Exam 1 - WESTERN NEW MEXICO UNIVERSITY Econ 425(Money &...

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WESTERN NEW MEXICO UNIVERSITY First Examination Fall 2019 Investing in financial instruments in today's economy: a. Is an activity practiced only by the wealthy? b. Involves costly transactions c. Requires a relatively large sum of money to invest (more than $100,000) d. Is made easier by the use of mutual funds Banks usually offer higher rates of interest to people willing to keep their funds in the bank longer because: a. These depositors are the banks' best customers b. Banks really do not want a lot of people coming into the bank c. Bankers realize time has value and people need to be compensated if they are to keep their money in the bank longer d. These depositors are very wealthy and so have other options about what to do with their funds Central banks can improve the welfare of a society by doing all of the following except: a. Serving the interests of government rather than the public at large b. Helping to promote economic growth c. Focusing on keeping the overall level of prices stable d. Helping to reduce the volatility of business cycles Which of the following statements best describes financial instruments? a. All financial instruments are a means of payment b. Financial instruments can transfer resources between people but not risk c. Financial instruments can transfer resources and risk between people d. Financial instruments can transfer risk but not resources between people Stock prices are: a. Set by the company issuing the stock b. Set by the central bank c. Determined by market transactions d. Unrelated to the value of the company issuing the stock
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Without the use of money, workers in an economy: a. Would become more specialized b. Would have to spend a lot less time trading c. Would probably specialize less d. Would be far more productive In a barter system: a. People have to specialize in order to have goods to trade b. People cannot specialize because they never know what goods will be desired c. People are less likely to specialize as extensively as they would in a monetary economy d. People must be self sufficient The high transaction costs associated with a barter system refers to: a. The fact that, often times, these exchanges are taxed by governments b. The risk associated with having to carry an inventory of goods to trade c. The high cost associated with finding someone with whom to exchange d. The cost of drawing up complete contracts Which of the following is not an example of bartering? a. Sue trading candles with Tom for his bread
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Exam 1 - WESTERN NEW MEXICO UNIVERSITY Econ 425(Money &...

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