1.1 Why Study Money, Banking, And Financial Markets?

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Register to read the introduction… A) positive; demand
B) positive; supply
C) negative; demand
D) negative; supply
Answer: B
Ques Status: New
Chapter 1 Why Study Money, Banking, and Financial Markets? 11
15) Evidence from the United States and other foreign countries indicates that
A) there is a strong positive association between inflation and growth rate of money over long periods of time.
B) there is little support for the assertion that ʺinflation is always and everywhere a monetary phenomenon.ʺ C) countries with low monetary growth rates tend to experience higher rates of inflation, all else being constant.
D) money growth is clearly unrelated to inflation.
Answer: A
Ques Status: Previous Edition
16) Countries that experience very high rates of inflation may also have
A) balanced budgets.
B) rapidly growing money supplies.
C) falling money supplies.
D) constant money supplies.
Answer: B
Ques Status: Revised
17) Between 1950 and 1980 in the U.S., interest rates trended upward. During this same time
…show more content…
C) lead to a slower rate of money growth.
D) lead to higher bond prices.
Answer: A
Ques Status: Previous Edition
24) Budget deficits are important because deficits
A) cause bank failures.
B) always cause interest rates to fall.
C) can result in higher rates of monetary growth.
D) always cause prices to fall.
Answer: C
Ques Status: Previous Edition
25) What happens to economic growth and unemployment during a business cycle recession?
What is the relationship between the money growth rate and a business cycle recession?
Answer: During a recession, output declines and unemployment increases. Prior to every recession in the U.S. the money growth rate has declined, however, not every decline is followed by a recession.
Ques Status: Previous Edition
Chapter 1 Why Study Money, Banking, and Financial Markets? 13
1.4 Why Study International Finance?
1) American companies can borrow funds
A) only in U.S. financial markets.
B) only in foreign financial markets.
C) in both U.S. and foreign financial markets.
D) only from the U.S. government.
Answer: C
Ques Status: New
2) The price of one countryʹs currency in terms of another countryʹs currency is called the
A) exchange rate.
B) interest

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