighta3 a3saving.
A) discourage;a 3 encourage
B) discourage;a 3 discourage
C) encourage;a 3 encourage
D) encourage;a3discourag
ea3Answer:a 3 A
Quesa3Status:a 3 New
14) Ana3increasea3ina3interesta3ratesa3mighta3
a3savinga3becausea3morea3cana3bea3earneda3in
a3interesta3income.
A) encourage
B) discourage
C) disallow
D) invalidate
a3Answer:a 3 A
Quesa3Status:a 3 Previousa3Edition
15) Everythinga3 elsea3 helda3 constant,a3 ana3 increasea3 ina3 interesta3 ratesa3 ona3 studenta3 loans
A) increasesa3 thea3 costa3 ofa3 aa3 collegea3 education.
B) reducesa3 thea3 costa3 ofa3 aa3 collegea3 education.
C) hasa3 noa3 effecta3 ona3 educationala3 costs.
D) increasesa3costsa3fora3studentsa3witha3no
a3loans.a3Answer:a 3 A
Quesa3Status:a 3 Previousa3Edition
, 4a 3 a 3 Mishkina3 ·a3Thea3 Economicsa3 ofa3 Money,a3 Banking,a3 anda3 Financiala3 Market
s,a 3 9tha3 Edition
16) Higha3interesta3ratesa3mighta3causea3aa3corporationa3toa3
a3buildinga3aa3newa3planta3thata
3woulda3providea3morea3jobs.
A) complete
B) consider
C) postpone
D) contemplate
a3Answer:a 3 C
Quesa3Status:a 3 Previousa3Edition
17) Thea3 stocka3 marketa3 isa3 importanta3 becausea3 ita3 i
s
A) wherea3 interesta3 ratesa3 area3 determined.
B) thea3 mosta3 widelya3 followeda3 financiala3 marketa3 ina3 thea3 Uniteda3 States.
C) wherea3 foreigna3 exchangea3 ratesa3 area3 determined.
D) thea3marketa3wherea3mosta3borrowersa3geta3their
a3funds.a3Answer:a 3 B
Quesa3Status:a 3 Previousa3Edition
18) Stocka3 pricesa3 are
A) relativelya3 stablea3 trendinga3 upwarda3 ata3 aa3 steadya3 pace.
B) relativelya3 stablea3 trendinga3 downwarda3 ata3 aa3 moderatea3 rate.
C) extremelya3 volatile.
D) unstablea3trendinga3downwarda3ata3aa3moderat
ea3rate.a3Answer:a 3 C
Quesa3Status:a 3 Revised
19) Aa3 risinga3 stocka3 marketa3 indexa3 duea3 toa3 highera3 sharea3 prices
A) increasesa3 peopleʹsa3 wealth,a3 buta3 isa3 unlikelya3 toa3 increasea3 theira3 willingnessa3 toa3 spend.
B) increasesa3 peopleʹsa3 wealtha3 anda3 asa3 aa3 resulta3 maya3 increasea3 theira3 willingnessa3 toa3 spend.
C) decreasesa3 thea3 amounta3 ofa3 fundsa3 thata3 businessa3 firmsa3 cana3 raisea3 bya3 sellinga3 newlya3-
issueda3 stock.
D) decreasesa3peopleʹsa3wealth,a3buta3isa3unlikelya3toa3increasea3theira3willingnes
sa3toa3spend.a3Answer:a 3 B
Quesa3Status:a 3 Previousa3Edition
20) Whena3 stocka3 pricesa3 fall
A) ana3 individualʹsa3 wealtha3 isa3 nota3 affecteda3 nora3 isa3 theira3 willingnessa3 toa3 spend.
B) aa3 businessa3 firma3 willa3 bea3 morea3 likelya3 toa3 sella3 stocka3 toa3 financea3 investmenta3 spending.
C) ana3 individualʹsa3 wealtha3 maya3 decreasea3 buta3 theira3 willingnessa3 toa3 spenda3 isa3 nota3 affected.
D) ana3individualʹsa3wealtha3maya3decreasea3anda3theira3willingnessa3toa3spenda3m
aya3decrease.a3Answer:a 3 D
Quesa3Status:a 3 Previousa3Edition
21) Changesa3 ina3 stocka3 prices
A) doa3 nota3 affecta3 peopleʹsa3 wealtha3 anda3 theira3 willingnessa3 toa3 spend.
B) affecta3 firmsʹa3 decisionsa3 toa3 sella3 stocka3 toa3 financea3 investmenta3 spending.
C) occura3 ina3 regulara3 patterns.
D) area3unimportanta3toa3decisiona3ma
kers.a3Answer:a 3 B
Quesa3Status:a 3 Previousa3Edition
Whya3Studya3 Money,a3Banking,a3anda3 Financiala3Markets?
1.1 Whya3Studya3Financiala3Markets?
1) Financiala3 marketsa3 promotea3 economica3 efficiencya3 by
A) channelinga3 fundsa3 froma3 investorsa3 toa3 savers.
