In the long-run equilibrium
A) output is a function of autonomous expenditures.
B) inflation is a function of past inflation.
C) inflation equals potential output.
D) output equals potential output.
A person remodeling her house could obtain a loan from a
A) sales finance company.
B) consumer finance company.
C) business finance company.
D) public finance company.
As default risk decreases, the expected return on corporate bonds ________, and the
return becomes ________ uncertain, everything else held constant.
A) increases; less
B) increases; more
C) decreases; less
D) decreases; more
A put option gives the seller the
A) right to sell the underlying security.
B) obligation to sell the underlying security.
C) right to buy the underlying security.
D) obligation to buy the underlying security.
In a study published in 1963, Milton Friedman and Anna Schwartz found that in every
business cycle they studied over nearly a hundred-year period
A) the growth rate of the money supply decreased before output decreased.
B) interest rates decreased before output decreased.
C) the growth rate of federal government spending decreased before output decreased.
D) the growth rate of state and local government spending decreased before output
decreased.
A possible sequence for the three stages of a financial crisis might be ________ leads to
________ leads to ________.
A) asset price declines; banking crises; unanticipated decline in price level
B) unanticipated decline in price level; banking crises; increase in interest rates
C) banking crises; increase in interest rates; unanticipated decline in price level
D) banking crises; increase in uncertainty; increase in interest rates
If a pension fund has sufficient contributions and earnings to pay benefits, it is said to
be
A) underfunded.
B) at par.
C) fully funded.
D) over par.
________ assume the risk of issuing a new stock in the hope of earning profits on its
sale.
A) Stock brokers
B) Securities dealers
C) Underwriters
D) Stock speculators
E) Reinsurers
If a bank manager wants to protect the bank against losses that would be incurred on its
portfolio of treasury securities should interest rates rise, he could ________ options on
financial futures.
A) buy put
B) buy call
C) sell put
D) sell call
One suggested method of dealing with the too-big-to-fail problem is to reimpose the
restrictions that were in place under
A) Glass-Steagall.
B) McFadden.
C) the Edge Act.
D) the Federal Reserve Act.
The Fed’s quantitative easing is to purchase ________ to affect credit spreads.
A) long-term securities
B) short-term securities
C) both long-term and short-term securities
D) private assets