Chap 01 3e - Brandl
Indicate whether the statement is true or false.
1. Financial assets include intangibles that can change in value, such as stocks and bonds.
a. True
b. False
ANSWER: True
Indicate the answer choice that best completes the statement or answers the question.
2. Which of these entities are part of the so-called shadow banking industry?
a. Insurance companies, credit review companies, and investment banks
b. Finance companies, mutual funds, and insurance companies
c. Savings and loan associations, large corporations, and mutual funds
d. Savings and loan associations, credit unions, and credit review companies
ANSWER: b
3. Commercial banks face competition from a variety of institutions, including
a. central banks, private equity companies, and finance companies.
b. government, central banks, and investment banks.
c. mutual funds, investment banks, and private equity partnerships.
d. government, finance companies, and mutual funds.
ANSWER: c
4. Financial markets bring together __________ and __________.
a. households; banks
b. firms; households
c. borrowers; lenders
d. lenders; savers
ANSWER: c
5. Aliyah has had a portion of stock in an e-commerce company for some time. She is ready to resell her stock. In
what market would she do this?
a. After market
b. Resale market
c. Secondary market
d. Liquidity market
ANSWER: c
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,Name: Class: Date:
Chap 01 3e - Brandl
6. Which of these statements most fully expresses why it is crucial to understand the basics of finance and
economics?
a. Failure to understand and implement sound financial practices can lead to personal bankruptcy.
b. Failure to understand and implement sound financial practices led to the global financial crisis that started
in 2008.
c. Failure to understand and implement sound financial practices can lead to both personal and global
financial collapse.
d. Failure to understand and implement sound financial practices can lead to the failure of start-up companies
and personal bankruptcy.
ANSWER: c
7. Which of the following statements best summarizes why is it important for the current generation, Gen Z, to
understand financial economics?
a. Decisions made today will affect lives globally and in the future.
b. Decisions made today will impact their financial futures.
c. Decisions made today can undo decisions made by the previous generations.
d. So they can adequately manage their personal finances which may include student loan debt.
ANSWER: a
8. Which of these most accurately defines possible effects of fluctuating interest rates in the financial markets?
a. Inflation
b. Prices and levels of employment
c. The rate of saving
d. Risk levels
ANSWER: b
9. Some of the most important central banks in the world include
a. the People's Bank of China, the European Central Bank, and the Federal Reserve.
b. the Deutsche Bundesbank, the People's Bank of China, and the Federal Reserve.
c. the People's Bank of China, the Federal Reserve, and the Bank of England.
d. the Federal Reserve, the European Central Bank, and the Bank of England.
ANSWER: d
10. Financial assets include which of the following?
a. Money, credit cards, and bonds
b. Money, bonds, and stocks
c. Credit cards, bonds, and stocks
d. Savings accounts, money, and debit cards
ANSWER: b
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,Name: Class: Date:
Chap 01 3e - Brandl
11. In financial markets, what is meant by the term liquidity?
ANSWER: Liquidity is the ease with which a financial asset can be converted into another financial asset, in
particular money, the most liquid of all financial assets.
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, Name: Class: Date:
Chap 02 3e - Brandl
Indicate whether the statement is true or false.
1. With measurements of monetary aggregates such as M1 and M2, the money supply is relatively easy to measure.
a. True
b. False
ANSWER: False
2. For a social justice class, you take a field trip to a prison, where you notice prisoners exchanging cigarettes for
other items, such as a candy bar, a magazine, a soft drink, and so on. In this circumstance, cigarettes could be
considered money.
a. True
b. False
ANSWER: True
3. For an asset to function as commodity money, it must be easily divisible, easily standardized, easy to carry
around, physically attractive, and broadly demanded.
a. True
b. False
ANSWER: False
4. The higher a person's rate of time preference, the lower the interest rate needed to get them to defer their
consumption to the future.
a. True
b. False
ANSWER: False
Indicate the answer choice that best completes the statement or answers the question.
5. If gold and silver became the primary types of commodity money in circulation, what would most likely be
expected if there was a sudden and great amount of hoarding of these two items?
a. People would start to print and use various forms of currency.
b. Bartering would simply replace gold and silver.
c. There would likely not be enough money, and the economy could slide into an economic recession.
d. There would be too much money of other types, and the economy could endure rapid inflation.
