, Franklyn A Plus Pass
Chapter 1
Why Study Money, Banking, and Financial Markets?
1.1Why 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
Fr
Answer: C
an
Question Status: New
kl
3) Well-functioning financial markets promote
yn
A) inflation.
e
B) deflation.
A
C) unemployment.
D) growth.
pl
Answer: D
us
Question Status: Revised
Pa
2|Page
ss
, Franklyn A Plus Pass
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
A) commodity markets.
B) fund-available markets.
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
Fr
6) Poorly performing financial markets can be the cause of
an
A) wealth.
kl
B) poverty.
yn
C) financial stability.
e
D) financial expansion.
A
Answer: B
Question Status: Revised
pl
us
Pa
3|Page
ss
, Franklyn A Plus Pass
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
Question Status: Revised
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
Fr
9) Compared to interest rates on long-term U.S. government bonds, interest rates on three-month Treasury
bills fluctuate and are on average.
an
A) more; lower
kl
B) less; lower
yn
C) more; higher
e
D) less; higher
A
Answer: A
Question Status: Previous Edition
pl
us
Pa
4|Page
ss
Chapter 1
Why Study Money, Banking, and Financial Markets?
1.1Why 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
Fr
Answer: C
an
Question Status: New
kl
3) Well-functioning financial markets promote
yn
A) inflation.
e
B) deflation.
A
C) unemployment.
D) growth.
pl
Answer: D
us
Question Status: Revised
Pa
2|Page
ss
, Franklyn A Plus Pass
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
A) commodity markets.
B) fund-available markets.
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
Fr
6) Poorly performing financial markets can be the cause of
an
A) wealth.
kl
B) poverty.
yn
C) financial stability.
e
D) financial expansion.
A
Answer: B
Question Status: Revised
pl
us
Pa
3|Page
ss
, Franklyn A Plus Pass
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
Question Status: Revised
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
Fr
9) Compared to interest rates on long-term U.S. government bonds, interest rates on three-month Treasury
bills fluctuate and are on average.
an
A) more; lower
kl
B) less; lower
yn
C) more; higher
e
D) less; higher
A
Answer: A
Question Status: Previous Edition
pl
us
Pa
4|Page
ss
