1、Chapter 1 Why Study Money, Banking, and Financial Markets? Multiple Choice 1) Financial markets and institutions (a) involve the movement of huge flows of money. (b) affect the profits of businesses. (c) affect the types of goods and services produced in an economy. (d) do each of the above. (e) do
2、only (a) and (b) of the above. Answer: D Question Status: Previous Edition 2) Financial markets and institutions (a) involve the movement of huge flows of money. (b) affect the location of businesses. (c) affect the types of goods and services produced in an economy. (d) do each of the above. (e) do
3、 only (a) and (c) of the above. Answer: E Question Status: Previous Edition 3) Money, financial institutions, and financial markets in the United States can have a major impact on (a) economic well being of other countries besides the United States. (b) the kinds of goods and services that are produ
4、ced. (c) the outcome of political elections. (d) all of the above. (e) only (a) and (b) of the above. Answer: D Question Status: Previous Edition 4) Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called (a) commod
5、ity markets. (b) fund-available markets. (c) derivative exchange markets. (d) financial markets. Answer: D Question Status: Previous Edition 2 Frederic S. Mishkin Economics of Money, Banking, and Financial Markets, Seventh Edition 5) Channeling funds from individuals with surplus funds to those desi
6、ring funds when the saver does not purchase the borrowers security is known as (a) barter. (b) redistribution. (c) theft. (d) taxation. (e) financial intermediation. Answer: E Question Status: Study Guide 6) Financial markets promote economic efficiency by (a) channeling funds from investors to save
7、rs. (b) creating inflation. (c) causing recessions. (d) channeling funds from savers to investors. (e) reducing investment. Answer: D Question Status: New 7) Well-functioning financial markets promote (a) inflation. (b) deflation. (c) unemployment. (d) growth. (e) none of the above. Answer: D Questi
8、on Status: New 8) Poorly performing financial markets can be the cause of (a) wealth. (b) poverty. (c) financial stability. (d) all of the above. (e) none of the above. Answer: B Question Status: New 9) The bond markets are important because (a) they are easily the most widely followed financial mar
9、kets in the United States. (b) they are the markets where foreign exchange rates are determined. (c) they are the markets where interest rates are determined. (d) of each of the above. (e) of only (a) and (b) of the above. Answer: C Question Status: Previous Edition Chapter 1 Why Study Money, Bankin
10、g, and Financial Markets? 3 10) The bond markets are important because (a) they are the markets where interest rates are determined. (b) they are the markets where most borrowers get their funds. (c) they are easily the most widely followed financial markets in the United States. (d) of each of the
11、above. (e) of only (a) and (b) of the above. Answer: A Question Status: Previous Edition 11) 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) inflation rate. (b) exchange rate. (c) interest rate. (d)
12、 aggregate price level. Answer: C Question Status: Previous Edition 12) Compared to interest rates on long-term U.S. government bonds, interest rates on _ fluctuate more and are lower on average. (a) medium-quality corporate bonds (b) low-quality corporate bonds (c) high-quality corporate bonds (d)
13、three-month Treasury bills (e) none of the above Answer: D Question Status: Previous Edition 13) Compared to interest rates on long-term U.S. government bonds, interest rates on three-month Treasury bills fluctuate _ and are _ on average. (a) more; lower (b) less; lower (c) more; higher (d) less; hi
14、gher Answer: A Question Status: Previous Edition 14) The interest rate on Baa (medium quality) corporate bonds is _, on average, than other interest rates, and the spread between it and other rates became _ in the 1970s. (a) lower; smaller (b) lower; larger (c) higher; smaller (d) higher; larger Ans
15、wer: D Question Status: Previous Edition 4 Frederic S. Mishkin Economics of Money, Banking, and Financial Markets, Seventh Edition 15) A decline in interest rates will cause spending on housing to (a) fall. (b) remain unchanged. (c) cannot be determined. (d) rise. (e) none of the above. Answer: D Qu
16、estion Status: Study Guide 16) An increase in interest rates on student loans (a) increases the cost of a college education. (b) reduces the cost of a college education. (c) has no effect on educational costs. (d) increases costs for students with no loans. (e) none of the above. Answer: A Question
17、Status: New 17) Interest rates affect (a) individuals. (b) businesses. (c) the overall economy. (d) all of the above. (e) only (b) and (c) of the above. Answer: D Question Status: New 18) Stock prices boomed in the 1980s until “Black Monday” in _ , when the DJIA fell by more than 500 points, a 22 pe
