Economic Question

Topics: Economics, Money, Currency Pages: 3 (520 words) Published: April 14, 2013
EXERCISE 1

ECO551

1) Financial markets promote economic efficiency by
A) channeling funds from investors to savers.
B) creating inflation.
C) channeling funds from savers to investors.
D) reducing investment.

2) Financial markets promote greater economic efficiency by channeling funds from ________ to ________. A) investors; savers
B) borrowers; savers
C) savers; borrowers
D) savers; lenders

3) Well-functioning financial markets promote
A) inflation.
B) deflation.
C) unemployment.
D) growth.

4) 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.

5) Poorly performing financial markets can be the cause of
A) wealth.
B) poverty.
C) financial stability.
D) financial expansion.

6) The bond markets are important because they are
A) easily the most widely followed financial markets in the United States. B) the markets where foreign exchange rates are determined.
C) the markets where interest rates are determined.
D) the markets where all borrowers get their funds.

7) ________ is used to make purchases while ________ is the total collection of pieces of property that serve to store value. A) Money; income
B) Wealth; income
C) Income; money
D) Money; wealth

8) The difference between money and income is that
A) money is a flow and income is a stock.
B) money is a stock and income is a flow.
C) there is no differencemoney and income are both stocks. D) there is no differencemoney and income are both flows.

9) Of money's three functions, the one that distinguishes money from other assets is its function as a A) store of value.
B) unit of account.
C) standard of deferred payment.
D) medium of exchange.

10) Compared to an economy that uses a medium of exchange, in a barter economy A) transaction costs are higher.
B) transaction costs are lower.
C) liquidity...
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