Economics of Money, Banking, and Financial Markets 9th Edition Test bank by Frederic Mishkin || All chapters complete || Question and Answers || Rated A+ || Complete Solution Guide.

Economics of Money, Banking, and Financial Markets 9th Edition Test bank by Frederic Mishkin || All chapters complete || Question and Answers || Rated A+ || Complete Solution Guide. 1) 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 Ques Status: Previous Edition 2) Poorly performing financial markets can be the cause of A) wealth. B) poverty. C) financial stability. D) financial expansion. Answer: B Ques Status: Previous Edition 3) 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 Ques Status: Previous Edition 4) Compared to interest rates on long-term U.S. government bonds, interest rates on three -month Treasury bills fluctuate and are on average. A) more; lower B) less; lower C) more; higher D) less; higher Answer: A Ques Status: Previous Edition 5) The interest rate on Baa (medium quality) corporate bonds is , on average, than other interest rates, and the spread between it and other rates became in the 1970s. A) lower; smaller B) lower; larger C) higher; smaller D) higher; larger Answer: D Chapter 1 Why Study Money, Banking, and Financial Markets? 3 Ques Status: Previous Edition 6) Everything else held constant, a decline in interest rates will cause spending on housing to A) fall. B) remain unchanged. C) either rise, fall, or remain the same. D) rise. Answer: D Ques Status: Previous Edition 7) High interest rates might purchasing a house or car but at the same time high interest rates might saving. A) discourage; encourage B) discourage; discourage C) encourage; encourage D) encourage; discourage Answer: A Ques Status: New 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 Ques Status: Previous Edition 9) An increase in interest rates might saving because more can be earned in interest income. A) encourage B) discourage C) disallow D) invalidate Answer: A Ques Status: Previous Edition 10) Everything else held constant, an increase in interest rates on student loans A) increases the cost of a college education. B) reduces the cost of a college education. C) has no effect on educational costs. D) increases costs for students with no loans. Answer: A Ques Status: Previous Edition 4 Mishkin · The Economics of Money, Banking, and Financial Markets, 9th Edition 11) High interest rates might cause a corporation to building a new plant that would provide more jobs. A) complete B) consider C) postpone D) contemplate Answer: C Ques Status: Previous Edition 12) A rising stock market index due to higher share prices A) increases peopleʹs wealth, but is unlikely to increase their willingness to spend. B) increases peopleʹs wealth and as a result may increase their willingness to spend. C) decreases the amount of funds that business firms can raise by selling newly -issued stock. D) decreases peopleʹs wealth, but is unlikely to increase their willingness to spend. Answer: B Ques Status: Previous Edition 13) When stock prices fall A) an individualʹs wealth is not affected nor is their willingness to spend. B) a business firm will be more likely to sell stock to finance investment spending. C) an individualʹs wealth may decrease but their willingness to spend is not affected. D) an individualʹs wealth may decrease and their willingness to spend may decrease. Answer: D Ques Status: Previous Edition 14) Changes in stock prices A) do not affect peopleʹs wealth and their willingness to spend. B) affect firmsʹ decisions to sell stock to finance investment spending. C) occur in regular patterns. D) are unimportant to decision makers. Answer: B Ques Status: Previous Edition 15) An increase in stock prices the size of peopleʹs wealth and may their willingness to spend, everything else held constant. A) increases; increase B) increases; decrease C) decreases; increase D) decreases; decrease Answer: A Ques Status: Previous Edition Chapter 1 Why Study Money, Banking, and Financial Markets? 5 16) Low stock market prices might consumers willingness to spend and might businesses willingness to undertake investment projects. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase Answer: C Ques Status: New 17) The stock market is important because it is A) where interest rates are determined. B) the most widely followed financial market in the United States. C) where foreign exchange rates are determined. D) the market where most borrowers get their funds. Answer: B Ques Status: Previous Edition 18) Stock prices are A) relatively stable trending upward at a steady pace. B) relatively stable trending downward at a moderate rate. C) extremely volatile. D) unstable trending downward at a moderate rate. Answer: C Ques Status: Revised 19) Fear of a major recession causes stock prices to fall, everything else held constant, which in turn causes consumer spending to A) increase. B) remain unchanged. C) decrease. D) cannot be determined. Answer: C Ques Status: Previous Edition 20) A share of common stock is a claim on a corporationʹs A) debt. B) liabilities. C) expenses. D) earnings and assets. Answer: D Ques Status: Revised 21) On , October 19, 1987, the market experienced its worst one-day drop in its entire history with the DIJA falling by more than 500 points. A) ʺTerrible Tuesdayʺ 6 Mishkin · The Economics of Money, Banking, and Financial Markets, 9th Edition B) ʺWoeful Wednesdayʺ C) ʺFreaky Fridayʺ D) ʺBlack Mondayʺ Answer: D Ques Status: Previous Edition 23) What is a stock? How do stocks affect the economy? Answer: A stock represents a share of ownership of a corporation, or a claim on a firmʹs earnings/assets. Stocks are part of wealth, and changes in their value affect peopleʹs willingness to spend. Changes in stock prices affect a firmʹs ability to raise funds, and thus their investment. Ques Status: Previous Edition 24) Why is it important to understand the bond market? Answer: The bond market supports economic activity by enabling the government and corporations to borrow to undertake their projects and it is the market where interest rates are determined. Ques Status: New