Which of the following will cause the LM curve to shift to the left?
A) A decrease in investment
B) A decrease in money demand
C) An increase in velocity
D) A decrease in the money supply
A vertical Phillips Curve is consistent with
A) a constant price level.
B) constant velocity.
C) an upward sloping aggregate supply curve.
D) a vertical aggregate supply curve.
The Treasury bill auction is over when the market reaches the
A) highest bid.
B) stop-out price.
C) discount price.
D) optimal price.
For investors, commercial paper is a close substitute for
A) U.S. Treasury bills.
B) U.S. Treasury bonds.
C) corporate bonds.
D) municipal bonds.
The assumption of variable velocity translates to, in IS-LM analysis, __________
curves.
A) downward sloping IS
B) vertical IS
C) upward sloping LM
D) vertical LM
Unlike most companies, financial intermediaries
A) carry financial instruments only on the liabilities side of their balance sheet.
B) carry financial instruments only on the asset side of their balance sheet.
C) carry financial instruments on both sides of the balance sheet.
D) have no debt.
The issuer of a bond is a
A) borrower.
B) creditor.
C) saver.
D) lender.
An investor wishing to minimize the risk of capital losses as a result of changing
interest rates should avoid
A) U.S. savings bonds.
B) U.S. Treasury notes.
C) U.S. Treasury bills.
D) U.S. Treasury bonds.
In the Classical model, the price level is determined by
A) aggregate supply.
B) the level of output.
C) the Cambridge k.
D) aggregate demand.
In which country is the central bank more independent than the Federal Reserve?
A) Germany
B) Japan
C) Great Britain
D) All of the above.
The two kinds of yields used in the Treasury bill market are the
A) coupon equivalent yield and yield on a discount basis.
B) face yield and discount yield.
C) nominal yield and real yield.
D) yield to maturity and coupon equivalent yield.
Which of the following does NOT appear on a prospectus?
A) The price of the securities being issued
B) The salaries of the borrowing firm’s top executives
C) Audited financial statements of the borrower
D) An explanation of any unusual rights granted to stockholders
Some amount of every security in existence is held in the hypothetical __________
portfolio
A) perfect
B) market
C) systematic
D) nonsystematic
The Bahamas and Cayman Islands are known for their warm, sandy beaches and their
A) Edge Act corporations.
B) shell banks.
C) section 20 affiliates.
D) high taxation.
The Glass-Steagall Act prevented commercial banks from
A) opening branches in other states unless the bank is part of a bank holding company.
B) getting into investment banking.
C) selling shares in themselves in the open market.
D) issuing commercial paper.
Along an LM curve at higher income levels the transactions demand for money is
__________, so the interest rate must be __________ to equate the demand to the fixed
supply of money.
A) higher; higher
B) higher; lower
C) lower; higher
D) lower; lower
A bank that maintains low NSF fees might also have relatively __________ loan rates,
both parts of a strategy to attract __________-than-average borrowers.
A) low; safer
B) low; riskier
C) high; safer
D) high; riskier
From the Monetarist perspective, an autonomous downward shift in investment will
A) shift the aggregate demand curve to the left.
B) shift the aggregate demand curve to the right.
C) have little effect on the aggregate demand curve.
D) cause a downward shift in the consumption function.
In corporate bond market quotations, the current yield on convertible bonds is usually
A) included as a ratio to the previous day’s high.
B) included as a ratio to the previous day’s low.
C) included as a ratio to the previous day’s close.
D) omitted.
Roughly speaking, the nominal interest rate is __________ than the real interest rate by
the amount of the expected __________.
A) higher; growth rate of real GDP
B) higher; inflation rate
C) lower; growth rate of real GDP
D) lower; inflation rate