ECON 2035 Final - Questions (LSU)
And All Actual Answers 2025-2026
Updated.
Compared to checks, paper currency and coins have major drawbacks that they - Answer are
easily stolen
In the bond market, the bond demanders are the ___ and they bond suppliers are the ___. -
Answer lenders; borrowers
Everything else held constant, when they government has higher budget deficits, the ___curve
for bonds shift to the ___ and the interest rate ___ - Answer supply; right; rises
When we say that money is a stock variable, we mean that - Answer the quantity of money
is measured at a given point in time
If Microsoft sells a bond in London and it is denominated in dollars, the bond is a - Answer
Eurobond
If the interest rate on a bond is above the equilibrium interest rate, there is an excess ___ for
bonds and the price will ___ - Answer demand; rise
which of the following can be described as direct finance? - Answer borrow $2500 from a
friend
Which of the following is a contractual savings institution? - Answer life insurance company
If prices in the bond market become more volatile, everything else held constant, the demand
curve for bonds shifts___ and the interest rates ___. - Answer left; rise
In which of the following situations would you prefer to be the borrower?
- The nominal interest rate is 13% and the expected inflation rate is 15%
- The nominal interest rate is 4% and the expected inflation rate is 1%
- The nominal interest rate is 9% and the expected inflation rate is 7%
- The nominal interest rate is 25% and the expected inflation rate is 50% - Answer The
nominal interest rate is 25% and the expected inflation rate is 50%
, The yield to maturity is ___than the ___rate when the bond price is ___its face value - Answer
greater; coupon; below
which of the following $1,000 face-value securities has the highest yield to maturity?
- A 5% coupon bond with a price of $600
- A 5% coupon bod with a price of $800
- A 5% coupon with a price of $1,000
- A 5% coupon bond with a price of $1,200 - Answer A 5% coupon bond with a price of $600
Everything else held constant an increase in the liquidity of bonds results in a ___in demand for
bonds and the demand curve shifts to the ___ - Answer rise; right
Everything else held constant, if the expected return on US Treasury bonds fall from 8 to 7% and
the expected return on corporate bonds falls from 10 to 8%, then the expected return of
corporate bonds relative to US Treasury bonds and the demand for corporate bonds ___ -
Answer falls; falls
Interest rate risk is the riskiness of an asset's returns due to - Answer interest rate changes
Provide a channel for linking those who want to save with those who want to invest - Answer
financial intermediaries
Because it is a unit of account, money - Answer reduces the number of prices that need to
be calculated
An example of the problem of ___ is when a corporation uses the finds raised from selling
bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and
their families - Answer moral hazard
Which of the following is not included in the M1 measure of money but is included in the M2
measure of money?
- Demand deposits
- Travelers' Checks
- Small-denomination time deposits
- Currency - Answer Small-denomination time deposits
And All Actual Answers 2025-2026
Updated.
Compared to checks, paper currency and coins have major drawbacks that they - Answer are
easily stolen
In the bond market, the bond demanders are the ___ and they bond suppliers are the ___. -
Answer lenders; borrowers
Everything else held constant, when they government has higher budget deficits, the ___curve
for bonds shift to the ___ and the interest rate ___ - Answer supply; right; rises
When we say that money is a stock variable, we mean that - Answer the quantity of money
is measured at a given point in time
If Microsoft sells a bond in London and it is denominated in dollars, the bond is a - Answer
Eurobond
If the interest rate on a bond is above the equilibrium interest rate, there is an excess ___ for
bonds and the price will ___ - Answer demand; rise
which of the following can be described as direct finance? - Answer borrow $2500 from a
friend
Which of the following is a contractual savings institution? - Answer life insurance company
If prices in the bond market become more volatile, everything else held constant, the demand
curve for bonds shifts___ and the interest rates ___. - Answer left; rise
In which of the following situations would you prefer to be the borrower?
- The nominal interest rate is 13% and the expected inflation rate is 15%
- The nominal interest rate is 4% and the expected inflation rate is 1%
- The nominal interest rate is 9% and the expected inflation rate is 7%
- The nominal interest rate is 25% and the expected inflation rate is 50% - Answer The
nominal interest rate is 25% and the expected inflation rate is 50%
, The yield to maturity is ___than the ___rate when the bond price is ___its face value - Answer
greater; coupon; below
which of the following $1,000 face-value securities has the highest yield to maturity?
- A 5% coupon bond with a price of $600
- A 5% coupon bod with a price of $800
- A 5% coupon with a price of $1,000
- A 5% coupon bond with a price of $1,200 - Answer A 5% coupon bond with a price of $600
Everything else held constant an increase in the liquidity of bonds results in a ___in demand for
bonds and the demand curve shifts to the ___ - Answer rise; right
Everything else held constant, if the expected return on US Treasury bonds fall from 8 to 7% and
the expected return on corporate bonds falls from 10 to 8%, then the expected return of
corporate bonds relative to US Treasury bonds and the demand for corporate bonds ___ -
Answer falls; falls
Interest rate risk is the riskiness of an asset's returns due to - Answer interest rate changes
Provide a channel for linking those who want to save with those who want to invest - Answer
financial intermediaries
Because it is a unit of account, money - Answer reduces the number of prices that need to
be calculated
An example of the problem of ___ is when a corporation uses the finds raised from selling
bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and
their families - Answer moral hazard
Which of the following is not included in the M1 measure of money but is included in the M2
measure of money?
- Demand deposits
- Travelers' Checks
- Small-denomination time deposits
- Currency - Answer Small-denomination time deposits
