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25 Cards in this Set
- Front
- Back
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An increase in interest rates might ______ saving because more can be earned in interest income. A. Dissallow B. Encourage C. Discourage D. Invalidate |
Encourage |
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A financial crisis is A. a major disruption in the financial markets B. typically followed by an economic boom C. a feature of developing economies only D. not possible in the modern financial environment |
a major disruption in the financial markets |
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The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental of $100 per year) is commonly referred to as the A. interest rate B. aggregate price level C. Inflation rate D. exchange rate
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Interest Rate |
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Changes in stock prices A. affects firms' decisions to sell stock to finance investment spending B. do not affect people's wealth and their willingness to spend C. occur in regular patterns D. are unimportant to decision makers |
affect firms' decisions to sell stock to finance investment |
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How does the size of the U.S. budget deficit in 2010 compare to the time period since 1950 A. It has not changed significantly B. It has expanded dramatically since 2007. In 2010, the deficit-to-GDP ratio was 10 percent well above the historical average of around 2 percent since 1950 C. It has constantly expanded since 1950. In 2010 |
It has expanded dramatically since 2007. In 2010, the deficit-to-GDP ratio was 10 percent well above the historical average of around 2 percent since 1950 |
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A budget _____ occurs when government expenditures exceed tax revenues for a particular time period A. surfeit B. deficit C. surge D. surplus |
Deficit |
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What is the basic activity of banks A. to represent the interest of insurance companies B. to equate future consumption with current consumption C. to sell shares of corporations to the general public D. to facilitate the transfer of money from savers to borrowers |
To facilitate the transfer of money from savers to borrowers |
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Has inflation in the United States increased or decreased in the past few years |
Trend: Slowing Down (Disinflation) Votality: Slightly Erratic |
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When there is an increase in the value of the Japanese yen, all else equal: A. American businesses will see a decrease in demand for their goods in the U.S. and in foreign countries B. American businesses will see a decrease in demand for their goods in the U.S. only C. American businesses will see an increase in demand for their goods in the U.S. and in foreign countries D. American businesses will see a decrease in the supply of their goods in the U.S. and in foreign countries |
American businesses will see an increase in demand for their goods in the United States and in foreign countries |
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When there is a decrease in the value of the American dollar relative to the Japanese yen, all else equal A. Americans will import more Japanese goods than they did before B. American goods will become more expensive relative to Japanese goods C. Japan will export more goods to the United States than it did before D. Japanese goods will become more expensive relative to American goods. |
Japanese goods will become more expensive relative to American goods. |
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The currency of the United States is said to be _______ when the exchange rate for the U.S. dollar falls and its costs more dollars to purchase another country's currency a. Weaker b. Stronger |
Weaker |
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Financial institutions that accept deposits and make loans are called A. Finance companies B. Banks C. Exchanges D. over-the-counter markets |
Banks |
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Banks, savings and loan associations, mutual savings banks, and credit unions A. are no longer important players in financial intermediation B. since deregulation now provides services only to small depositors C. have been adept at innovating in response to changes in the regulatory environment D. produce nothing of value and are therefore a drain on society's resources |
have been adept at an innovating in response to changes in the regulatory environment |
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The market where one currency is converted into another currency is called the ____ market. A.Derivatives B.Bond C. Foreign Exchange D. Stock |
Foreign Exchange |
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Financial markets promote greater economic efficiency by channeling funds from ____ to _____. A. savers; lender B. savers; borrowers C.investors; savers D. borrowers; savers |
Savers; Borrowers |
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As the price of stocks held by consumers increases A. consumer wealth and spending both increase B. consumer wealth decreases and consumer spending increases C. consumer wealth and spending both decrease D. consumer wealth and spending decreases |
consumer wealth and spending both decrease |
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Why are financial markets important to the health of the economy? A.They eliminate the need for financial intermediaries B.They channel funds from savers to investors C.They allow consumers to time their purchases better D. They identity and shut down inefficient firms |
They channel funds from savers to investors |
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Low stock market prices might ____ consumers willingness to spend and might _____ businesses willingness to undertake investment project. A.Decrease; Increase B. Decrease; Decrease C.Increase; Increase D. Increase; Decrease |
Decrease; Decrease |
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The national debt of the U.S. is best defined as: A.the amount that the federal government borrows in any one year B. the accumulated federal budget deficits and surpluses since the nation's beginning C. the quantity of outstanding currency D. the claims that foreigners have against the U.S. |
the accumulated federal budget deficits and surpluses since the nation's beginning |
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Everything else held constant, a weaker dollar will likely hurt A. wheat farmers in Montana that sell domestically B.automobile manufactures in Michigan that use domestically produced inputs C. textile exporters in South Carolina D. furniture importers in California |
Furniture importers in California |
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High interest rates might cause a corporation to ______ building a new plant that would provide more jobs A. Consider B. Complete C. Contemplate D. Postpone |
Postpone |
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What effect might a fall in stock prices have on business investment? A fall in stock prices might cause businesses _______ investment ( decrease or increase ) |
Decrease |
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What effect might a rise in stock prices have on consumers' decisions to spend? A rise in stock prices will generally lead to ______ consumer spending. ( More or Less ) |
More |
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Countries that experience very high rates of inflation may also have A. falling money supplies B. rapidly growing money supplies C. constant money supplies D. balanced budgets |
Rapidly growing money supplies |
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The foreign exchange rate it: A. where the currency of one country is converted into the currency of another country B. where imports and exports are traded for one another C. the price of one country's currency in terms of another country's currency D. the amount of loans made from one country's bank to another country's bank |
The price of one country's currency in terms of another country's currency |