18、rcent decline. (a) 1985 (b) 1986 (c) 1987 (d) 1988 Answer: C Question Status: Previous Edition 19) The stock market is important because (a) it is where interest rates are determined. (b) it is the most widely followed financial market in the United States. (c) it is where foreign exchange rates are
19、 determined. (d) all of the above. Answer: B Question Status: Previous Edition Chapter 1 Why Study Money, Banking, and Financial Markets? 5 20) Stock prices since the 1950s have been (a) relatively stable trending upward at a steady pace. (b) relatively stable trending downward at a moderate rate. (
20、c) extremely volatile. (d) unstable trending downward at a moderate rate. Answer: C Question Status: Previous Edition 21) A rising stock market index due to higher share prices (a) increases peoples wealth, but is unlikely to increase their willingness to spend. (b) increases peoples wealth and as a
21、 result may increase their willingness to spend. (c) increases the amount of funds that business firms can raise by selling newly-issued stock. (d) both (b) and (c) of the above. Answer: D Question Status: Previous Edition 22) A rising stock market index due to higher share prices (a) increases peop
22、les wealth and as a result may increase their willingness to spend. (b) increases the amount of funds that business firms can raise by selling newly-issued stock. (c) decreases the amount of funds that business firms can raise by selling newly-issued stock. (d) both (a) and (b) of the above. Answer:
23、 D Question Status: Previous Edition 23) A rising stock market index due to higher share prices (a) increases peoples wealth, but is unlikely to increase their willingness to spend. (b) increases peoples wealth and as a result may increase their willingness to spend. (c) decreases the amount of fund
24、s that business firms can raise by selling newly-issued stock. (d) both (a) and (c) of the above. (e) both (b) and (c) of the above. Answer: B Question Status: Previous Edition 24) A declining stock market index due to lower share prices (a) reduces peoples wealth and as a result may reduce their wi
25、llingness to spend. (b) increases peoples wealth and as a result may increase their willingness to spend. (c) increases the amount of funds that business firms can raise by selling newly-issued stock. (d) both (a) and (c) of the above. (e) both (b) and (c) of the above. Answer: A Question Status: Pr
26、evious Edition 6 Frederic S. Mishkin Economics of Money, Banking, and Financial Markets, Seventh Edition 25) A declining stock market index due to lower share prices (a) reduces peoples wealth and as a result may reduce their willingness to spend. (b) increases peoples wealth and as a result may inc
27、rease their willingness to spend. (c) decreases the amount of funds that business firms can raise by selling newly-issued stock. (d) both (a) and (c) of the above. (e) both (b) and (c) of the above. Answer: D Question Status: Previous Edition 26) Changes in stock prices (a) affect peoples wealth and
28、 their willingness to spend (b) affect firms decisions to sell stock to finance investment spending. (c) are characterized by considerable fluctuations. (d) all of the above. (e) only (a) and (b) of the above. Answer: D Question Status: Previous Edition 27) Fear of a major recession causes stock pri
29、ces to fall, which in turn causes consumer spending to (a) increase. (b) remain unchanged. (c) decrease. (d) cannot be determined. (e) none of the above. Answer: C Question Status: Study Guide 28) A common stock is a claim on a corporations (a) debt. (b) liabilities. (c) expenses. (d) employees. (e)
30、 earnings and assets. Answer: E Question Status: New 29) The decline in stock prices from 2000 through 2002 (a) increased individuals willingness to spend. (b) had no effect on individual spending. (c) reduced individuals willingness to spend. (d) increased individual wealth. (e) both (a) and (d) ar
31、e correct. Answer: C Question Status: New Chapter 1 Why Study Money, Banking, and Financial Markets? 7 30) The price of one countrys currency in terms of anothers is called (a) the exchange rate. (b) the interest rate. (c) the Dow Jones industrial average. (d) none of the above. Answer: A Question S
32、tatus: Previous Edition 31) Everything else constant, a stronger dollar will mean that (a) vacationing in England becomes more expensive. (b) vacationing in England becomes less expensive. (c) French cheese becomes more expensive. (d) Japanese cars become more expensive. Answer: B Question Status: P
33、revious Edition 32) All else constant, as the dollar becomes stronger, (a) Americans will purchase fewer foreign goods. (b) U.S. goods exported abroad will cost less in foreign countries, and so foreigners will buy more of them. (c) the U.S. is unquestionably made better off. (d) none of the above.
