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Econ 345 Money & Banking Midterm 1 With Complete Solutions Latest Update 2024
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Econ 345 Money & Banking Midterm 1 With Complete Solutions Latest Update 2024
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Econ 345 Money & Banking Midterm 1 WithComplete Solutions Latest Update 2024
Financial markets promote economic efficiency by - ANS channeling funds to those
who have a productive use for them
Markets in which funds are transferred from those who do not have a productive
use for them to those who do are called - ANS Financial markets
A security is also known as - ANS a financial instrument
The interest rate on long-term corporate bonds is _____, on average than other
interest rates. The spread between it an other rates _______ over time. - ANS
higher, fluctuates
An increase in interest rates might ______ saving because more can be earned in
interest income - ANS encourage
Everything else held constant, and increase in interest rates on student loans
________ - ANS may increase the cost of education
A share of common stock is a claim on a corporation's - ANS earnings and assets
,Lower interest rates might cause a corporation to ________ building a new plant
that would provide more jobs - ANS consider
The stock market is important because it is - ANS the most widely followed
financial market in Canada
Changes in stock prices _________ - ANS affect firms' decisions to sell stock to
finance investment spending
Channeling funds from individuals with savings to those desiring funds when the
saver does not purchase the borrower's security is known as ________ - ANS
Financial intermediation
Financial crises are characterized by ________. - ANS decline in asset prices
Chartered banks, trust and mortgage loan companies, and credit unions and
caisses populaires________. - ANS accept deposits and make loans
Which of the following are the largest financial intermediaries in the Canadian
economy? - ANS Banks
Prior to all recessions, there has been a drop in ________. - ANS the rate of money
growth
, ________ theory relates changes in the quantity of money to changes in aggregate
economic activity and the price level. - ANS Monetary
A sharp increase in the growth of the money supply is likely followed by ________.
- ANS an increase in the inflation rate
Which of the following is a true statement? - ANS The average price of goods and
services in an economy is called the aggregate price level.
There is a ________ association between inflation and the growth rate of money
________. - ANS positive; supply
A budget ________ occurs when government expenditures exceed tax revenues
for a particular time period. - ANS deficit
Budget deficits areimportant because deficits ________. - ANS may lead to a
financial crisis
Canadian companies can borrow funds ________. - ANS in both Canadian and
foreign financial markets
The price of one country's currency in terms of another country's currency is called
the ________. - ANS foreign exchange rate
The foreign exchange rate is ________. - ANS the relative price of two currencies
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