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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. Complete the following statement.The problem of adverse selection in financial markets, which financial intermediaries have evolved to minimize, refers to the difficulty in:
2. Which of the following is the best functional definition of money?
3. Who owns the U.S. Federal Reserve?
4. 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?
5. Arianna took a one-year loan from Sammy at an interest rate of 7% at a time when expected inflation was 3%.The actual inflation turned out to be 10%.Which of the following is true?
6. When an individual takes out a loan from a bank to buy a car, the individual issues which of the following?
7. If the risk associated with holding an asset increases and expected inflation also increases, then what will happen to the equilibrium interest rate?
8. The real interest rate is measured by which of the following?
9. A deposits funds with B for safekeeping. B lends the funds to C and charges C interest.Which of the following is true?
10. The asymmetric information problem that occurs after a financial transaction is called which of the following?
11. What is one of the major roles of central banks, such as the Federal Reserve Bank?
12. As an economy grows and people's disposable income rises, what is likely to happen to the demand for foreign goods?
13. When a person lends to a business in the financial market, the person acquires which of the following?
14. Which of the following reasons accurately explains why governments regulate banks?
15. Complete the following statement.The federal funds market is the market where:
16. When a business borrows directly from a saver, the business incurs which of the following?
17. Country C commits to maintaining parity of its currency with that of country U. What inference can be drawn from such a policy with everything else being equal?
18. 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?
19. You win a lottery which promises to pay you $1,000.00 over five years in equal installments.The interest rate is 5%.The amount you won is actually closest to what amount?
20. What will make the equilibrium exchange rate increase?
21. The demand for foreign currency by U.S. businesses and citizens derives from which of the following?
22. A debt instrument can be issued by which of the following?
23. Which of the following is a main reason for the dominance of financial intermediaries in the economy?
24. Fill in the blanks.When a company wants to raise money from financial markets, it may go to _________, which will help it issue a(n) __________.
25. Everything else remaining constant, if the risk associated with holding security increases, what will happen to the price and interest rate?

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