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FINAL EXAM

# FINAL EXAM - F INAL EXAM fall semester User ID xefri...

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FINAL EXAM - fall semester User ID: xefri Attempt: 1 / 1 Out of: 100 Started: Dec 18, 2003 09:25 Finished: Dec 18, 2003 11:06 Time spent: 1 hr., 40 min., 31 sec. Student finished 1 hr., 19 min., 29 sec. ahead of the 180 min. time limit. Return to Scores -------------------------------------------------------------------------------- Question 1 (2 points) Which of the following is a characteristic of money? 0.0% 1. indivisible 0.0% 2. perishable 100.0% 3. portable 0.0% 4. all of the above Score 2 / 2 -------------------------------------------------------------------------------- Question 2 (2 points) From the definitions of M1 and M2, we know that 0.0% 1. M1 is always larger than M2. 100.0% 2. M2 is always larger than M1. 0.0% 3. M1 and M2 are always equal. 0.0% 4. M1 is sometimes larger than M2, and sometimes smaller than M2. Score 2 / 2 -------------------------------------------------------------------------------- Question 3 (2 points) One common problem with commodity money is that 0.0% 1. it has little intrinsic value. 0.0% 2. it is not useful as a unit of account. 100.0% 3. it may not be divisible.

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0.0% 4. gold is in short supply. Score 2 / 2 -------------------------------------------------------------------------------- Question 4 (2 points) If the money supply increases, then interest rates will rise. 0.0% 1. True 100.0% 2. False Score 2 / 2 -------------------------------------------------------------------------------- Question 5 (2 points) Suppose you will receive an inheritance in 20 years worth \$5 million. If the interest rate is 8 percent, the present value of the inheritance is 100.0% 1. \$1.075 million. 0.0% 2. \$2 million. 0.0% 3. \$5 million. 0.0% 4. \$40 million. Score 2 / 2 -------------------------------------------------------------------------------- Question 6 (2 points) The graph below shows the demand for money. The initial interest rate is io. Which graph correctly depicts a rise in interest rates above the initial level io? 0.0% 1. 100.0% 2. 0.0% 3. 0.0% 4.
Score 0 / 2 -------------------------------------------------------------------------------- Question 7 (2 points) Suppose there is an increase in income. Then we should expect 0.0% 1. the interest rate to fall as people want to spend more money. 100.0% 2. the interest rate to rise as the demand for money shifts to the right. 0.0% 3. the money supply curve to shift to the right as people spend more money. 0.0% 4. none of the above. Score 2 / 2 -------------------------------------------------------------------------------- Question 8 (2 points) Financial intermediaries are institutions that 0.0% 1. set interest rates. 100.0% 2. transfer funds in the form of loans from savers to investors. 0.0% 3. create money. 0.0% 4. provide checking accounts. Score 2 / 2 -------------------------------------------------------------------------------- Question 9 (2 points) The Dow Jones Industrial Average is an index used to track the average price of all stocks on the New York Stock Exchange. How many corporate stocks are included in the DOW? 0.0% 1. 500 100.0% 2. 30 0.0% 3. 250 0.0% 4. 90

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Score 0 / 2 -------------------------------------------------------------------------------- Question 10 (2 points) Owning the bond of a company 0.0% 1. is equivalent to owning stock in the company. 0.0% 2. means that you profit if the company loses money. 100.0% 3. means that the company owes you money. 0.0% 4. means that you owe the company money. Score 0 / 2 -------------------------------------------------------------------------------- Question 11 (2 points) If a bond's coupon rate is 5% and the bondholder receives a \$500 interest payment annually, the face value of the bond must be ________. 100.0% 1. \$10,000 0.0% 2. \$25 0.0% 3. \$1,000 0.0% 4. \$100,000 Score 0 / 2 -------------------------------------------------------------------------------- Question 12 (2 points) If the Fed decides to buy bonds on the open market, which of the following is true? 0.0% 1. This is an easing of the money supply. 0.0% 2. The money supply will shift right.
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