,Economics of Money, Banking, and Financial Markets 6e (Mishkin)
Chapter 1 Why Study Money, Banking, and Financial Markets?
1.1 Why Study Financial Markets?
1) Financial markets promote economic efficiency by ________.
A) channelling funds from investors to savers
B) creating inflation
C) channelling funds to those who have a productive use for them
D) reducing investment
Answer: C
Diff: 1 Type: MC
Skill: Recall
Objective: 1.1 Recognize the importance of financial markets in the economy.
2) Well-functioning financial markets promote ________.
A) inflation
B) deflation
C) unemployment
D) economic growth
Answer: D
Diff: 1 Type: MC
Skill: Recall
Objective: 1.1 Recognize the importance of financial markets in the economy.
3) A key factor in producing high economic growth is ________.
A) eliminating foreign trade
B) well-functioning financial markets
C) high interest rates
D) stock market volatility
Answer: B
Diff: 1 Type: MC
Skill: Recall
Objective: 1.1 Recognize the importance of financial markets in the economy.
4) Markets in which funds are transferred from those who do not have a productive use for
them to those who do are called ________.
A) commodity markets
B) fund-available markets
C) derivative exchange markets
D) financial markets
Answer: D
Diff: 1 Type: MC
Skill: Recall
Objective: 1.1 Recognize the importance of financial markets in the economy.
, 5) ________ markets transfer funds from people who do not have a productive use for them to
people who do.
A) Commodity
B) Fund-available
C) Financial
D) Derivative exchange
Answer: C
Diff: 1 Type: MC
Skill: Recall
Objective: 1.1 Recognize the importance of financial markets in the economy.
6) Poorly performing financial markets can be the cause of ________.
A) wealth
B) poverty
C) financial stability
D) financial expansion
Answer: B
Diff: 1 Type: MC
Skill: Recall
Objective: 1.1 Recognize the importance of financial markets in the economy.
7) The bond markets are important because they are ________.
A) easily the most widely followed financial markets in Canada
B) the markets where foreign exchange rates are determined
C) where corporations and governments borrow to finance their activities
D) the markets where all borrowers get their funds
Answer: C
Diff: 1 Type: MC
Skill: Recall
Objective: 1.1 Recognize the importance of financial markets in the economy.
8) A security is also known as ________.
A) a financial instrument
B) a contingent claim
C) the interest rate
D) a liability
Answer: A
Diff: 1 Type: MC
Skill: Applied
Objective: 1.1 Recognize the importance of financial markets in the economy.
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