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1) Which of the following statements about the characteristics of debt and equities is
true?
A) They can both be long-term financial instruments
B) Bond holders are residual claimants
C) The income from bonds is typically more variable than that from equities
D) Bonds pay dividends
2) Everything else held constant, a decrease in net exports ________ aggregate
________
A) increases; demand
B) decreases; demand
C) decreases; supply
D) increases; supply
3) US banks have most of their branches in
A) Latin America, the Far East, the Caribbean, and London
B) Latin America, the Middle East, the Caribbean, and London
C) Mexico, the Middle East, the Caribbean, and London
D) South America, the Middle East, the Caribbean, and Canada
4) When economists say that money promotes ________, they mean that money
encourages specialization and the division of labor
A) bargaining
B) contracting
C) efficiency
D) greed
5) Bank consolidation will likely result in
A) less competition
B) the elimination of community banks
C) increased competition
D) a shift in assets from larger banks to smaller banks
6) In the late 1990s and early 2000s, the Japanese economy has experienced
A) easy monetary policy as indicated by falling nominal interest rates
B) easy monetary policy as indicated by short-term interest rates near zero
C) tight monetary policy as indicated by falling asset prices
D) tight monetary policy as indicated by short-term interest rates near zero
7) Anything that increases the demand for foreign goods relative to domestic goods
tends to ________ the domestic currency because domestic goods will only continue to
sell well if the value of the domestic currency is ________, everything else held
constant
A) depreciate; lower
B) depreciate; higher
C) appreciate; lower
D) appreciate; higher
8) Everything else held constant, if aggregate output is to the ________ of the LM
curve, then there is an excess ________ of money which will cause the interest rate to
rise
A) right; supply
B) right; demand
C) left; supply
D) left; demand
9) Everything else held constant, an increase in the liquidity of bonds results in a
________ in demand for bonds and the demand curve shifts to the ________
A) rise; right
B) rise; left
C) fall; right
D) fall; left
10) The immediate (two-day) exchange of one currency for another is a
A) forward transaction
B) spot transaction
C) money transaction
D) exchange transaction
