Question 1

Everything else held constant,a decline in interest rates will cause spending on housing to

Accepted Answer

A)  fall.
B)  remain unchanged.
C)  either rise,fall,or remain the same.
D)  rise.E) B) and D)
F) C) and D)

Question 2

What happens to economic growth and unemployment during a business cycle recession? What is the relationship between the money growth rate and a business cycle recession?

Accepted Answer

During a recession,output decl...

Question 3

Banks,savings and loan associations,mutual savings banks,and credit unions

Accepted Answer

A)  are no longer important players in financial intermediation.
B)  since deregulation now provide services only to small depositors.
C)  have been adept at innovating in response to changes in the regulatory environment.
D)  produce nothing of value and are therefore a drain on society's resources.E) None of the above
F) B) and C)

Question 4

________ policy involves decisions about government spending and taxation.

Accepted Answer

A)  Monetary
B)  Fiscal
C)  Financial
D)  SystemicE) None of the above
F) A) and D)

Question 5

Banks

Accepted Answer

A)  provide a channel for linking those who want to save with those who want to invest.
B)  produce nothing of value and are therefore a drain on society's resources.
C)  are the only financial institutions allowed to give loans.
D)  hold very little of the average American's wealth.E) B) and D)
F) A) and D)

Question 6

When prices are measured in terms of fixed (base-year) prices they are called ________ prices.

Accepted Answer

A)  nominal
B)  real
C)  inflated
D)  aggregateE) A) and D)
F) A) and C)

Question 7

An increase in stock prices ________ the size of people's wealth and may ________ their willingness to spend,everything else held constant.

Accepted Answer

A)  increases;increase
B)  increases;decrease
C)  decreases;increase
D)  decreases;decreaseE) B) and C)
F) C) and D)

Question 8

Which of the following is a TRUE statement?

Accepted Answer

A)  Money or the money supply is defined as Federal Reserve notes.
B)  The average price of goods and services in an economy is called the aggregate price level.
C)  The inflation rate is measured as the rate of change in the federal government budget deficit.
D)  The aggregate price level is measured as the rate of change in the inflation rate.E) B) and D)
F) A) and B)

Question 9

Sustained downward movements in the business cycle are referred to as

Accepted Answer

A)  inflation.
B)  recessions.
C)  economic recoveries.
D)  expansions.E) B) and C)
F) C) and D)

Question 10

If the aggregate price level at time t is denoted by Pt,the inflation rate from time t - 1 to t is defined as

Accepted Answer

A)  πt = (Pt - Pt ₋ ₁) /Pt ₋ ₁.
B)  πt = (Pt ₊ ₁ - Pt ₋ ₁) /Pt ₋ ₁.
C)  πt = (Pt ₊ ₁ - Pt ) /Pt.
D)  πt = (Pt - Pt ₋ ₁) /Pt.E) All of the above
F) A) and B)

Question 11

Evidence from business cycle fluctuations in the United States indicates that

Accepted Answer

A)  a negative relationship between money growth and general economic activity exists.
B)  recessions are usually preceded by declines in bond prices.
C)  recessions are usually preceded by dollar depreciation.
D)  recessions are usually preceded by a decline in the growth rate of money.E) C) and D)
F) B) and C)

Question 12

To convert a nominal GDP to a real GDP,you would use

Accepted Answer

A)  the PCE deflator.
B)  the CPI measure.
C)  the GDP deflator.
D)  the PPI measure.E) A) and B)
F) C) and D)

Question 13

If the price level increases from 200 in year 1 to 220 in year 2,the rate of inflation from year 1 to year 2 is

Accepted Answer

A)  20%.
B)  10%.
C)  11%.
D)  120%.E) B) and D)
F) B) and C)

Question 14

Money is defined as

Accepted Answer

A)  bills of exchange.
B)  anything that is generally accepted in payment for goods and services or in the repayment of debt.
C)  a risk-free repository of spending power.
D)  the unrecognized liability of governments.E) A) and B)
F) A) and C)

Question 15

The market where one currency is converted into another currency is called the ________ market.

Accepted Answer

A)  stock
B)  bond
C)  derivatives
D)  foreign exchangeE) None of the above
F) A) and D)

Question 16

If your nominal income in 2014 was $50,000,and prices doubled between 2014 and 2017,to have the same real income,your nominal income in 2017 must be

Accepted Answer

A)  $50,000.
B)  $75,000.
C)  $90,000.
D)  $100,000.E) B) and D)
F) A) and B)

Question 17

The Dow reached a peak of over 11,000 before the collapse of the ________ bubble in 2000.

Accepted Answer

A)  housing
B)  manufacturing
C)  high-tech
D)  bankingE) B) and D)
F) C) and D)

Question 18

A continuing increase in the growth of the money supply is likely followed by

Accepted Answer

A)  a recession.
B)  a depression.
C)  an increase in the price level.
D)  no change in the economy.E) None of the above
F) B) and D)

Question 19

Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called

Accepted Answer

A)  commodity markets.
B)  fund-available markets.
C)  derivative exchange markets.
D)  financial markets.E) A) and B)
F) B) and C)

Question 20

________ markets transfer funds from people who have an excess of available funds to people who have a shortage.

Accepted Answer

A)  Commodity
B)  Fund-available
C)  Financial
D)  Derivative exchangeE) A) and D)
F) B) and C)

Exam 1: Why Study Money,banking,and Financial Markets

Which of the following is a TRUE statement?

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Banks

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What happens to economic growth and unemployment during a business cycle recession? What is the relationship between the money growth rate and a business cycle recession?

Correct AnswerverifiedDuring a recession,output decl...View AnswerShow Answer

An increase in stock prices ________ the size of people's wealth and may ________ their willingness to spend,everything else held constant.

Correct AnswerverifiedShow Answer

Sustained downward movements in the business cycle are referred to as

Correct AnswerverifiedShow Answer

Evidence from business cycle fluctuations in the United States indicates that

Correct AnswerverifiedShow Answer

The market where one currency is converted into another currency is called the ________ market.

Correct AnswerverifiedShow Answer

Money is defined as

Correct AnswerverifiedShow Answer

The Dow reached a peak of over 11,000 before the collapse of the ________ bubble in 2000.

Correct AnswerverifiedShow Answer

When prices are measured in terms of fixed (base-year) prices they are called ________ prices.

Correct AnswerverifiedShow Answer

Banks,savings and loan associations,mutual savings banks,and credit unions

Correct AnswerverifiedShow Answer

If the aggregate price level at time t is denoted by Pt,the inflation rate from time t - 1 to t is defined as

Correct AnswerverifiedShow Answer

If your nominal income in 2014 was $50,000,and prices doubled between 2014 and 2017,to have the same real income,your nominal income in 2017 must be

Correct AnswerverifiedShow Answer

________ policy involves decisions about government spending and taxation.

Correct AnswerverifiedShow Answer

Everything else held constant,a decline in interest rates will cause spending on housing to

Correct AnswerverifiedShow Answer

To convert a nominal GDP to a real GDP,you would use

Correct AnswerverifiedShow Answer

Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called

Correct AnswerverifiedShow Answer

A continuing increase in the growth of the money supply is likely followed by

Correct AnswerverifiedShow Answer

________ markets transfer funds from people who have an excess of available funds to people who have a shortage.

Correct AnswerverifiedShow Answer

If the price level increases from 200 in year 1 to 220 in year 2,the rate of inflation from year 1 to year 2 is

Correct AnswerverifiedShow Answer

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During a recession,output decl...
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An increase in stock prices the size of people's wealth and may their willingness to spend,everything else held constant.

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