Financial Institutions, Instruments and Markets 9th Edition by Christopher Viney Test bank

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114. The fundamental cause of a crisis is established in the boom period. Describe how a financial crisis starts in the boom. You can illustrate this with either the Asian financial crisis or the sub-prime mortgage crisis.
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115. Explain why restrictions on capital movements are not consistent with globalisation.
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Chapter 01 Testbank Key
 
1. The exchange of goods and services is made more efficient by:
A. barters.
B. money.
C. governments.
D. some combination of government transfer and barter.
Ans: B
AACSB: Communication
Bloom's: Knowledge
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.02 Explain the functions of a modern financial system and categorise the main types of financial institutions, including depository financial institutions, investment banks, contractual savings institutions, finance companies and unit trusts.
Section: Introduction
Topic: Introduction


 
2. The term ‘medium of exchange' for money refers to its use as:
A. coinage.
B. currency.
C. something that is widely accepted as payment for goods and services.
D. any standard of value that prices can be expressed in.
Ans: C
AACSB: Reflective thinking
Bloom's: Knowledge
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.02 Explain the functions of a modern financial system and categorise the main types of financial institutions, including depository financial institutions, investment banks, contractual savings institutions, finance companies and unit trusts.
Section: Introduction
Topic: Introduction


 
3. The role of money as a store of value refers to:
A. the value of money falling only when the money supply falls.
B. the value of money falling only when the money supply increases.
C. the fact that money allows worth to be stored readily.
D. the fact that money never loses its value compared with other assets.
Ans: C
AACSB: Communication
Bloom's: Knowledge
Difficulty: Medium
Est time: <1 minute
Learning Objective: 1.02 Explain the functions of a modern financial system and categorise the main types of financial institutions, including depository financial institutions, investment banks, contractual savings institutions, finance companies and unit trusts.
Section: Introduction
Topic: Introduction


 
4. Money increases economic growth by assisting transfers from:
A. consumers to investors.
B. savers to borrowers.
C. businesses to consumers.
D. borrowers to investors.
Ans: B
AACSB: Reflective thinking
Bloom's: Synthesis
Difficulty: Medium
Est time: <1 minute
Learning Objective: 1.02 Explain the functions of a modern financial system and categorise the main types of financial institutions, including depository financial institutions, investment banks, contractual savings institutions, finance companies and unit trusts.
Section: Introduction
Topic: Introduction


 
5. Financial markets have developed to facilitate the exchange of money between savers and borrowers. Which of the following is NOT a function of money?
A. A store of value
B. A medium of exchange for settling economic transactions
C. A claim to future cash flows
D. Short-term protection against inflation
Ans: C
AACSB: Communication
Bloom's: Knowledge
Difficulty: Medium
Est time: <1 minute
Learning Objective: 1.02 Explain the functions of a modern financial system and categorise the main types of financial institutions, including depository financial institutions, investment banks, contractual savings institutions, finance companies and unit trusts.
Section: Introduction
Topic: Introduction


 
6. Buyers of financial claims lend their excess funds because they:
A. expect to borrow extra funds in the future.
B. want surplus funds in the future.
C. want to invest in the future.
D. want to increase their costs relative to their incomes.
Ans: B
AACSB: Communication
Bloom's: Knowledge
Difficulty: Medium
Est time: <1 minute
Learning Objective: 1.02 Explain the functions of a modern financial system and categorise the main types of financial institutions, including depository financial institutions, investment banks, contractual savings institutions, finance companies and unit trusts.
Section: Introduction
Topic: Introduction