Test Bank Economics of Money, Banking and Financial Markets 9th by Frederick Mishkin - Questions.

Test Bank Economics of Money, Banking and Financial Markets 9th by
Frederick Mishkin - Questions.


Test Bank For Economics of Money,
Banking, and Financial Markets 9th by
Frederick Mishkin

Chapter 1: Why Study Money, Banking, and Financial
Markets?
1) Financial markets promote economic efficiency by
A) channeling funds from investors to savers.
B) creating inflation.
C) channeling funds from savers to investors.
D) reducing investment.
2) Financial markets promote greater economic efficiency by channeling funds from
to .
A) investors; savers
B) borrowers; savers
C) savers; borrowers
D) savers; lenders
3) Well-functioning financial markets promote
A) inflation.
B) deflation.
C) unemployment.
D) growth.
4) A key factor in producing high economic growth is
A) eliminating foreign trade.
B) well-functioning financial markets.
C) high interest rates.
D) stock market volatility.
5) Markets in which funds are transferred from those who have excess funds available to
those who have a shortage of available funds are called
A) commodity markets.
B) fund-available markets.
C) derivative exchange markets.
D) financial markets.
6) markets transfer funds from people who have an excess of available funds to people
who have a shortage.
A) Commodity
www.testbanksuccess.com

,Test Bank Economics of Money, Banking and Financial Markets 9th by
Frederick Mishkin - Questions.

B) Fund-available
C) Financial
D) Derivative exchange
7) Poorly performing financial markets can be the cause of
A) wealth.
B) poverty.
C) financial stability.
D) financial expansion.
8) 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.
9) 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.
10) 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
11) 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
12) 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.
13) 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
14) An increase in interest rates might saving because more can be earned in interest
income.
A) encourage B) discourage C) disallow D) invalidate
15) Everything else held constant, an increase in interest rates on student loans
www.testbanksuccess.com

, Test Bank Economics of Money, Banking and Financial Markets 9th by
Frederick Mishkin - Questions.

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.
16) 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
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.
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.
19) 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.
20) 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.
21) 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.

Chapter 2: An Overview of the Financial System
1) Every financial market has the following characteristic:
A) It determines the level of interest rates.
B) It allows common stock to be traded.
C) It allows loans to be made.
D) It channels funds from lenders-savers to borrowers-spenders.
2) Financial markets have the basic function of
A) getting people with funds to lend together with people who want to borrow funds.
B) assuring that the swings in the business cycle are less pronounced.
www.testbanksuccess.com