Question 1

What is the primary function of U.S.regulatory agencies in the U.S.financial system?

Accepted Answer

The answer of What is the primary function of U.S.regulatory...

Question 2

Which of the following statements best describes financial markets?

Accepted Answer

A) Financial markets lower the cost and increase the speed of buying and selling financial instruments. 
B) Financial markets increase the speed of buying and selling, but they also increase the cost since people are earning fees for these transactions. 
C) Financial markets are a good example of unregulated markets. 
D) Financial markets today offer fewer instruments than they did in the past.

Question 3

Which core principle(s) could you use to explain why credit card issuers charge such high rates of interest?

Accepted Answer

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Question 4

Identify the six parts of the financial system.

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Question 5

The largest regulatory change in U.S.financial markets since 1930 is known as:

Accepted Answer

A) Basel III. 
B) the Fred-Bob Act. 
C) the Gramm-Leach-Bliley Act. 
D) the Dodd-Frank Act.

Question 6

If the U.S.Supreme Court ruled that states could no longer require people to have auto insurance, do you think most people would cancel their policies? Explain.

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Question 7

Mutual funds have:

Accepted Answer

A) been created for very wealthy individuals with a lot of money to invest. 
B) increased the risks associated with constructing a portfolio. 
C) reduced the costs associated with gathering information on stocks and bonds. 
D) increased the transactions costs associated with participating in financial markets.

Question 8

When an individual obtains a car loan and makes all of the regular monthly payments, the sum of the payments made will exceed the purchase price of the car.This is due primarily to the core principle:

Accepted Answer

A) risk requires compensation. 
B) information is the basis for decisions. 
C) markets determine prices and allocate resources. 
D) time has value.

Question 9

Studying money and banking through five core principles is helpful because:

Accepted Answer

A) studies have shown students have a difficult time remembering more than five topics. 
B) everything in economics can be reduced to five core principles. 
C) money and banking can undergo drastic changes overtime, but the five principles do not. 
D) these five principles are understood by everyone.

Question 10

Which of the following statements best describes financial instruments?

Accepted Answer

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.

Exam 1: An Introduction to Money and the Financial System