The Economics of Money, Banking and Financial Markets 13th Global Edition Test bank
15) Everything else held constant, an increase in interest rates on student loans
A) increases the cost of a college education.
B) reduces the cost of a college education.
C) has no effect on educational costs.
D) increases costs for students with no loans.
Answer: A
Question Status: Previous Edition
AACSB: Analytical Thinking
16) High interest rates might cause a corporation to ________ building a new plant that would provide more jobs.
A) complete
B) consider
C) postpone
D) contemplate
Answer: C
Question Status: Previous Edition
AACSB: Analytical Thinking
17) The stock market is
A) where interest rates are determined.
B) the most widely followed financial market in the United States.
C) where foreign exchange rates are determined.
D) the market where most borrowers get their funds.
Answer: B
Question Status: Previous Edition
AACSB: Reflective Thinking
18) Stock prices are
A) relatively stable trending upward at a steady pace.
B) relatively stable trending downward at a moderate rate.
C) extremely volatile.
D) unstable trending downward at a moderate rate.
Answer: C
Question Status: Previous Edition
AACSB: Reflective Thinking
19) A rising stock market index due to higher share prices
A) increases people's wealth, but is unlikely to increase their willingness to spend.
B) increases people's wealth and as a result may increase their willingness to spend.
C) decreases the amount of funds that business firms can raise by selling newly-issued stock.
D) decreases people's wealth, but is unlikely to increase their willingness to spend.
Answer: B
Question Status: Previous Edition
AACSB: Analytical Thinking
20) When stock prices fall
A) an individual's wealth is not affected nor is their willingness to spend.
B) a business firm will be more likely to sell stock to finance investment spending.
C) an individual's wealth may decrease but their willingness to spend is not affected.
D) an individual's wealth may decrease and their willingness to spend may decrease.
Answer: D
Question Status: Previous Edition
AACSB: Analytical Thinking
21) Changes in stock prices
A) do not affect people's wealth and their willingness to spend.
B) affect firms' decisions to sell stock to finance investment spending.
C) occur in regular patterns.
D) are unimportant to decision makers.
Answer: B
Question Status: Previous Edition
AACSB: Reflective Thinking
22) An increase in stock prices ________ the size of people's wealth and may ________ their willingness to spend, everything else held constant.
A) increases; increase
B) increases; decrease
C) decreases; increase
D) decreases; decrease
Answer: A
Question Status: Previous Edition
AACSB: Analytical Thinking
23) Low stock market prices might ________ consumers willingness to spend and might ________ businesses willingness to undertake investment projects.
A) increase; increase
B) increase; decrease
C) decrease; decrease
D) decrease; increase
Answer: C
Question Status: Previous Edition
AACSB: Analytical Thinking
24) Fear of a major recession causes stock prices to fall, everything else held constant, which in turn causes consumer spending to
A) increase.
B) remain unchanged.
C) decrease.
D) cannot be determined.
Answer: C
Question Status: Previous Edition
AACSB: Reflective Thinking
25) A share of common stock is a claim on a corporation's
A) debt.
B) liabilities.
C) expenses.
D) earnings and assets.
Answer: D
Question Status: Previous Edition
AACSB: Application of Knowledge
26) On ________, October 19, 1987, the stock market experienced its worst one-day drop in its entire history with the DJIA falling by 22%.
A) "Terrible Tuesday"
B) "Woeful Wednesday"
C) "Freaky Friday"
D) "Black Monday"
Answer: D
Question Status: Previous Edition
AACSB: Application of Knowledge
27) A decline in stock prices
A) increases individuals' willingness to spend.
B) has no effect on individual spending.
C) reduces individuals' willingness to spend.
D) increases individual wealth.
Answer: C
Question Status: Revised
AACSB: Analytical Thinking