Econ 2035 Final Test Questions and
Answers.
Which of the following is NOT a financial asset? - Answer Wells Fargo Bank
Which of the following forms the largest share of household holdings of financial assets? -
Answer Pension fund reserves
Economists define liquidity as - Answer the ease with which an assets can be exchanged
Which of the following assets is the most liquid? - Answer money market mutual fund
Securitization is the process of - Answer converting loans into securities
Financial markets - Answer channel funds directly from lenders to borrowers
Which of the following is NOT a financial intermediary? - Answer stock exchange
The main role of the financial intermediaries is to - Answer borrow funds form savers and
lend them to borrowers
financial intermediaries - Answer include banks, and other depository institutions
A bank lending depositors' money to a local business and a pension fund investing contributions
in shares of a company are similar financial activities in that - Answer both involve funds
being channeled from savers to borrowers through financial intermediaries
The leading federal regulatory body for financial markets in the US is the - Answer Securities
and Exchange Commission
Which of the following assets is the least liquid? - Answer House
Increased liquidity in recent decades has reduced interest rates on which of the following assets
(holding constant all other things that affect interest rates)? - Answer Business loans
, Ordinary (non-securitized) loans cannot be resold after they have been granted by a bank or
another lender. Therefore these loans are - Answer Financial assets, but not financial
securities
Because securitized loans are loans that have been bundled with other loans and sold to
investors, they are - Answer both financial assets and financial securities
All of the following are true regarding securitized loans EXCEPT - Answer they cannot be
resold
An important reason why economics at an early stage of development tend to operate
inefficiently is - Answer the high transaction costs associated with barter
Which of the following is an example of a barter transaction? - Answer An individual
provides three light bulbs to her neighbor in exchange for two gallons of milk
In the barter system individuals - Answer find it difficult to specialize, but may be able to do
so
A system of barter has substantial transactions costs because - Answer traders must spend
considerable time searching for trading partners
Under a barter system - Answer each good has many prices
Commodity money can best be described as - Answer a good used as money that also has
value independent of its use as money
Which of the following is NOT a problem with barter? - Answer the commodity money
having value for other uses besides money
Fiat money - Answer is money that has no value if it were not usable as money
Money that has no value apart from its use as money - Answer is known as fiat money
Which of the following is an example of commodity money? - Answer Gold coins
All of the following are problems associated with commodity money EXCEPT - Answer
commodities tend to have little vale in and of themselves
Answers.
Which of the following is NOT a financial asset? - Answer Wells Fargo Bank
Which of the following forms the largest share of household holdings of financial assets? -
Answer Pension fund reserves
Economists define liquidity as - Answer the ease with which an assets can be exchanged
Which of the following assets is the most liquid? - Answer money market mutual fund
Securitization is the process of - Answer converting loans into securities
Financial markets - Answer channel funds directly from lenders to borrowers
Which of the following is NOT a financial intermediary? - Answer stock exchange
The main role of the financial intermediaries is to - Answer borrow funds form savers and
lend them to borrowers
financial intermediaries - Answer include banks, and other depository institutions
A bank lending depositors' money to a local business and a pension fund investing contributions
in shares of a company are similar financial activities in that - Answer both involve funds
being channeled from savers to borrowers through financial intermediaries
The leading federal regulatory body for financial markets in the US is the - Answer Securities
and Exchange Commission
Which of the following assets is the least liquid? - Answer House
Increased liquidity in recent decades has reduced interest rates on which of the following assets
(holding constant all other things that affect interest rates)? - Answer Business loans
, Ordinary (non-securitized) loans cannot be resold after they have been granted by a bank or
another lender. Therefore these loans are - Answer Financial assets, but not financial
securities
Because securitized loans are loans that have been bundled with other loans and sold to
investors, they are - Answer both financial assets and financial securities
All of the following are true regarding securitized loans EXCEPT - Answer they cannot be
resold
An important reason why economics at an early stage of development tend to operate
inefficiently is - Answer the high transaction costs associated with barter
Which of the following is an example of a barter transaction? - Answer An individual
provides three light bulbs to her neighbor in exchange for two gallons of milk
In the barter system individuals - Answer find it difficult to specialize, but may be able to do
so
A system of barter has substantial transactions costs because - Answer traders must spend
considerable time searching for trading partners
Under a barter system - Answer each good has many prices
Commodity money can best be described as - Answer a good used as money that also has
value independent of its use as money
Which of the following is NOT a problem with barter? - Answer the commodity money
having value for other uses besides money
Fiat money - Answer is money that has no value if it were not usable as money
Money that has no value apart from its use as money - Answer is known as fiat money
Which of the following is an example of commodity money? - Answer Gold coins
All of the following are problems associated with commodity money EXCEPT - Answer
commodities tend to have little vale in and of themselves
