Economics of Money, Banking and Financial Markets 12th edition by Frederic Mishkin Test bank
C) more; higher
D) less; higher
Answer: A
Ques Status: Previous Edition
AACSB: Reflective Thinking
11) The interest rate on Baa corporate bonds is ________, on average, than interest rates on Treasuries, and the spread between these rates became ________ in the 1970s.
A) lower; smaller
B) lower; larger
C) higher; smaller
D) higher; larger
Answer: D
Ques Status: Previous Edition
AACSB: Reflective Thinking
12) Everything else held constant, a decline in interest rates will cause spending on housing to
A) fall.
B) remain unchanged.
C) either rise, fall, or remain the same.
D) rise.
Answer: D
Ques Status: Previous Edition
AACSB: Analytical Thinking
13) High interest rates might ________ purchasing a house or car but at the same time high interest rates might ________ saving.
A) discourage; encourage
B) discourage; discourage
C) encourage; encourage
D) encourage; discourage
Answer: A
Ques Status: Previous Edition
AACSB: Analytical Thinking
14) An increase in interest rates might ________ saving because more can be earned in interest income.
A) encourage
B) discourage
C) disallow
D) invalidate
Answer: A
Ques Status: Previous Edition
AACSB: Analytical Thinking
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
Ques 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
Ques 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
Ques 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
Ques 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
Ques Status: Previous Edition
AACSB: Analytical Thinking