CHAPTER 1 - Chapter 1 Exercise: . Key terms 1. Assets 2. A...

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Chapter 1 Exercise: ¢ñ. Key terms 1. Assets 2. A security 3. A bond 4. An interest rate 5. Common stock 6. Financial market 7. Money 8. Cash flow 9. Central bank 10. Common stock (or stock) 11. e-finance 12. Federal Reserve System (the Fed) 13. Foreign exchange market 14. Inflation 15. Monetary theory 16. Monetary policy 17. Recession ¢ò.Multiple Choice : 1.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. 2.Financial markets and institutions a. involve the movement of huge flows of money. b. affect the location of businesses. c. affect the types of goods and services produced in an economy. d. each of the above. e. only (a) and (c) of the above. 3.Financial markets promote economic efficiency by a. anneling funds from investors to savers. b. eating inflation. c. using recessions. d. anneling funds from savers to investors. e. ducing investment. 4.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. flation rate. b. change rate. c. terest rate. d. gregate price level. 5.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 6.Interest rates affect a. individuals. b. businesses. c. the overall economy. d. all of the above. e. only (b) and (c) of the above. 7.An increase in interest rates on student loans
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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. e. none of the above. 8.Changes in stock prices a. affect people¡¯s wealth and their willingness to spend b. affect firms¡¯ decisions to sell stock to finance investment spending. c. are characterized by considerable fluctuations.
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This note was uploaded on 01/10/2011 for the course FSD 201 taught by Professor Huong during the Spring '10 term at Beacon FL.

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CHAPTER 1 - Chapter 1 Exercise: . Key terms 1. Assets 2. A...

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