Which of these will cause the equilibrium interest rate to rise?
A) A decrease in the supply of loanable funds
B) A decrease in the demand for loanable funds
C) An increase in the supply of loanable funds
D) A decrease in the quantity of loanable funds demanded
As a tool of monetary policy the effectiveness of the discount rate is __________
because __________.
A) Limited; banks will not borrow reserves from the Fed as long as they have ample
excess reserves no matter how low the discount rate goes
B) Limited; banks will borrow reserves from the Fed whenever they need them as long
as they have a reserve deficiency no matter how high the discount rate goes
C) very effective; changes in the discount rate leads changes in money market rates and
thus assures that the injections and withdrawals of reserves from the banking system
desired by the Fed will occur
D) very effective; banks will predictably increase borrowings from the Federal Reserve
when the discount rate decreases and decrease borrowings when the discount rate
increases
Which of the following is not in the index of leading economic indicators?
A) Average workweek
B) Initial unemployment claims
C) Building permits
D) Producer price index
FHA-VA mortgages differ from conventional mortgages in that
A) the mortgaged land and building are collateral for conventional mortgages but not
for FHA-VA mortgages.
B) FHA-VA mortgages are insured by the federal government, while conventional
mortgages are not.
C) FHA-VA mortgages involve real estate, while conventional mortgages may or may
not involve real estate.
D) conventional mortgages run for 25-30 years, but FHA-VA are considerably shorter
in duration.
The Eurodollar market is an alternative way for __________ to lend or borrow.
A) governments
B) corporations
C) banks
D) pension plans
In recent years the life insurance industry has emphasized
A) whole life policies.
B) group insurance.
C) less risky investments.
D) the purchase of short-term assets.
Suppose the marginal propensity to consume is 0.8. A $20 billion increase in
government spending shifts the IS curve
A) to the right by $100 billion.
B) to the left by $20 billion.
C) to the left by $16 billion.
D) to the right by $2.5 billion.
Generally speaking, exchange rates are determined by
A) supply and demand.
B) the International Monetary Fund.
C) interest rates.
D) differences in money growth rates.
The three main types of securities market organization are
A) primary, secondary, and tertiary markets.
B) stock, money, and bond markets.
C) public, private, and government markets.
D) auction, dealer, and brokered markets.
The larger the leverage ratio of a bank,
A) the greater the proportion of its deposits that are fully insured.
B) the smaller the proportion of its deposits that are fully insured.
C) the thicker its cushion against failure.
D) the thinner its cushion against failure.
In a private placement, a(n) __________ and __________ are sent to prospective
investors.
A) offering memorandum, term sheet
B) registration statement, term sheet
C) registration statement, offering prospectus
D) offering memorandum, offering prospectus
As of the end of 1994 which of the countries in our survey had the smallest proportion
of stock held by foreigners?
A) The United Kingdom
B) The United States
C) Japan
D) Germany
Which of the following characteristics is required of a good medium of exchange?
A) High intrinsic value
B) Low uncertainty over value in trade
C) Deteriorating exchange value over time
D) A high rate of return
Futures contracts are least likely to be traded on which of the following exchanges?
A) New York Stock Exchange
B) Chicago Board of Trade
C) Chicago Mercantile Exchange
D) All of the above are equally likely to trade futures contracts.
Asymmetric information is a particular problem for __________ firms or firms with
__________ relationship with a particular lending institution.
A) small; a longstanding
B) small; only a recent
C) large; a longstanding
D) large; only a recent
The open interest on calls __________ the open interest on puts.
A) is always equal
B) is always larger
C) is always smaller
D) has no direct relationship with
The coupon rate is equal to the
A) yield to maturity for all bonds.
B) present value of the bond.
C) real rate of return.
D) interest rate printed on the face of the bond.
In the Keynesian model, if interest rates rise above what people consider normal,
households will respond by
A) increasing the saving rate.
B) reducing the saving rate.
C) holding more money.
D) holding more bonds.