Test Bank for Economics of Money, Banking, and Financial Markets, 13th Edition by Frederic S Mishkin

,Contents
Chaptera1 WhyaStudyaMoney,aBanking,aandaFinancialaMarkets? ................................................ 1
Chaptera2 AnaOverviewaofatheaFinancialaSystem ......................................................................... 20
Chaptera3 WhataIsaMoney? .............................................................................................................. 43
Chaptera4 UnderstandingaInterestaRates ....................................................................................... 60
Chaptera5 TheaBehavioraofaInterestaRates ...................................................................................... 78
Chaptera6 TheaRiskaandaTermaStructureaofaInterestaRates ......................................................... 111
Chaptera7 TheaStockaMarket,atheaTheoryaofaRationalaExpectations,
andatheaEfficientaMarketaHypothesis ......................................................................... 133
Chaptera8 AnaEconomicaAnalysisaofaFinancialaStructure .......................................................... 150
Chaptera9 FinancialaCrisesaandatheaSubprimeaMeltdown.......................................................... 169
Chaptera10 BankingaandatheaManagementaofaFinancialaInstitutions.......................................... 181
Chaptera11 EconomicaAnalysisaofaFinancialaRegulation .............................................................. 208
Chaptera12 BankingaIndustry:aStructureaandaCompetition ......................................................... 229
Chaptera13 CentralaBanksaandatheaFederalaReserveaSystem........................................................ 253
Chaptera14 TheaMoneyaSupplyaProcess ......................................................................................... 274
Chaptera15 ToolsaforaMonetaryaPolicy ........................................................................................... 319
Chaptera16 TheaConductaofaMonetaryaPolicy:aStrategyaandaTactics ........................................... 343
Chaptera17 TheaForeignaExchangeaMarket .................................................................................... 363
Chaptera18 TheaInternationalaFinancialaSystem ............................................................................ 389
Chaptera19 TheaDemandaforaMoney............................................................................................... 418
Chaptera20 TheaISLMaModel ........................................................................................................... 440
Chaptera21 MonetaryaandaFiscalaPolicyainatheaISLMaModel ....................................................... 466
Chaptera22 AggregateaDemandaandaSupplyaAnalysis ................................................................. 493
Chaptera23 TransmissionaMechanismsaofaMonetaryaPolicy:aTheaEvidence .............................. 511
Chaptera24 MoneyaandaInflation ..................................................................................................... 529
Chaptera25 RationalaExpectations:aImplicationsaforaPolicy ......................................................... 549

,Chapter 1 a



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




1.1 WhyaStudyaFinancialaMarkets?
1) Financiala marketsa promotea economica efficiencya by
A) channelinga fundsa froma investorsa toa savers.
B) creatinga inflation.
C) channelinga fundsa froma saversa toa investors.
D) reducingainvestment.
aAnswer:a C
QuesaStatus:a PreviousaEdition

2) Financiala marketsa promotea greatera economica efficiencya bya channelinga fundsa froma a to
.
A) investors;a savers
B) borrowers;a savers
C) savers;a borrowers
D) savers;alenders
aAnswer:a C
QuesaStatus:a PreviousaEdition

3) Well-functioninga financiala marketsa promote
A) inflation.
B) deflation.
C) unemployment.
D) growth.
Answer:a D
QuesaStatus:a PreviousaEdition

4) Aa keya factora ina producinga higha economica growtha is
A) eliminatinga foreigna trade.
B) well-functioninga financiala markets.
C) higha interesta rates.
D) stockamarketavolatility.
aAnswer:a B
QuesaStatus:a New

5) Marketsainawhichafundsaareatransferredafromathoseawhoahaveaexcessafundsaavailableatoathosea
whoahaveaaashortageaofaavailableafundsaareacalled
A) commoditya markets.
B) fund-availablea markets.
C) derivativea exchangea markets.
D) financiala markets.
Answer:a D
QuesaStatus:a PreviousaEdition

, 2 Mishkina ·aThea Economicsaofa Money,aBanking,aanda FinancialaMarkets,a 9tha Edition



6)
amarketsatransferafundsafrom apeopleawhoahaveaanaexcessaofaavailableafundsatoapeoplea

whoahaveaaashortage.
A) Commodity
B) Fund-available
C) Financial
D) Derivativeaexchange
aAnswer:a C
QuesaStatus:a PreviousaEdition

7) Poorlya performinga financiala marketsa cana bea thea causea of
A) wealth.
B) poverty.
C) financiala stability.
D) financiala expansion.
Answer:a B
QuesaStatus:a PreviousaEdition

8) Thea bonda marketsa area importanta becausea theya are
A) easilya thea mosta widelya followeda financiala marketsa ina thea Uniteda States.
B) thea marketsa wherea foreigna exchangea ratesa area determined.
C) thea marketsa wherea interesta ratesa area determined.
D) theamarketsawhereaallaborrowersagetatheirafunds.a
Answer:a C
QuesaStatus:a PreviousaEdition

9) Theapriceapaidaforathearentalaofaborrowedafundsa(usuallyaexpressedaasaaapercentageaofathearentala
ofa$100aperayear)aisacommonlyareferredatoaasathe
A) inflationa rate.
B) exchangea rate.
C) interesta rate.
D) aggregatea pricea level.
Answer:a C
QuesaStatus:a PreviousaEdition

10) Comparedatoainterestaratesaonalong-termaU.S.agovernmentabonds,ainterestaratesaonathreea-
monthaTreasuryabillsafluctuatea aandaarea aonaaverage.

A) more;a lower
B) less;a lower
C) more;a higher
D) less;ahigher
aAnswer:a A
QuesaStatus:a PreviousaEdition