Economics of Money, Banking and Financial Markets 12th edition by Frederic Mishkin Test bank
B) stock; bond
C) stock; debt security
D) bond; debt security
Answer: A
Ques Status: Previous Edition
AACSB: Application of Knowledge
30) What is a stock? How do stocks affect the economy?
Answer: A stock represents a share of ownership of a corporation, or a claim on a firm's earnings/assets. Stocks are part of wealth, and changes in their value affect people's willingness to spend. Changes in stock prices affect a firm's ability to raise funds, and thus their investment.
Ques Status: Previous Edition
AACSB: Application of Knowledge
31) Why is it important to understand the bond market?
Answer: The bond market supports economic activity by enabling the government and corporations to borrow to undertake their projects and it is the market where interest rates are determined.
Ques Status: Previous Edition
AACSB: Application of Knowledge
1.2 Why Study Financial Institutions and Banking?
1) Channeling funds from individuals with surplus funds to those desiring funds when the saver does not purchase the borrower's security is known as
A) barter.
B) redistribution.
C) financial intermediation.
D) taxation.
Answer: C
Ques Status: Previous Edition
AACSB: Application of Knowledge
2) A financial crisis is
A) not possible in the modern financial environment.
B) a major disruption in the financial markets.
C) a feature of developing economies only.
D) typically followed by an economic boom.
Answer: B
Ques Status: Previous Edition
AACSB: Application of Knowledge
3) Banks are important to the study of money and the economy because they
A) channel funds from investors to savers.
B) have been a source of rapid financial innovation.
C) are the only important financial institution in the U.S. economy.
D) create inflation.
Answer: B
Ques Status: Previous Edition
AACSB: Reflective Thinking
4) Banks
A) provide a channel for linking those who want to save with those who want to invest.
B) produce nothing of value and are therefore a drain on society's resources.
C) are the only financial institutions allowed to give loans.
D) hold very little of the average American's wealth.
Answer: A
Ques Status: Previous Edition
AACSB: Reflective Thinking
5) Banks, savings and loan associations, mutual savings banks, and credit unions
A) are no longer important players in financial intermediation.
B) since deregulation now provide services only to small depositors.
C) have been adept at innovating in response to changes in the regulatory environment.
D) produce nothing of value and are therefore a drain on society's resources.
Answer: C
Ques Status: Previous Edition
AACSB: Reflective Thinking
6) Financial institutions search for ________ has resulted in many financial innovations.
A) higher profits
B) regulations
C) respect
D) higher risk
Answer: A
Ques Status: Previous Edition
AACSB: Application of Knowledge
7) Banks and other financial institutions engage in financial intermediation, which
A) can hurt the performance of the economy.
B) can benefit economic performance.
C) has no effect on economic performance.