ECON 330 Exam questions and
answers graded A+
What is a financial intermediary? - ANS✅✅an institution that channels money between savers and
borrowers
What is Adverse Selection? - ANS✅✅(before the transaction): try to avoid selecting the risky
borrower by gathering information about them (banks are good at this)
What is Moral Hazard? - ANS✅✅(after the transaction): ensure borrower will not engage in
activities that will prevent him/her to repay the loan
What is gross domestic product? - ANS✅✅the most comprehensive measure of aggregate output
What is a stock? - ANS✅✅I own a portion of a firm and have the right to vote on issues important
to the firm and to elect its directors.
What is a Eurobond? - ANS✅✅Bonds that are sold in a foreign country and are denominated in a
currency other than that of the country in which it is sold.
What are Liquidity services? - ANS✅✅Makes it easier for customers to conduct transactions.
What is an example of moral hazard? - ANS✅✅When a corporation uses the funds raised from
selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and
their families.
What is a Contractual Savings Institutions? - ANS✅✅Get funds from premiums or contributions
and lend those funds.Ex: pension fund, life insurance company, and fire and casualty insurance
company
Currency includes: - ANS✅✅paper money and coins
An example of medium of exchange is: - ANS✅✅Kevin purchasing concert tickets with a $100 bill.
answers graded A+
What is a financial intermediary? - ANS✅✅an institution that channels money between savers and
borrowers
What is Adverse Selection? - ANS✅✅(before the transaction): try to avoid selecting the risky
borrower by gathering information about them (banks are good at this)
What is Moral Hazard? - ANS✅✅(after the transaction): ensure borrower will not engage in
activities that will prevent him/her to repay the loan
What is gross domestic product? - ANS✅✅the most comprehensive measure of aggregate output
What is a stock? - ANS✅✅I own a portion of a firm and have the right to vote on issues important
to the firm and to elect its directors.
What is a Eurobond? - ANS✅✅Bonds that are sold in a foreign country and are denominated in a
currency other than that of the country in which it is sold.
What are Liquidity services? - ANS✅✅Makes it easier for customers to conduct transactions.
What is an example of moral hazard? - ANS✅✅When a corporation uses the funds raised from
selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and
their families.
What is a Contractual Savings Institutions? - ANS✅✅Get funds from premiums or contributions
and lend those funds.Ex: pension fund, life insurance company, and fire and casualty insurance
company
Currency includes: - ANS✅✅paper money and coins
An example of medium of exchange is: - ANS✅✅Kevin purchasing concert tickets with a $100 bill.
