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econ423hw1 - Econ 423 Summer 2009 Lauren Heller Homework#1...

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Econ 423, Summer 2009 Lauren Heller Homework #1, Due 6 - 23 - 09 Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1. Financial market activities affect A) the economy's location in the business cycle. B) spending decisions by individuals and business firms. C) personal wealth. D) all of the above. 1. 2. Interest rates are important to financial institutions since an interest rate increase _________ the cost of acquiring funds and _________ the income from assets. 2. 3. Typically, increasing interest rates 3. 4. A rising stock market index due to higher share prices 4. 5. Changes in stock prices A) affect firms' decisions to sell stock to finance investment spending. B) affect people's wealth and their willingness to spend. C) are characterized by considerable fluctuations. D) all of the above. E) only A and B of the above. 5. 6. A stronger dollar benefits _________ and hurts _________ 6. 1
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Remember: These questions are to be answered on your own , without any assistance from others. 7. Economists group commercial banks, savings and loan associations, credit unions, mutual funds, mutual savings banks, insurance companies, pension funds, and finance companies together under the heading financial intermediaries. Financial intermediaries 7. 8. (I) Banks are financial intermediaries that accept deposits and make loans. (II) The term "banks" includes firms such as commercial banks, savings and loan associations, mutual savings banks, credit unions, insurance companies, and pension funds. 8.
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