Money and Banking Practise Questions
Practice Questions for Money and Banking
Why Study Money, Banking, and Financial Markets: Chapter 1 Money appears to have a major influence on a. inflation. b. the business cycle. c. interest rates. d. each of the above. In the United States, monetary policy is implemented by the a. U.S. Congress b. U.S. Treasury c. Office of Thrift Supervision d. Federal Reserve The financial system provides all of the following financial services except: a. risk sharing b. provision of liquidity c. reduction of information costs d. the elimination of public debt The central bank of the United States is the a U.S. Treasury b. Federal Deposit Insurance Corporation c. Federal Reserve d. Comptroller of the Currency A higher interest rate might induce households to _____ but businesses to _____. a. save more, borrow less b. save less, borrow more c. save more, borrow more d. save less, borrow less Budget deficits are important to study in a money and banking class because a. budget deficits cause banks to fail. b. without budget deficits banks would not exist. c. budget deficits may influence the conduct of monetary policy. d. of each of the above. An increase in the growth rate of the money supply is most likely to be followed by a. a recession.
b. a decline in economic activity. c. inflation. d. all of the above. A sharp decrease in the growth rate of the money supply is most likely to be followed by a. a decline in economic activity. b an upswing in the business cycle. c. inflation. d. all of the above. Suppose that due to a fear that the United States is about to enter a long period of stagnant growth, stock prices fall by 50% on average. Predict what would happen to spending by consumers. a. spending would probably increase. b. spending would probably fall. c. spending would probably be unaffected. d. the change in spending would be ambiguous. Budget deficits can be a concern because they might a. ultimately lead to lower inflation. b. lead to lower interest rates. c. lead
Why Study Money, Banking, and Financial Markets: Chapter 1 Money appears to have a major influence on a. inflation. b. the business cycle. c. interest rates. d. each of the above. In the United States, monetary policy is implemented by the a. U.S. Congress b. U.S. Treasury c. Office of Thrift Supervision d. Federal Reserve The financial system provides all of the following financial services except: a. risk sharing b. provision of liquidity c. reduction of information costs d. the elimination of public debt The central bank of the United States is the a U.S. Treasury b. Federal Deposit Insurance Corporation c. Federal Reserve d. Comptroller of the Currency A higher interest rate might induce households to _____ but businesses to _____. a. save more, borrow less b. save less, borrow more c. save more, borrow more d. save less, borrow less Budget deficits are important to study in a money and banking class because a. budget deficits cause banks to fail. b. without budget deficits banks would not exist. c. budget deficits may influence the conduct of monetary policy. d. of each of the above. An increase in the growth rate of the money supply is most likely to be followed by a. a recession.
b. a decline in economic activity. c. inflation. d. all of the above. A sharp decrease in the growth rate of the money supply is most likely to be followed by a. a decline in economic activity. b an upswing in the business cycle. c. inflation. d. all of the above. Suppose that due to a fear that the United States is about to enter a long period of stagnant growth, stock prices fall by 50% on average. Predict what would happen to spending by consumers. a. spending would probably increase. b. spending would probably fall. c. spending would probably be unaffected. d. the change in spending would be ambiguous. Budget deficits can be a concern because they might a. ultimately lead to lower inflation. b. lead to lower interest rates. c. lead