Question 1

Explain why households supply loanable funds to the market.

Accepted Answer

Households can supply loanable

Question 2

Near money includes

Accepted Answer

A)  some of M2 and some of M1. 
B)  some of M2 but none of M1. 
C)  only the money in M2. 
D)  hard assets such as land. 
A)  some of M2 and some of M1. 
B)  some of M2 but none of M1. 
C)  only the money in M2. 
D)  hard assets such as land.

Question 3

Which statement is correct?

Accepted Answer

A)  M2 measures assets primarily used as a medium of exchange. 
B)  M2 includes M1. 
C)  M1 includes assets primarily used as a means of savings. 
D)  The Federal Reserve discontinued reporting on M1 and M2 because they provide little insight into the state of the economy. 
A)  M2 measures assets primarily used as a medium of exchange. 
B)  M2 includes M1. 
C)  M1 includes assets primarily used as a means of savings. 
D)  The Federal Reserve discontinued reporting on M1 and M2 because they provide little insight into the state of the economy.

Question 4

Which of these is considered near money?

Accepted Answer

A)  money market deposit accounts 
B)  silver 
C)  a $100 bill 
D)  a credit card 
A)  money market deposit accounts 
B)  silver 
C)  a $100 bill 
D)  a credit card

Question 5

Insurance companies are examples of financial intermediaries that are the bridge between savers and borrowers.

Accepted Answer

A) True 
 B)False

Question 6

If market interest rates increase to 9% and the yield on a bond is 7%, then the price of the bond will rise.

Accepted Answer

A) True 
 B)False

Question 7

The supply curve for loanable funds is

Accepted Answer

A)  positively sloped. 
B)  negatively sloped. 
C)  horizontal. 
D)  vertical. 
A)  positively sloped. 
B)  negatively sloped. 
C)  horizontal. 
D)  vertical.

Question 8

Corporate bonds generally have a _____ return on investment than do checking deposits because bonds are _____.

Accepted Answer

A)  higher; less risky 
B)  higher; riskier 
C)  lower; less risky 
D)  lower; riskier 
A)  higher; less risky 
B)  higher; riskier 
C)  lower; less risky 
D)  lower; riskier

Question 9

The reason bond prices and interest rates are inversely related is because

Accepted Answer

A)  bond prices are fixed for the life of a bond. 
B)  market interest rates stay the same for the life of a bond. 
C)  the coupon payment is fixed for the life of a bond. 
D)  bonds are always perpetuities. 
A)  bond prices are fixed for the life of a bond. 
B)  market interest rates stay the same for the life of a bond. 
C)  the coupon payment is fixed for the life of a bond. 
D)  bonds are always perpetuities.

Question 10

Many U.S. retirement accounts have regained much of their lost value since the 2007-2009 stock market crash because investors switched their portfolio mix from stocks to bonds.

Accepted Answer

A) True 
 B)False

Question 11

Money that one puts into a 401(k) account is taxed when it is taken out.

Accepted Answer

A) True 
 B)False

Question 12

As interest rates fall

Accepted Answer

A)  there is a movement upward along the supply curve for loanable funds. 
B)  the supply curve for loanable funds shifts to the left. 
C)  there is a movement downward along the supply curve for loanable funds. 
D)  the supply curve for loanable funds shifts to the right. 
A)  there is a movement upward along the supply curve for loanable funds. 
B)  the supply curve for loanable funds shifts to the left. 
C)  there is a movement downward along the supply curve for loanable funds. 
D)  the supply curve for loanable funds shifts to the right.

Question 13

Institutions that acquire funds from savers and then lend those funds to borrowers are called

Accepted Answer

A)  state banks. 
B)  monetary mediums. 
C)  financial intermediaries. 
D)  Federal Reserve banks. 
A)  state banks. 
B)  monetary mediums. 
C)  financial intermediaries. 
D)  Federal Reserve banks.

Question 14

M2 is calculated by adding _____ to the value of M1.

