TEST BANK - Economics of Money,
Banking and Financial Markets, 11th
Edition by Frederic Mishkin
EXPERT VERIFIED SOLUTIONS|
CHAPTER 1-25
TB
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, 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
Question Status: Revised
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
Question Status: New
3) Well-functioning financial markets promote
A) inflation.
B) deflation.
C) unemployment.
D) growth.
Answer: D
Question Status: Revised
4) Markets in which funds are transferred from those who have excess funds available to those who have a
shortage of available funds are called
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A) commodity markets.
B) fund-available markets.
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,C) derivative exchange markets.
D) financial markets.
Answer: D
Question Status: Previous Edition
5) 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
Question Status: New
6) Poorly performing financial markets can be the cause of
A) wealth.
B) poverty.
C) financial stability.
D) financial expansion.
Answer: B
Question Status: Revised
7) 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
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Question Status: Revised
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, 8) 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
Question Status: Previous Edition
9) 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
Question Status: Previous Edition
10) The interest rate on Baa (medium quality) corporate bonds is , on average, than other interest rates, and
the spread between it and other rates became in the 1970s.
A) lower; smaller
B) lower; larger
C) higher; smaller
D) higher; larger
Answer: D
Question Status: Previous Edition
11) Everything else held constant, a decline in interest rates will cause spending on housing to
A) fall.
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B) remain unchanged.
C) either rise, fall, or remain the same.
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er
Banking and Financial Markets, 11th
Edition by Frederic Mishkin
EXPERT VERIFIED SOLUTIONS|
CHAPTER 1-25
TB
Ac
1
er
, 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
Question Status: Revised
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
Question Status: New
3) Well-functioning financial markets promote
A) inflation.
B) deflation.
C) unemployment.
D) growth.
Answer: D
Question Status: Revised
4) Markets in which funds are transferred from those who have excess funds available to those who have a
shortage of available funds are called
TB
A) commodity markets.
B) fund-available markets.
Ac
2
er
,C) derivative exchange markets.
D) financial markets.
Answer: D
Question Status: Previous Edition
5) 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
Question Status: New
6) Poorly performing financial markets can be the cause of
A) wealth.
B) poverty.
C) financial stability.
D) financial expansion.
Answer: B
Question Status: Revised
7) 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
TB
Question Status: Revised
Ac
3
er
, 8) 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
Question Status: Previous Edition
9) 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
Question Status: Previous Edition
10) The interest rate on Baa (medium quality) corporate bonds is , on average, than other interest rates, and
the spread between it and other rates became in the 1970s.
A) lower; smaller
B) lower; larger
C) higher; smaller
D) higher; larger
Answer: D
Question Status: Previous Edition
11) Everything else held constant, a decline in interest rates will cause spending on housing to
A) fall.
TB
B) remain unchanged.
C) either rise, fall, or remain the same.
Ac
4
er
