Econ Practice Quiz Ch.15B - StudentzNirav Patel Instructor...

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Unformatted text preview: StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 15-8 Submitted: 12/12/10 2:50pm Course: CCBC ECON 201- MWF 9:05 -10:00 Book: Miller: Economics Today 15e Updated Edition 1. Scott is seeking a loan from his bank for a home improvement project. He receives the loan and then decides to take a special vacation opportunity to Las Vegas and enter a gambling tournament. The bank, as a financial intermediary, is facing a problem of: {:1-A. adverse selection. { 1 3- B - symmetric information. {F C moral hazard. {:j:-D- liabilities. YOU ANSWERED: nothing 2. Which of the following assets is the most liquid? -I:::I-A- 50 shares of Microsoft stock. {F B- A traveler's check. {:j; C. An automobile. {:jz-D- A US. savings bond. YOU ANSWERED: nothing 3, Money may serve as a "standard of value" that allows for comparison of the relative worth of various goods and services. What function of money does this describe? {:jz-A- Standard of deferred payment. {:jz-B- Medium of exchange. {:1-C- Store of value. _'_k D- Unit of accounting. YOU ANSWERED: nothing Page I StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 15-8 Submitted: 12/12/10 2:50pm Course: CCBC ECON 201- MWF 9:05 -10:00 Book: Miller: Economics Today 15e Updated Edition 4. Nicholas needs to decide between buying a slate pool table for $1,800 or being able to go on a Canadian vacation for $1,000 and still having enough left over to buy a nonslate pool table for $800. Nicholas opts for the nonslate pool table and the Canadian vacation. Nicholas has used money in What ways in making his decision? -:j:j:-A~ Medium of exchange and a store of value. F 13- Medium of exchange and a standard unit of account. -:j:j:-C- Medium of exchange and a method to decrease deferred payments. {3-D Store of value and a standard unit of account. YOU ANSWERED: nothing 5. The Federal Deposit Insurance Corporation (FDIC): {:jz-A. creates moral hazard problems in that big banks take on more risk knowing the FDIC will consider them "too big to fail." {3-13— assures depositors that their deposits will be fully recoverable (for a minimum of $100,000) regardless of how serious a bank's financial situation may be. -'j:j:-C- was created in 1933 to prevent bank runs that had been plaguing the economy during the Great Depression. _'_k D. all of the above. YOU ANSWERED: nothing 6_ Which of the following statements is true when considering central banks? {xi-A- Every nation in the world has a central bank that influences the world's economy. -I:::I-B- The first central bank was the Bank of England, established by Parliament in 1694. .;'__* C- The number of central banks in the world grew enormously after the Great Depression. {:2- D- Central banks are a relatively new phenomena, appearing after the end of World War 11. YOU ANSWERED: nothing Page 2 StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 15-8 Submitted: 12/12/10 2:50pm Course: CCBC ECON 201- MWF 9:05 -10:00 Book: Miller: Economics Today 15e Updated Edition 7 _ Due to the Gramm-Leach-Bliley Act of 1999: -:j:j:-A- the US government forbid US commercial banks to own stock of any other business domestic or foreign. {:ji-B- the US government forbid US commercial banks to own stock of foreign banks and businesses. {1:- C- allowed European central banks to unite into the European Union Bank. F D. the US government allowed commercial banks to own stock and sell insurance policies. YOU ANSWERED: nothing 8_ What backs up the value of US. dollars? 1* A- Faith that the dollars represent command over goods and services. -'j:j:-B- Gold. -:j:j:-C. Foreign currency reserves held by the Federal Reserve System. {jz-D- Gold denominated Federal Reserve System assets. YOU ANSWERED: nothing 9, In order to be successful, money in a fiduciary monetary system must have: 5* A- acceptability and predictability of value. -:j:j:-B- divisability and accountability. -:j:j:- C- portability and transformability. -:j:j:-D- none of the above. YOU ANSWERED: nothing Page 3 StudentzNirav Patel Instructor: Alpha Kaikai Assignment: Chapter 15-8 Submitted: 12/12/10 2:50pm Course: CCBC ECON 201- MWF 9:05 10. ll. 12. -10:00 Book: Miller: Economics Today 15e Updated Edition Which of the following is a major reason why financial intermediaries, such as banks, exist? {EA- Banks exist to facilitate exchanges through barter. "2:23-13- Banks create near monies. -:j:j:-C- Financial intermediaries exist because they provide a medium of exchnage for their customers. .;'__* D. The existence of asymmetric information makes financial intermediaries more efficient in channelling money to its most efficent use. YOU ANSWERED: nothing Which of the following is a situation of moral hazard created by the existence of the FDIC? -:j:j:-A- Financial institutions seeking the protection of the FDIC are able to "hide" their poor practices. {3-13. The FDIC regulates banks that do not promote the morals of today's society. -:j:j:-C- The FDIC seeks to include those financial institutions that practice low risk loans. F D. Financial institutions, with FDIC protection, use depositors' funds in riskier investment projects. YOU ANSWERED: nothing Which of the following statements is true when considering liquidity? 1* A- The most liquid assets typically earn no or little interest. -'j:j:-B- Physical assets are the most liquid type of assets. -:::::-C- Bonds have a guaranteed redemption value so there is no chance of a financial loss from their purchase. -'j:j:-D- Stocks have no transaction fees. YOU ANSWERED: nothing Page 4 ...
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