34、Answer: D Question Status: Previous Edition 33) Which of the following is most likely to result from a stronger dollar? (a) U.S. goods exported aboard will cost less in foreign countries, and so foreigners will buy more of them. (b) U.S. goods exported aboard will cost more in foreign countries and
35、so foreigners will buy more of them. (c) U.S. goods exported abroad will cost more in foreign countries, and so foreigners will buy fewer of them. (d) Americans will purchase fewer foreign goods. Answer: C Question Status: Previous Edition 34) A change in the exchange rate has a direct effect on Ame
36、ricans because it affects (a) the price of foreign goods to American consumers. (b) the price of American goods to foreign consumers. (c) the price Americans will pay to travel abroad. (d) the price foreigners will pay to travel to the U.S. (e) all of the above. Answer: E Question Status: Previous E
37、dition 8 Frederic S. Mishkin Economics of Money, Banking, and Financial Markets, Seventh Edition 35) A stronger dollar will likely hurt (a) textile producers in South Carolina. (b) wheat farmers in Montana. (c) automobile manufacturers in Michigan. (d) all of the above since their exports will decli
38、ne. (e) none of the above since their exports will increase. Answer: D Question Status: Previous Edition 36) A weaker dollar will likely hurt (a) textile producers in South Carolina. (b) wheat farmers in Montana. (c) automobile manufacturers in Michigan. (d) all of the above since their exports will
39、 decline. (e) none of the above since their exports will increase. Answer: E Question Status: Previous Edition 37) A stronger dollar benefits _ and hurts _. (a) American businesses; American consumers (b) American businesses; foreign businesses (c) American consumers; American businesses (d) foreign
40、 businesses; American consumers Answer: C Question Status: Previous Edition 38) A weaker dollar benefits _ and hurts _. (a) American businesses; American consumers (b) American businesses; foreign consumers (c) American consumers; American businesses (d) foreign businesses; American consumers Answer
41、: A Question Status: Previous Edition 39) From 1980 to early 1985 the dollar appreciated in value, thereby benefiting _ and harming _. (a) American businesses; American consumers (b) American businesses; foreign businesses (c) American consumers; American businesses (d) foreign businesses; American
42、consumers Answer: C Question Status: Previous Edition Chapter 1 Why Study Money, Banking, and Financial Markets? 9 40) From 1980 to early 1985 the dollar _ in value, thereby benefiting American _. (a) appreciated; consumers (b) appreciated, businesses (c) depreciated; consumers (d) depreciated, busi
43、nesses Answer: A Question Status: Previous Edition 41) From 1980 to 1985 the dollar appreciated relative to the British pound. Holding everything else constant, one would expect that, when compared to 1980, (a) more Americans traveled to England in 1985. (b) Americans imported more Shetland sweaters
44、 from England in 1985. (c) Britons imported more wine from California in 1985. (d) all of the above. (e) only (a) and (b) of the above. Answer: E Question Status: Previous Edition 42) From 1980 to 1985 the dollar appreciated relative to the British pound. Holding everything else constant, one would
45、expect that, when compared to 1980, (a) more Britons traveled to the United States in 1985. (b) Britons imported more wine from California in 1985. (c) Americans imported more Shetland sweaters from England in 1985. (d) only (a) and (b) of the above. Answer: C Question Status: Previous Edition 43) F
46、rom 1980 to 1985 the dollar appreciated relative to the British pound. Holding everything else constant, one would expect that, when compared to 1980, (a) more Britons traveled to the United States in 1985. (b) Britons imported more wine from California in 1985. (c) Americans exported more wheat to
47、England in 1985. (d) all of the above. (e) none of the above. Answer: E Question Status: Previous Edition 44) From 1980 to 1985 the dollar appreciated relative to the British pound. Holding everything else constant, one would expect that, when compared to 1980, (a) fewer Britons traveled to the Unit
48、ed States in 1985. (b) Britons imported more wine from California in 1985. (c) Americans exported more wheat to England in 1985. (d) more Britons traveled to the United States in 1985. Answer: A Question Status: Previous Edition 10 Frederic S. Mishkin Economics of Money, Banking, and Financial Marke
49、ts, Seventh Edition 45) When in 1980 a British pound cost approximately $2.40, a Shetland sweater that cost 50 British pounds would have cost $120. With a stronger dollar, the same Shetland sweater would have cost (a) less than $120. (b) more than $120. (c) $120, since the exchange rate does not affect the prices that American consumers pay for foreign goods. (d) $120, since the demand for Shetland sweaters will decrease to prevent an increase in price due to the stronger dollar. Answer: A Question