B) creatinga3 inflation.
C) channelinga3 fundsa3 froma3 saversa3 toa3 investors.
D) reducinga3investmen
t.a3Answer:a 3 C
Quesa3Status:a 3 Previousa3Edition
2) Financiala3 marketsa3 promotea3 greatera3 economica3 efficiencya3 bya3 channelinga3 fundsa3 froma3
a3to
.
A) investors;a 3 savers
B) borrowers;a 3 savers
C) savers;a3 borrowers
D) savers;a3lender
sa3Answer:a 3 C
Quesa3Status:a 3 Previousa3Edition
3) Well-functioninga 3 financiala 3 marketsa 3 promote
A) inflation.
B) deflation.
C) unemployment.
D) growth.
Answer:a 3 D
Quesa3Status:a 3 Previousa3Edition
4) Aa3 keya3 factora3 ina3 producinga3 higha3 economica3 growtha3 is
A) eliminatinga3 foreigna3 trade.
B) well-functioninga 3 financiala 3 markets.
C) higha3 interesta3 rates.
D) stocka3marketa3volatili
ty.a3Answer:a 3 B
Quesa3Status:a 3 New
5) Marketsa3ina3whicha3fundsa3area3transferreda3froma3thosea3whoa3havea3excessa3fundsa3ava
ilablea3toa3thosea3whoa3havea3aa3shortagea3ofa3availablea3fundsa3area3called
A) commoditya3 markets.
B) fund-availablea3markets.
C) derivativea3 exchangea 3 markets.
D) financiala3 market
s.
Answer:a 3 D
Quesa3Status:a 3 Previousa3Edition
,2a 3 a 3 Mishkina3 ·a3Thea3 Economicsa3 ofa3 Money,a3 Banking,a3 anda3 Financiala3 Market
s,a 3 9tha3 Edition
6)
a3marketsa3transfera3fundsa3froma3peoplea3whoa3havea3ana3excessa3ofa3availablea3f
undsa3toa3peoplea3whoa3havea3aa3shortage.
A) Commodity
B) Fund-available
C) Financial
D) Derivativea3exchang
ea3Answer:a 3 C
Quesa3Status:a 3 Previousa3Edition
7) Poorlya3 performinga3 financiala3 marketsa3 cana3 bea3 thea3 causea3 of
A) wealth.
B) poverty.
C) financiala3 stability.
D) financiala3 expansio
n.
Answer:a 3 B
Quesa3Status:a 3 Previousa3Edition
8) Thea3 bonda3 marketsa3 area3 importanta3 becausea3 theya3 are
A) easilya3 thea3 mosta3 widelya3 followeda3 financiala3 marketsa3 ina3 thea3 Uniteda3 States.
B) thea3 marketsa3 wherea3 foreigna3 exchangea3 ratesa3 area3 determined.
C) thea3 marketsa3 wherea3 interesta3 ratesa3 area3 determined.
D) thea3marketsa3wherea3alla3borrowersa3geta3their
a3funds.a3Answer:a 3 C
Quesa3Status:a 3 Previousa3Edition
9) Thea3pricea3paida3fora3thea3rentala3ofa3borroweda3fundsa3(usuallya3expresseda3asa3aa3percenta
gea3ofa3thea3rentala 3 ofa3$100a3pera3year)a3isa3commonlya3referreda3toa3asa3the
A) inflationa3 rate.
B) exchangea3 rate.
C) interesta3 rate.
D) aggregatea3 pricea3 le
vel.
Answer:a 3 C
Quesa3Status:a 3 Previousa3Edition
10) Compareda3toa3interesta3ratesa3ona3long-
terma3U.S.a3governmenta3bonds,a3interesta3ratesa3ona3threea3-
montha 3 Treasurya3billsa3fluctuatea3 a3anda3area3 a3ona3average.
A) more;a3 lower
B) less;a3 lower
C) more;a3 higher
D) less;a3highe
ra3Answer:a 3 A
Quesa3Status:a 3 Previousa3Edition
, Chaptera3 1a 3 a 3 Whya3 Studya3 Money,a3 Banking,a3 anda3 Financiala3
Markets?a 3 a 3 3
11) Thea3interesta3ratea3ona3Baaa3(mediuma3quality)a3corporatea3bondsa3isa3
,a3ona3average,a3thana3
othera3interesta3rates,a3anda3thea3spreada3betweena3ita3anda3othera3ratesa3becamea3
a3ina3thea31970s.
A) lower;a3 smaller
B) lower;a3 larger
C) higher;a3 smaller
D) higher;a3large
ra3Answer:a 3 D
Quesa3Status:a 3 Previousa3Edition
12) Everythinga3 elsea3 helda3 constant,a3 aa3 declinea3 ina3 interesta3 ratesa3 willa3 causea3 spendinga3 ona3 hous
inga3 to
A) fall.
B) remaina3 unchanged.
C) eithera3 rise,a3 fall,a3 ora3 remaina3 thea3 same.