Accepted Answer

A)  near monies. 
B)  narrow money. 
C)  commodity money. 
D)  fiat money. 
A)  near monies. 
B)  narrow money. 
C)  commodity money. 
D)  fiat money.

Question 15

Money

Accepted Answer

A)  is anything that is accepted in exchange for other goods and services or for payment of debt. 
B)  is anything that is backed by precious metal. 
C)  is currency. 
D)  has to have an intrinsic value. 
A)  is anything that is accepted in exchange for other goods and services or for payment of debt. 
B)  is anything that is backed by precious metal. 
C)  is currency. 
D)  has to have an intrinsic value.

Question 16

Missing a minimum payment on your credit card can make it more expensive to buy a house in the future.

Accepted Answer

A) True 
 B)False

Question 17

Establishment of new government regulations that reduce corruption and instill confidence in firms and entrepreneurs tends to lead to higher interest rates.

Accepted Answer

A) True 
 B)False

Question 18

Currency is part of M2.

Accepted Answer

A) True 
 B)False

Question 19

Liquidity refers to how

Accepted Answer

A)  fast money can be transferred from one account to another account. 
B)  quickly, easily, and reliably an asset can be converted into a medium of exchange. 
C)  easily cash can be transported across national borders. 
D)  fast money travels throughout the economy. 
A)  fast money can be transferred from one account to another account. 
B)  quickly, easily, and reliably an asset can be converted into a medium of exchange. 
C)  easily cash can be transported across national borders. 
D)  fast money travels throughout the economy.

Question 20

Which asset is MOST liquid?

Accepted Answer

A)  a house 
B)  a Picasso painting 
C)  a corporate bond 
D)  money 
A)  a house 
B)  a Picasso painting 
C)  a corporate bond 
D)  money

Explain why households supply loanable funds to the market.

Near money includes

Which statement is correct?

Which of these is considered near money?

Insurance companies are examples of financial intermediaries that are the bridge between savers and borrowers.

If market interest rates increase to 9% and the yield on a bond is 7%, then the price of the bond will rise.

The supply curve for loanable funds is

Corporate bonds generally have a _ return on investment than do checking deposits because bonds are _.

The reason bond prices and interest rates are inversely related is because

Many U.S. retirement accounts have regained much of their lost value since the 2007-2009 stock market crash because investors switched their portfolio mix from stocks to bonds.

Money that one puts into a 401(k) account is taxed when it is taken out.

As interest rates fall

Institutions that acquire funds from savers and then lend those funds to borrowers are called

M2 is calculated by adding _____ to the value of M1.

Money

Missing a minimum payment on your credit card can make it more expensive to buy a house in the future.

Establishment of new government regulations that reduce corruption and instill confidence in firms and entrepreneurs tends to lead to higher interest rates.

Currency is part of M2.

Liquidity refers to how

Which asset is MOST liquid?

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Exam 11: Saving, Investment, and the Financial System

Explain why households supply loanable funds to the market.

Near money includes

Which statement is correct?

Which of these is considered near money?

Insurance companies are examples of financial intermediaries that are the bridge between savers and borrowers.

If market interest rates increase to 9% and the yield on a bond is 7%, then the price of the bond will rise.

The supply curve for loanable funds is

Corporate bonds generally have a _____ return on investment than do checking deposits because bonds are _____.

The reason bond prices and interest rates are inversely related is because

Many U.S. retirement accounts have regained much of their lost value since the 2007-2009 stock market crash because investors switched their portfolio mix from stocks to bonds.

Money that one puts into a 401(k) account is taxed when it is taken out.

As interest rates fall

Institutions that acquire funds from savers and then lend those funds to borrowers are called

M2 is calculated by adding _____ to the value of M1.

Money

Missing a minimum payment on your credit card can make it more expensive to buy a house in the future.

Establishment of new government regulations that reduce corruption and instill confidence in firms and entrepreneurs tends to lead to higher interest rates.

Currency is part of M2.

Liquidity refers to how

Which asset is MOST liquid?

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Corporate bonds generally have a _ return on investment than do checking deposits because bonds are _.