Exam (elaborations)
ECO4223 Final Exam Review: Questions & Answers
- Course
- Institution
ECO4223 Final Exam Review: Questions & Answers
[Show more]
1 review
By: samishal • 3 months ago
Seller
Follow
LeCrae
Reviews received
Content preview
ECO4223 Final Exam Review: Questions & Answers Which of the following contributes to GDP? Correct Ans - D) Value of all final goods and services.Which of the following is true regarding GDP? Correct Ans - A) GDP does not include intermediate goods, which are used to produce other final goods. (Example: Tires used to make a car)
If the CPI in 2004 is 200, and in 2005 the CPI is 180, the rate of inflation from 2004 to 2005 is Correct Ans - D) -10%
If the Nominal GDP in 2001 is $9 trillion, and 2001 real GDP in 1996 price is $6 trillion, the GDP deflator price index is Correct Ans - B) 150
If the CPI is 120 in 1996 and 180 in 2002, then between 1996 and 2002, prices
have increased by Correct Ans - D) 50%
What is the inflation rate if the GDP deflator in 2012 was 112, and the GDP deflator in 2013 was 115? Correct Ans - A) 2.68%
What is the nominal GDP in 2010, if real GDP in 2009 was $12 billion and the GDP deflator is 108? Correct Ans - D) $12.96 billion
If the expected inflation decreases, the real cost of borrowing _____________ and the supply of bonds decreases causing the supply curve to shift ____________. Correct Ans - B) Rises, shifts to the left
If the nominal rate of interest is 2 percent, and the expected inflation rate is -
10 percent, the real rate of interest is Correct Ans - C) 12%
If you expect the inflation rate to be 12% and a 1-year bond has a yield to maturity of 7%, then the real interest rate on this bond is Correct Ans - C) -5%
If you expect the inflation rate to be 15% next year and a 1-year bond has a yield to maturity of 7%, then the real interest rate on this bond is Correct Ans - C) -8% A zero coupon bond pays annual interest and has a future value of $1,000, matures in 4 years and has a yield to maturity of 6.5%. What is the present value of this bond? Correct Ans - D) $777.32
The price of a zero coupon bond and the yield to maturity are ___________ related; that is, as the yield to maturity ______________, the price of the bond ___________. Correct Ans - A) negatively, rises, falls
As the price of a coupon bond increases the YTM __________. Correct Ans - B) decreases
If the interest rate on a bond rises, and you want to sell it before maturity, you will most likely experience a _____________. Correct Ans - D) loss
The concept of ________ is based on the common-sense notion that a dollar paid to you in the future is less valuable to you than a dollar today. Correct Ans - C) present value
The problem created by asymmetric information before the transaction occurs is called ___________, while the problem created after the transaction occurred is called _____________. Correct Ans - B) adverse selection, moral hazard
Dennis notices that jackets are on sale for $99. In this case money is functioning as a Correct Ans - C) unit of account
High interest rates might __________ purchasing a house of car but at the same time high interest rates might ___________ saving. Correct Ans - C) discourage, encourage
The bond markets are important because they are Correct Ans - D) the markets where interest rates are determined
If bad credit risks are the ones who most actively seek loans then financial intermediaries face the problem of Correct Ans - A) adverse selection
An example of _________ is when a corporation uses the funds raised from selling bonds to fund corporate expansion to pay for a cruise for all of their employees and their family members. Correct Ans - D) moral hazard
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller LeCrae. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for CA$14.37. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75759 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now