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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 preferred method the Federal Reserve Bank uses to control the money supply?
2. Fill in the blanks.In a world where there is only direct financing, small savers would be subject to ______, because their portfolios would not be sufficiently ______.
3. Complete the following statement.Asymmetric information reduces financial transactions, because:
4. Who owns the U.S. Federal Reserve?
5. Complete the following statement.The federal funds market is the market where:
6. 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?
7. What is a secondary market?
8. In seeking to increase the money supply, the Federal Reserve Bank could do which of the following?
9. Complete the following statement.Banks are regulated because governments want them to:
10. 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?
11. Everything else remaining constant, if the risk associated with holding security increases, what will happen to the price and interest rate?
12. When the Federal Reserve Bank increases the monetary base, this is a sign that it wants which of the following to occur?
13. What are treasury bills?
14. Why are financial markets important in the economy?
15. How is risk premium defined?
16. What would be a consequence of the failure of financial markets?
17. A debt instrument can be issued by which of the following?
18. Why are bonds issued by municipalities to finance large projects attractive to investors?
19. When a business borrows directly from financial markets, it issues which of the following?
20. What is one of the major roles of central banks, such as the Federal Reserve Bank?
21. A new ten-year bond will be bought and sold in what market?
22. A deposits funds with B for safekeeping. B lends the funds to C and charges C interest.Which of the following is true?
23. What is the Federal Funds rate?
24. Financial intermediaries succeed in lending and borrowing by doing which of the following?
25. Consider whether the following statement is true or false and how so.Money is useful only when it can be held in the hand.