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1. Suppose that when your wealth increases from $...

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1. Suppose that when your wealth increases from $100,000 to $200,000, your holdings of savings deposits increase from $10,000 to $12,000. Your wealth elasticity of demand for savings deposits then is: A) less than 1 and savings deposits are necessity asset B) greater than 1 and saings deposits are a necessity asset C) less than 1 and savings deposits are a luxury asset D) greater than 1 and savings deposits are a luxury asset 2. A bank lending depositors' money to a local business and a pension fund investing contributions in shares of a company are similar financial activities in that: A) both involve the use of financial markets B) both involve funds being channeled from savers to borrowers through financial intermediaries C) both involve a reduction in the overall level of liquidity in the financial system D) both involve in an increase in the overall level of risk in the financial system 3. Which of the following statements is correct? A) The financial sector is a large source of jobs in the U.S. economy, but a relatively small source of jobs in other major economies B) The financial sector is a relatively small source of jobs in the U.S. economy, but a large source of jobs in other major economies. C) The financial sector is a large source of jobs in the U.S. and other major economies. D) The financial sector is a relatively small but important source of jobs in the U.S. and other major economies 4. The most important reason why economies at an early stage of development tend to operate inefficiently is that: A) They tend to be dominated by the agricultural sector, where productivity is usually low. B) They tend to have authoriatarian governments that stifle innovation. C) They tend to be plagued by superstitious beliefs that stifle innovation. D) They tend not to have specialization of labor 5. The most common type of simple loan is a(an) A) automobile loan from a bank B) mortgage loan from a bank C) commercial loan from a bank D) Corporate bond 6. As wealth decreases, which of the following is likely to account for a larger fraction of a saver's portfolio? A) Corporate stock B) Corporate bonds C) U.S. government securities D) Checking account balance 7. If the equilbrium price in the bond market for a one-year discount bond is $950, then the equilibrium interest rate in the loanable funds market must be: A) 5% B) 5.26% C) 50% D) 10% 8. Which of the following rankins of sources of funds for businesses from the least important to the most important is correct? A) Stock issues, bond issues, loans from financial institutions B) Bond issues, stock issues, loans from financial institutions C) Loans from financial institiutions, stock issues, bond issues D) Loans from financial institutions, bonds issues, stock issues 9. The financial system accounts for about what percentage of the U.S. economy's value added (GDP)? A) 2% B) 22% C) 42% D) 72% 10. As a result of higher expected inflation: A) the demand and supply curves for loanable funds both shift to the right and the equilibrium interest rate usually rises. B) the demand and supply curves for loanable funds both shift to the left and the equilibrium interest rate usually falls. C) the demand curve for loanable funds shifts to the right, the supply curve for loanable funds shifts to the left, and the equilbrium interest rate usually rises. D) the demand curve for loanable funds shifts to the left, the supply curve for loanable funds shifts to the right, and the equilibrium interest rate usually rises. 11. Which of the following was an important consequence of the regulatory reforms that followed the deposit insurance crisis of the 1980s and early 1990s? A) An unprecedented consolidation of the U.S. banking industry B) A series of bank panics C) Unprecedentedly high interest rates D) New restrictions on interstate banking

 

Paper#3904 | Written in 18-Jul-2015

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