ANSWER: c
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Indicate whether the statement is true or false.
1. Financial assets include intangibles that can change in value, such as stocks and bonds.
a. True
b. False
ANSWER: True
Indicate the answer choice that best completes the statement or answers the question.
2. Which of these entities are part of the so-called shadow banking industry?
a. Insurance companies, credit review companies, and investment banks
b. Finance companies, mutual funds, and insurance companies
c. Savings and loan associations, large corporations, and mutual funds
d. Savings and loan associations, credit unions, and credit review companies
ANSWER: b
3. Commercial banks face competition from a variety of institutions, including
a. central banks, private equity companies, and finance companies.
b. government, central banks, and investment banks.
c. mutual funds, investment banks, and private equity partnerships.
d. government, finance companies, and mutual funds.
ANSWER: c
4. Financial markets bring together __________ and __________.
a. households; banks
b. firms; households
c. borrowers; lenders
d. lenders; savers
ANSWER: c
5. Aliyah has had a portion of stock in an e-commerce company for some time. She is ready to resell her stock. In
what market would she do this?
a. After market
b. Resale market
c. Secondary market
d. Liquidity market
ANSWER: c
Page 1
,Name: Class: Date:
Chap 01 3e - Brandl
6. Which of these statements most fully expresses why it is crucial to understand the basics of finance and
economics?
a. Failure to understand and implement sound financial practices can lead to personal bankruptcy.
b. Failure to understand and implement sound financial practices led to the global financial crisis that started
in 2008.
c. Failure to understand and implement sound financial practices can lead to both personal and global
financial collapse.
d. Failure to understand and implement sound financial practices can lead to the failure of start-up companies
and personal bankruptcy.
ANSWER: c
7. Which of the following statements best summarizes why is it important for the current generation, Gen Z, to
understand financial economics?
a. Decisions made today will affect lives globally and in the future.
b. Decisions made today will impact their financial futures.
c. Decisions made today can undo decisions made by the previous generations.
d. So they can adequately manage their personal finances which may include student loan debt.
ANSWER: a
8. Which of these most accurately defines possible effects of fluctuating interest rates in the financial markets?
a. Inflation
b. Prices and levels of employment
c. The rate of saving
d. Risk levels
ANSWER: b
9. Some of the most important central banks in the world include
a. the People's Bank of China, the European Central Bank, and the Federal Reserve.
b. the Deutsche Bundesbank, the People's Bank of China, and the Federal Reserve.
c. the People's Bank of China, the Federal Reserve, and the Bank of England.
d. the Federal Reserve, the European Central Bank, and the Bank of England.
ANSWER: d
10. Financial assets include which of the following?
a. Money, credit cards, and bonds
b. Money, bonds, and stocks
c. Credit cards, bonds, and stocks
d. Savings accounts, money, and debit cards
ANSWER: b
Page 2
,Name: Class: Date:
Chap 01 3e - Brandl
11. In financial markets, what is meant by the term liquidity?
ANSWER: Liquidity is the ease with which a financial asset can be converted into another financial asset, in
particular money, the most liquid of all financial assets.
Page 3
, Name: Class: Date:
Chap 02 3e - Brandl
Indicate whether the statement is true or false.
1. With measurements of monetary aggregates such as M1 and M2, the money supply is relatively easy to measure.
a. True
b. False
ANSWER: False
2. For a social justice class, you take a field trip to a prison, where you notice prisoners exchanging cigarettes for
other items, such as a candy bar, a magazine, a soft drink, and so on. In this circumstance, cigarettes could be
considered money.
a. True
b. False
ANSWER: True
3. For an asset to function as commodity money, it must be easily divisible, easily standardized, easy to carry
around, physically attractive, and broadly demanded.
a. True
b. False
ANSWER: False
4. The higher a person's rate of time preference, the lower the interest rate needed to get them to defer their
consumption to the future.
a. True
b. False
ANSWER: False
Indicate the answer choice that best completes the statement or answers the question.
5. If gold and silver became the primary types of commodity money in circulation, what would most likely be
expected if there was a sudden and great amount of hoarding of these two items?
a. People would start to print and use various forms of currency.
b. Bartering would simply replace gold and silver.
c. There would likely not be enough money, and the economy could slide into an economic recession.
d. There would be too much money of other types, and the economy could endure rapid inflation.
ANSWER: c
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