Eco 372
Exercises – Topic 1 (Financial System and Role of Interest Rates)
1. What is produced and exchanged in the real sector?
A. Money.
B. Goods and services.
C. Financial assets.
D. All assets with a money price.
2. What is exchanged in the financial sector?
A. Money only.
B. Goods and services.
C. All financial assets.
D. All assets with a money price.
3. In a market economy, every real transaction has a corresponding:
A. financial transaction.
B. financial liability.
C. real liability.
D. real asset
4. If the financial sector causes more to flow into spending than is saved, most likely:
A. the supply of real assets will exceed the demand for real assets.
B. there will be too many real assets produced.
C. the economy will experience inflation.
D. the economy will experience recession.
5. Flows that do not enter the spending stream enter the financial sector in the form of:
A. saving.
B. investment.
C. real assets.
D. expenditures.
6. Every financial asset has a corresponding:
A. financial liability.
B. real liability.
C. real asset.
D. financial asset.
7. When you have $1,000 in a savings account at a bank:
A. the bank holds a financial asset of $1,000 and you hold a financial liability of $1,000.
B. the bank holds a financial liability of $1,000 and you hold a financial asset of $1,000.
C. both you and the bank now have a financial asset of $1,000.
D. both you and the bank now have a financial liability of $1,000.
8. The interest rate is the price paid for the use of a:
A. real liability.
B. real asset.
C. financial liability.
D. financial asset. 9. When the interest rate rises, people are:
A. less likely to save, that is, sell a financial asset.
B. more likely to save, that is, sell a financial asset.
C. less likely to save, that is, purchase a financial asset.
D. more likely to save, that is, purchase a financial asset.
10. Which of the following are examples of financial assets that pay a
1. What is produced and exchanged in the real sector?
A. Money.
B. Goods and services.
C. Financial assets.
D. All assets with a money price.
2. What is exchanged in the financial sector?
A. Money only.
B. Goods and services.
C. All financial assets.
D. All assets with a money price.
3. In a market economy, every real transaction has a corresponding:
A. financial transaction.
B. financial liability.
C. real liability.
D. real asset
4. If the financial sector causes more to flow into spending than is saved, most likely:
A. the supply of real assets will exceed the demand for real assets.
B. there will be too many real assets produced.
C. the economy will experience inflation.
D. the economy will experience recession.
5. Flows that do not enter the spending stream enter the financial sector in the form of:
A. saving.
B. investment.
C. real assets.
D. expenditures.
6. Every financial asset has a corresponding:
A. financial liability.
B. real liability.
C. real asset.
D. financial asset.
7. When you have $1,000 in a savings account at a bank:
A. the bank holds a financial asset of $1,000 and you hold a financial liability of $1,000.
B. the bank holds a financial liability of $1,000 and you hold a financial asset of $1,000.
C. both you and the bank now have a financial asset of $1,000.
D. both you and the bank now have a financial liability of $1,000.
8. The interest rate is the price paid for the use of a:
A. real liability.
B. real asset.
C. financial liability.
D. financial asset. 9. When the interest rate rises, people are:
A. less likely to save, that is, sell a financial asset.
B. more likely to save, that is, sell a financial asset.
C. less likely to save, that is, purchase a financial asset.
D. more likely to save, that is, purchase a financial asset.
10. Which of the following are examples of financial assets that pay a