D) rise.
Answer:a 3
D
Quesa3Status:a 3 Previousa3Edition
13) Higha3interesta3ratesa3mighta3
a3purchasinga3aa3housea3ora3cara3buta3ata3thea3samea3timea3higha3interes
ta3ratesa3mighta3 a3saving.
A) discourage;a 3 encourage
B) discourage;a 3 discourage
C) encourage;a 3 encourage
D) encourage;a3discourag
ea3Answer:a 3 A
Quesa3Status:a 3 New
14) Ana3increasea3ina3interesta3ratesa3mighta3
a3savinga3becausea3morea3cana3bea3earneda3in
a3interesta3income.
A) encourage
B) discourage
C) disallow
D) invalidate
a3Answer:a 3 A
Quesa3Status:a 3 Previousa3Edition
15) Everythinga3 elsea3 helda3 constant,a3 ana3 increasea3 ina3 interesta3 ratesa3 ona3 studenta3 loans
A) increasesa3 thea3 costa3 ofa3 aa3 collegea3 education.
B) reducesa3 thea3 costa3 ofa3 aa3 collegea3 education.
C) hasa3 noa3 effecta3 ona3 educationala3 costs.
D) increasesa3costsa3fora3studentsa3witha3no
a3loans.a3Answer:a 3 A
Quesa3Status:a 3 Previousa3Edition
, 4a 3 a 3 Mishkina3 ·a3Thea3 Economicsa3 ofa3 Money,a3 Banking,a3 anda3 Financiala3 Market
s,a 3 9tha3 Edition
16) Higha3interesta3ratesa3mighta3causea3aa3corporationa3toa3
a3buildinga3aa3newa3planta3thata
3woulda3providea3morea3jobs.
A) complete
B) consider
C) postpone
D) contemplate
a3Answer:a 3 C
Quesa3Status:a 3 Previousa3Edition
17) Thea3 stocka3 marketa3 isa3 importanta3 becausea3 ita3 i
s
A) wherea3 interesta3 ratesa3 area3 determined.
B) thea3 mosta3 widelya3 followeda3 financiala3 marketa3 ina3 thea3 Uniteda3 States.
C) wherea3 foreigna3 exchangea3 ratesa3 area3 determined.
D) thea3marketa3wherea3mosta3borrowersa3geta3their
a3funds.a3Answer:a 3 B
Quesa3Status:a 3 Previousa3Edition
18) Stocka3 pricesa3 are
A) relativelya3 stablea3 trendinga3 upwarda3 ata3 aa3 steadya3 pace.
B) relativelya3 stablea3 trendinga3 downwarda3 ata3 aa3 moderatea3 rate.
C) extremelya3 volatile.
D) unstablea3trendinga3downwarda3ata3aa3moderat
ea3rate.a3Answer:a 3 C
Quesa3Status:a 3 Revised
19) Aa3 risinga3 stocka3 marketa3 indexa3 duea3 toa3 highera3 sharea3 prices
A) increasesa3 peopleʹsa3 wealth,a3 buta3 isa3 unlikelya3 toa3 increasea3 theira3 willingnessa3 toa3 spend.
B) increasesa3 peopleʹsa3 wealtha3 anda3 asa3 aa3 resulta3 maya3 increasea3 theira3 willingnessa3 toa3 spend.
C) decreasesa3 thea3 amounta3 ofa3 fundsa3 thata3 businessa3 firmsa3 cana3 raisea3 bya3 sellinga3 newlya3-
issueda3 stock.
D) decreasesa3peopleʹsa3wealth,a3buta3isa3unlikelya3toa3increasea3theira3willingnes
sa3toa3spend.a3Answer:a 3 B
Quesa3Status:a 3 Previousa3Edition
20) Whena3 stocka3 pricesa3 fall
A) ana3 individualʹsa3 wealtha3 isa3 nota3 affecteda3 nora3 isa3 theira3 willingnessa3 toa3 spend.
B) aa3 businessa3 firma3 willa3 bea3 morea3 likelya3 toa3 sella3 stocka3 toa3 financea3 investmenta3 spending.
C) ana3 individualʹsa3 wealtha3 maya3 decreasea3 buta3 theira3 willingnessa3 toa3 spenda3 isa3 nota3 affected.
D) ana3individualʹsa3wealtha3maya3decreasea3anda3theira3willingnessa3toa3spenda3m
aya3decrease.a3Answer:a 3 D
Quesa3Status:a 3 Previousa3Edition
21) Changesa3 ina3 stocka3 prices
A) doa3 nota3 affecta3 peopleʹsa3 wealtha3 anda3 theira3 willingnessa3 toa3 spend.
B) affecta3 firmsʹa3 decisionsa3 toa3 sella3 stocka3 toa3 financea3 investmenta3 spending.
C) occura3 ina3 regulara3 patterns.
D) area3unimportanta3toa3decisiona3ma
kers.a3Answer:a 3 B
Quesa3Status:a 3 Previousa3Edition
