In Keynes’ concept of the liquidity trap,
A) monetary policy becomes more effective as interest rates fall below normal.
B) people wish to hold more bonds as interest rates fall below normal.
C) people wish to hold fewer bonds as interest rates fall below normal.
D) there is a need for more liquidity in the banking system.
A bank can make new loans as long as it has
A) excess reserves.
B) required reserves.
C) reserves.
D) capital.
Lowering a fixed exchange rate by a government is called a(n) __________ of that rate.
A) devaluation
B) revaluation
C) appreciation
D) depreciation
It is not surprising to see a rather __________ volume of mergers and acquisitions in
Germany given how its __________ conflicts are resolved.
A) high; shareholder-lender
B) high; manager-stockholder
C) low; shareholder-lender
D) low; manager-stockholder
All of the following explain the impact lag except the time between
A) a change in the money supply and a change in interest rates.
B) a change in interest rates and a change in investment.
C) a change in investment and the change in GDP.
D) a change in the economy and the use of a tool of monetary policy.
When borrower-spenders raise funds in financial markets, they issue new securities in
the
A) primary market.
B) secondary market.
C) third market.
D) fourth market.
In a typical year, about __________ of bank business loans in the United States are
made by foreign-owned banks through their branches here.
A) ten percent
B) twenty percent
C) one-third
D) one-half
Private placements are a particularly important type of financing for __________ firms.
A) very small
B) small
C) mid-size
D) large
“Insider trading” laws are meant to prevent
A) the executives of a corporation from holding a majority of its outstanding shares.
B) buying or selling shares based on information not available to the public.
C) foreign investors from gaining controlling interest in U.S. corporations.
D) the issuing of bonds for the purpose of buying stock.
Commercial banks are likely to
A) require a liquidity premium to hold long-term securities.
B) purchase equally in each maturity segment of the market.
C) view similar securities of different maturities as close substitutes.
D) have a preference for long-term securities.
Which of the following is an example of a Federal Reserve operating target?
A) Federal funds rate
B) Unemployment rate
C) Non-financial debt
D) M2
Because women have a longer average life span than men, they pay
A) more for health insurance.
B) less for health insurance.
C) more for life insurance.
D) less for life insurance.
High transactions costs are reflected in
A) wide bid-asked spreads.
B) narrow bid-asked spreads.
C) high equilibrium prices.
D) low equilibrium prices.
“A rise in the money supply raised output in the short run, but left output unaffected in
the long run.” This statement implies that the price level __________ in the long run,
causing the interest rate to __________.
A) rose; rise
B) rose; fall
C) fell; rise
D) fell; fall
On the New York Stock Exchange, the specialist at a “post” acts as a(n)
A) broker.
B) auctioneer.
C) dealer.
D) underwriter.
A(n) __________ in consumer spending will __________ the demand for reserves,
resulting in a __________ federal funds rate.
A) increase; raise; lower
B) increase; raise; higher
C) decrease; raise; higher
D) decrease; lower; higher
Another term for “don’t put all your eggs in one basket” is
A) moral hazard.
B) indirect finance.
C) asymmetric information.
D) portfolio diversification.
The minimum-leverage-ratio approach to capital adequacy requirements
A) has been dominant since the 1930s.
B) was phased out in the 1990s.
C) was adopted in the 1990s.
D) has never been implemented.
If prices rise in the United States, everything else constant, the dollar __________
against the yen and the yen __________ against the dollar.
A) appreciates; appreciates
B) appreciates; depreciates
C) depreciates; appreciates
D) depreciates; depreciates
Property and casualty insurance companies are supervised and regulated by the
A) Federal Home Loan Bank Board.
B) Securities and Exchange Commission.
C) states in which they operate.
D) Federal Reserve.
A major purchaser of corporate bonds is
A) state and local governments.
B) money market mutual funds.
C) pension and retirement funds.
D) the Federal Reserve.