. In general, the more liquid an asset the ______.
4 P1 u- e+ `1 u, A) g' z- l; g A. less it is likely to yield
- n, A, x1 n) j% @" i1 g7 E B. greater its risk of default
5 o5 Q; {3 `) b4 q- L" V- Z, N) \( H C. lower its market price will be/ m( u4 A% r) H* V
D. more it will add to bank profits
- V& p9 ~1 [& I0 h 2. The interest rate printed on the face of a bond is called the ______.
8 b! r! L3 \% L! q8 g7 x. v A. coupon rate
$ ]2 m+ s2 S7 i- t) l2 h/ ~ B. prime rate
+ e2 Y! B3 @* G9 }/ w4 o9 U C. printed rate
+ h! C# P3 T* ] X$ c6 J D. nominal rate: S: |, f8 q7 d+ k, Z
3. A rise in interest rates leads to ______.
) _- K, R" K) L. K T' |2 n, T A. capital gains for bondholders( d" {) r1 C( m- V
B. capital losses for bondholders
% x2 Y' b9 `; K. Q7 a3 ], l- p C. income gains for bondholders
- H+ i: T; i% {0 {; k/ ^3 D& ` D. income losses for bondholders
) [! A2 N! c7 g& A 4. If the reserve requirement ratio were equal to zero, then ______.
" u, s. g6 A* O A. the deposit multiplier would be infinitely large& Q* B7 p2 b* z; X
B. required reserves would be equal to zero
" X* \$ V: u8 h( n2 _" P2 }! \ C. the banking system would theoretically be able to create an infinitely large amount of demand deposits
9 ^) k, ^( R! z9 ~/ F3 X: U D. all of the above
1 c& c! Y* l8 v/ \7 X% Q 5. Financial intermediaries' primary function in financial markets is to serve as ______.
9 t4 m2 f/ [" Z5 ~& Q. w A. ultimate borrowers1 S1 I9 _1 _; S9 w
B. ultimate lenders
" |: d: n/ C# q. }1 t9 O' d4 O C. ultimate savers: s1 t w) k5 f# p) \9 U V- i9 p/ }
D. middlemen
# h% ~) e% H2 h/ n" I 6. Suppose the Fed buys $10 million in government securities from a commercial bank. If the required reserve ratio is 0.25, what is the maximum amount by which checkable deposits in the banking system can change______.
9 o9 m7 {( Q X; F: n A. +$100000007 @ K# ]! x# h0 j9 q7 J% G3 r
B. +$25000000
2 w T9 J" T# \( {3 L) y' L# \ C. +$40000000
. H5 J- @/ }6 J- M |1 Q1 r D. -$40000000
4 r* q' N' i' I- n: ~ 7. Suppose the annualized yield on a 91-day Treasury bill is 1.25%. If you invested $10 000 in this bill, how much would you have to pay for this security______.
+ B9 i3 `+ H2 o1 l A. $11 250 ^; ^8 E. v6 z4 n, D; k
B. $10012.50% G6 k/ c6 ~) d
C. $9998.75( s2 Y/ g3 R5 U6 s# R
D. $9968.93
, @' @5 O/ r9 _. ?% S 8. Who are the first to bear financial losses incurred by the bank______.( U, y7 I8 | D' D% r7 o. R
A. The depositors
. [% X4 G2 ?8 m3 l; q& \" V# B B. The debtors
" e# e9 j; k6 f C. The bank capital shareholders
/ Y% S: o5 W2 R+ D/ T A3 _. [7 C D. The bank employees) a# _! a0 s9 P( L
9. A government is faced with a balance of payments deficit. It may take action to deal with this by doing all of the following except ______.9 c% D& }; y P$ k
A. devalue the currency( k2 |# r# D2 }6 Z% E
B. reduce interest rates
0 M& s) p; ^5 \1 M C. restrict consumer spending: _3 S1 J# t0 s. M9 p- c+ ?3 F
D. restrict imports
^$ N7 {) F" { 10. According to the principle of comparative advantage, countries ______.
( e/ q# Y. D& R- y* n A. should specialize in producing goods they have lower opportunity cost for+ J8 o8 c1 ?7 Z Z8 |6 J
B. should export goods they can produce at lower input costs4 N7 h4 J* i- F- z; o' h& C5 \
C. will specialize in producing goods which they can produce at lower input costs
9 d1 {' N1 e8 i4 r8 p4 @& w D. should specialize in producing goods they have lower absolute costs for
. `5 @/ R p: N8 m) G* x 11. A currency depreciation on the foreign exchange market will ______.& t0 {. Y7 B5 z1 H" U( D) C% Z
A. encourage imports to the country whose currency has depreciated
5 n+ |: \' h% s6 Z |/ |- k9 x B. discourage imports to the country whose currency has depreciated
9 r. X+ }6 _' F' y1 p3 m C. discourage exports to the country whose currency has depreciated3 M% N* p& @6 Y# c
D. encourage foreign travel by the citizens of the country whose currency has depreciated' ?9 I/ t' I+ s
12. The difference between fiscal policy and monetary policy is that ______.7 O: Y" d8 h3 K+ {3 F
A. fiscal policy is macroeconomic policy and monetary policy is microeconomic policy" R+ o l4 \) O& r
B. monetary policy is macroeconomic policy and fiscal policy is microeconomic policy
/ k- X' `) ]) j, I C. fiscal policy involves regulation of natural monopolies and monetary policy involves the provision of public goods
9 S" O, s2 C0 Q* k, v: T8 y3 h L D. monetary policy involves regulation of the money supply and fiscal policy involves government spending and taxing+ q# ^0 g) s; y' j5 q& R8 ~' |) q
13. When economists speak of the utility of a certain good, they are referring to ______.
+ N) l1 \9 o8 A1 k A. the demand for the good: B2 _+ u2 L2 a& p2 {! j* `
B. the usefulness of the good in consumption( e: U! y" q# l
C. the satisfaction gained from consuming the good# e ~# i2 T2 D! {( @
D. the rate at which consumers are willing to exchange one good for another) W/ h( o/ V* R2 |
14. How are financial ratios used in decision making______.
5 a( ]0 {& f J3 c- b W/ w A. They remove the uncertainty of the business environment
0 w3 V, P2 j3 G! ~" b" m( E B. They give clear signals about the appropriate action to take
9 S. C: b" g4 u6 x, t. S% b C. They can help identify the reasons for success and failure in business, but decision making requires information beyond the ratios6 F$ Y/ x$ k6 b" d0 S. R* y: ?
D. They aren't useful because decision making is too complex.
% a m5 q8 O4 {0 R 15. A good is called an inferior good if sales ______.6 K( H# f& P; f: S' e0 Z
A. are unaffected by income+ T r. [7 b$ p3 i% y7 p3 X; ~, c* q& O
B. rise as price increases
& }3 N" u/ n( s9 {5 R C. decline as price increases |