Along an IS curve as income levels __________, saving is larger, so the interest rate
must be __________ to expand the level of investment so it will be equal to saving.
A) increase; higher
B) increase; lower
C) decrease; higher
D) decrease; lower
Suppose that Samsung, a South Korean corporation, issues bonds denominated in
dollars. These are called
A) foreign exchange bonds.
B) Eurobonds.
C) shell bonds.
D) IBFs.
A leveraged buyout is
A) a form of short-term lending to finance companies when they buy a company.
B) the acquisition of a company financed by debt.
C) the sale of commercial paper to finance purchases of bundles of securitized
non-traded loans.
D) borrowing by finance companies to make loans.
Traders in futures markets settle gains and losses each day.
A) by making margin payments.
B) by using settlement-by-offset.
C) in a process called mark-to-market settlement.
D) by making arbitrage payments.
Economic agents have an incentive to formulate expectations rationally
A) because ignoring information is usually costly.
B) to increase prices.
C) to reduce wages.
D) to ensure that all expectations are realized.
Good news about an economic indicator __________ the denominator and __________
the numerator in the stock price valuation formula.
A) raises; raises
B) raises; lowers
C) lowers; raises
D) lowers; lowers
In the Keynesian model consumption is primarily determined by __________ and
investment is primarily determined by __________.
A) the price level; income
B) income; the interest rate
C) income; the price level
D) the interest rate; income
The present value of an asset can be found by __________ the future value.
A) stripping
B) discounting
C) compounding
D) annualizing
In the Classical view, the money supply determines
A) interest rates.
B) the saving rate.
C) aggregate supply.
D) the price level.
Compared with other bonds, callable bonds usually have
A) less liquidity.
B) a higher price.
C) a higher yield.
D) low tax payments.
If the required reserve ratio is .5, the deposit contraction multiplier is
A) .5.
B) 2.
C) 2.5.
D) 5.
Eastern Europe is an information-__________ environment, which __________ the use
of securities markets for large-firm financing.
A) poor; encourages
B) poor; discourages
C) rich; encourages
D) rich; discourages
The Federal Reserve uses dynamic open market operations to
A) alter the money multiplier.
B) alter the growth path of bank reserves.
C) inject reserves temporarily into the system.
D) take reserves temporarily from the system.
An indirect flow of funds occurs when
A) funds flow from saver-lenders to borrower-spenders through financial
intermediaries.
B) funds flow from saver-lenders to borrower-spenders through financial markets.
C) funds flow to saver-lenders from borrower-spenders through financial
intermediaries.
D) funds flow to saver-lenders from borrower-spenders through financial markets.
Because of their __________ liability, corporate stockholders are more concerned with
__________.
A) limited; success than failure
B) limited; failure than success
C) unlimited; success than failure
D) unlimited; failure than success