Econ 330 Test quizzes with answers
graded A+
A key factor in producing high economic growth is - ANS✅✅well-functioning financial markets
Everything else held constant, a decline in interest rates will cause spending on housing to -
ANS✅✅rise
A financial crisis is - ANS✅✅a major disruption in the financial markets
Financial institutions that accept deposits and make loans are called _________. - ANS✅✅Banks
During a recession, output declines result in - ANS✅✅higher unemployment in the economy
The management of money and interest rates is called _____________ policy and is conducted by a
nation's _____________ bank - ANS✅✅monetary; central
Which of the following is most likely to result from a stronger dollar? - ANS✅✅U.S. goods
exported aboard will cost more in foreign countries and so foreigners will buy less of them
Everything else held constant, a decrease in the value of the dollar relative to all foreign currencies
means that the price of foreign goods purchased by Americans - ANS✅✅Increases
The most comprehensive measure of aggregate output is - ANS✅✅gross domestic product (GDP)
Nominal GDP is output measured in __________ prices while real GDP is output measured in
____________ prices. - ANS✅✅current; fixed
Every financial market has the following characteristic: - ANS✅✅It channels funds from lenders -
savers to borrowers - spenders
Which of the following can be described as involving indirect finance? - ANS✅✅you buy shares in a
mutual fund
, When I purchase ______, I own a portion of a firm and have the right to vote on issues important to
the firm and to elect its directors - ANS✅✅stocks
When secondary market buyers and sellers of securities meet in one central location to conduct
trades the market is called a(n) - ANS✅✅exchange
______ are short term loans in which Treasury bills serve as collateral - ANS✅✅Repurchase
agreements
Which of the following instruments are trade din a money market? - ANS✅✅U.S. Treasury bills
Equity of U.S. companies can be purchased by - ANS✅✅U.S. citizens and foreign citizens
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 are known as - ANS✅✅Eurobonds
Financial intermediaries provide customers with liquidity services. Liquidity services -
ANS✅✅make it easier for customers to conduct transactions
An example of the problem of _______ is 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 - ANS✅✅Moral hazard
Which of the following is not a contractual savings institution? - ANS✅✅A savings and loan
association
An investment bank purchases securities form a corporation at a predetermined price and then
resells them in the market. This process is called - ANS✅✅underwriting
Increasing the amount of information available to investors helps to reduce the problems of
__________ and __________ in the financial markets - ANS✅✅Adverse selection; moral hazard
In order to reduce risk and increase the safety of financial institutions, commercial banks and other
depository institutions are prohibited from - ANS✅✅owning common stock.
graded A+
A key factor in producing high economic growth is - ANS✅✅well-functioning financial markets
Everything else held constant, a decline in interest rates will cause spending on housing to -
ANS✅✅rise
A financial crisis is - ANS✅✅a major disruption in the financial markets
Financial institutions that accept deposits and make loans are called _________. - ANS✅✅Banks
During a recession, output declines result in - ANS✅✅higher unemployment in the economy
The management of money and interest rates is called _____________ policy and is conducted by a
nation's _____________ bank - ANS✅✅monetary; central
Which of the following is most likely to result from a stronger dollar? - ANS✅✅U.S. goods
exported aboard will cost more in foreign countries and so foreigners will buy less of them
Everything else held constant, a decrease in the value of the dollar relative to all foreign currencies
means that the price of foreign goods purchased by Americans - ANS✅✅Increases
The most comprehensive measure of aggregate output is - ANS✅✅gross domestic product (GDP)
Nominal GDP is output measured in __________ prices while real GDP is output measured in
____________ prices. - ANS✅✅current; fixed
Every financial market has the following characteristic: - ANS✅✅It channels funds from lenders -
savers to borrowers - spenders
Which of the following can be described as involving indirect finance? - ANS✅✅you buy shares in a
mutual fund
, When I purchase ______, I own a portion of a firm and have the right to vote on issues important to
the firm and to elect its directors - ANS✅✅stocks
When secondary market buyers and sellers of securities meet in one central location to conduct
trades the market is called a(n) - ANS✅✅exchange
______ are short term loans in which Treasury bills serve as collateral - ANS✅✅Repurchase
agreements
Which of the following instruments are trade din a money market? - ANS✅✅U.S. Treasury bills
Equity of U.S. companies can be purchased by - ANS✅✅U.S. citizens and foreign citizens
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 are known as - ANS✅✅Eurobonds
Financial intermediaries provide customers with liquidity services. Liquidity services -
ANS✅✅make it easier for customers to conduct transactions
An example of the problem of _______ is 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 - ANS✅✅Moral hazard
Which of the following is not a contractual savings institution? - ANS✅✅A savings and loan
association
An investment bank purchases securities form a corporation at a predetermined price and then
resells them in the market. This process is called - ANS✅✅underwriting
Increasing the amount of information available to investors helps to reduce the problems of
__________ and __________ in the financial markets - ANS✅✅Adverse selection; moral hazard
In order to reduce risk and increase the safety of financial institutions, commercial banks and other
depository institutions are prohibited from - ANS✅✅owning common stock.
