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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. When a business borrows directly from financial markets, it issues which of the following?
2. How do financial markets promote economic efficiency?
3. Complete the following statement.The more easily a security can be sold and bought:
4. Fill in the blanks.By lending to many borrowers, financial intermediaries ______ through ______.
5. In Table 1 below, what will be the interest rate on a two-year bond?
TABLE 1
Expected interest rate on one-year bonds over the next five years is as follows:
6. Money functions as which of the following?
7. Why are bonds issued by municipalities to finance large projects attractive to investors?
8. One of the ways the Federal Reserve Bank can control the money supply is to do which of the following?
9. Complete the following statement.The effectiveness of monetary policy is often said to be asymmetric.This means that monetary policy is:
10. A firm accepts and keeps funds for several people with the promise that they can withdraw them anytime they want.The same firm then lends the funds to borrowers. Which of the following best identifies this type of firm?
11. To achieve the mandate of full employment, the Federal Reserve Bank could do which of the following?
12. When the central bank sells securities, what does it seek to do?
13. The Federal Open Market Committee (FOMC) of the Federal Reserve Bank is primarily responsible for which of the following?
14. Treasury bills are issued by which of the following?
15. 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?
16. Which of the following reasons explains why financial institutions are heavily regulated?
17. The central bank can influence economic activity by doing which of the following?
18. Fill in the blanks.Financial markets foster economic growth by facilitating the transfer of funds from ______ to ______.
19. You buy a municipal bond with a face value of $1,000.00.The fixed interest payment is $100.00 a year.The bond matures in ten years.Five years before maturity, you sell the bond for $1,000.00.What will the rate of return be?
20. In a certain society, people use shells as a means of payment and store of value.The unit of account is gold.Which of the following is true of this economy?
21. Who are the participants in financial markets?
22. Fill in the blanks.Financial intermediaries are efficient at moving funds from savers to borrowers, because they ______ by ______.
23. Amelia gives Ben a one-hundred dollar loan payable in a year.She tells him that when he repays her, he should make sure that the repayment can buy as many hamburgers as the initial one hundred dollars bought.What would be the correct inference from Amelia's stipulation?
24. Loans to households to buy houses generate which of the following?
25. The U.S. government is running a big budget deficit and plans to finance the deficit by borrowing.If everything else remaining constant, then what will happen to the demand for bonds?

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