11. The federal funds rate is the interest rate ______. S! \$ j8 ]0 [2 |# b' m& ]) j
A. on overnight loans of reserves between banks
+ _: w5 h8 ], M% y B. the government pays when borrowing from banks& l; ^* [/ f) M1 J
C. on government debt0 _! o" m& {4 C2 f$ ?
D. both A and B
% k& u/ V) t" J9 l& n( l* f2 S7 [ 12. A consumer's indifference curve shows ______.1 |, a* M9 J" Y: D" o
A. all combinations of two products that a consumer can use
$ x8 b, ~" K! {# E+ E& ` B. all combinations of two products that yield the same total satisfaction to the consumer
4 r! K H; B. J/ h0 s C. all combinations of two goods that the consumer can purchase with disposable persona income* [! ]3 `* |, W F' C( y
D. equal income for consumption/ Y0 W) A6 ^9 o( Q+ j5 J5 S, F
13. The value of any investment is found by computing ______.
: G5 S3 J0 J+ G8 N A. the future value of all future expenses6 B) U' h9 A/ A/ Z, F; }6 l j% t' P% ^
B. the future value of all sales6 _* A% M: y- F2 X0 w" Z6 Z" r
C. the present value of all future liabilities- |1 i, x) k+ ]" d/ D( t
D. the present value of all cash flows5 Y+ x% E: }9 Z, W
14. A "base" or "high-powered" money is distinguished from other types of money by the fact that it ./ _" F5 c# i* I$ s7 d0 h
A. always consists of central-bank liabilities; @1 ^/ h2 \1 w9 Z! d; @: K& O; l; U
B. always consists of assets that can serve as commercial bank cash reserves) P5 F% ]! S: t
C. always consists of gold coin% A9 c4 G. j" r% G
D. must be a "fiat" money
1 _/ W# t; n- m e" l7 O; b 15. The relationship between interest rates on various bonds, and the time to (heir maturity is called the ______ structure of interest rates.
$ N* B( X! F n4 f" n A. chronological
$ `3 t' B+ G: p" _4 b1 P( d4 v; `! D B. term- X+ G! x! E# H
C. risk8 `' I6 h" }( c' H% T' G
D. liquidity' |) U1 I9 u. K N
16. An example of an investment pool is ______.7 D% k5 X6 K9 C1 u- N: ]
A. a savings and loan association
1 f8 Z- e' r6 s: N0 \" f* m* d f2 t B. a life insurance company
2 O5 B+ ?. {) n5 p0 L4 K C. a finance company, Y2 U6 E' t% h- v3 h9 o5 N
D. a mutual fund# }; p- Y4 q$ K; g8 ?
17. Sustained downward movements in the business cycle are referred to as ______.
X; `9 B" Y$ `+ v2 @ A. recessions
( e8 F$ l& g, o+ U0 Y) J3 q) D B. economic recoveries
3 [9 G1 n6 @+ A9 k C. inflation) b8 y' o3 r0 O2 K
D. expansions
, C1 F& \- h( F2 E0 Q 18. _____ offers a wide spectrum of personal services to wealthy clients who may have little knowledge of how to handle their own financial affairs or who are too busy.9 ^9 c3 t. f$ X
A. A private bank
% ~- N4 @1 ^+ t) ~& I* Z B. Private banking
9 I3 h0 c2 J- O8 {7 H5 l# r C. Personal banking
1 @! T& Y; x4 f+ t5 a- A D. Retail banking, O& F' `- L# x; L" j/ Y: u5 M
19. Which of the following can be described as involving direct finance? ______.
+ a# i) o+ e1 W+ e1 x C" D A. A pension fund manager buys a short-term corporate security in the secondary market
0 c4 y/ T$ m4 v7 X9 {* x B. People buy shares in a mutual fund
0 i) v& n8 a1 D2 @1 q( A C. A corporation issues new shares of stock
: P5 _' R: f' X+ _% Y1 _ D. An insurance company buys shares of common stock in the over-the-counter markets.8 g; S, Z9 o$ i' d5 e4 i5 i
20. A call option gives the owner the right to ______.( M2 x9 e8 q! @( c) }* E# T2 P" q
A. sell the underlying asset at a fixed price
8 q N; }1 {/ O! i. ]) | B. buy the underlying asset at a fixed price
" u$ c. T: H7 S, y, ^8 B! O C. convert the underlying asset at a fixed price# Y3 ~( C( F3 v$ s. `
D. take delivery of the underlying asset at a fixed price |