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ECON302 Final Exam - Money, Banking, And Financial Markets
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MCQs on the importance of money, banking, and financial markets of a developed economy.

ECON302 Final Exam - Money, Banking, And Financial Markets
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25 Questions

1. What is the Federal Funds rate?
2. Erica borrows $1,000.00 from Jorge.Jorge demands repayment in a year in the amount of $1,100.00. What is the yield to maturity?
3. One of the ways the Federal Reserve Bank can control the money supply is to do which of the following?
4. The U.S. government is running a big budget deficit and plans to finance it by borrowing.If everything else remaining constant, then what will happen to the price of bonds and the interest rate?
5. The rate of return on a security or bond can be negative under which circumstance?
6. What would be a consequence of the failure of financial markets?
7. Treasury bills are issued by which of the following?
8. Why would the interest rate on U.S. government bonds be lower than the interest rate on Mexican government bonds?
9. Why would a modern economy not operate efficiently without money?
10. What is a Eurobond?
11. In seeking to increase the money supply, the Federal Reserve Bank could do which of the following?
12. A bond with a maturity of less than one year is classified as which of the following?
13. Which of the following is a main reason for the dominance of financial intermediaries in the economy?
14. When a person lends to a business in the financial market, the person acquires which of the following?
15. When a business borrows directly from financial markets, it issues which of the following?
16. Fill in the blanks.Financial intermediaries are efficient at moving funds from savers to borrowers, because they ______ by ______.
17. Complete the following statement.The more easily a security can be sold and bought:
18. What are equities?
19. What are treasury bills?
20. Why are financial markets important in the economy?
21. I lend funds to Jake, who has a reputation of being trustworthy.He turns around and lends the funds to Jane, whom I do not know.Which of the following characterizes Jake's role?
22. In Table 1 below, what will be the slope of the yield curve?
TABLE 1
Expected interest rate on one-year bonds over the next five years is as follows:
23. Financial intermediaries succeed in lending and borrowing by doing which of the following?
24. Complete the following statement.Asymmetric information reduces financial transactions, because:
25. A new ten-year bond will be bought and sold in what market?

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