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Money, Banking, and Financial Markets Practice Test: The Basics
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Money, Banking, and Financial Markets Practice Test: The Basics
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25 Questions

1. A financial crisis is
2. ________ theory relates changes in the quantity of money to changes in aggregate economic activity and the price level.
3. American farmers who sell beef to Europe benefit most from
4. From 1980 to early 1985 the dollar ________ in value, thereby benefiting American ________.
5. An increase in interest rates might ________ saving because more can be earned in interest income.
6. Everything else held constant, a stronger dollar benefits ________ and hurts ________.
7. Money is defined as
8. Banks, savings and loan associations, mutual savings banks, and credit unions
9. Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called
10. Nominal GDP is output measured in ________ prices while real GDP is output measured in ________ prices.
11. The Dow reached a peak of over 11,000 before the collapse of the ________ bubble in 2000.
12. GDP measured with constant prices is referred to as
13. Everything else constant, a stronger dollar will mean that
14. If the price of a euro (the European currency) increases from $1.00 to $1.10, then, everything else held constant,
15. Everything else held constant, Americans who love French wine benefit most from
16. The measure of the aggregate price level that is most frequently reported in the media is the________.
17. A sharp increase in the growth of the money supply is likely followed by
18. If your nominal income in 2002 was $50,000, and prices doubled between 2002 and 2008, to have the same real income, your nominal income in 2008 must be
19. Which of the following is a true statement?
20. Everything else held constant, a decline in interest rates will cause spending on housing to
21. Financial markets promote economic efficiency by
22. ________ policy involves decisions about government spending and taxation.
23. Between 1950 and 1980 in the U.S., interest rates trended upward. During this same time period,
24. If ten years ago the prices of the items bought last month by the average consumer would have been much higher, then one can likely conclude that
25. The management of money and interest rates is called ________ policy and is conducted by a nationʹs ________ bank.