Term
| How many prices would a trader of a particular good need to know in a barter economy with 5 goods? |
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Definition
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Term
| Kate buys a share of Google. Google uses the funds raised from selling its stock to expand its operations into Asia. This is an example of: |
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Definition
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Term
| A bank is a financial intermediary. Which of the following statements is most accurate? |
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Definition
The bank's depositors are the ultimate lenders, while those seeking loans from the bank are the ultimate spenders |
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Term
| Which of the following statements is most correct |
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Definition
| Financial instruments are created to transfer risks that are relatively easy to predict |
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Term
| Asymmetric information in financial markets is a potential problem usually resulting from: |
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Definition
| Borrowers having more information than the lenders, and not disclosing this information |
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Term
| The owner of a small business applies for a bank loan and tells the loan officer that the funds will be used to expand inventory for the upcoming holiday season. The small business finds itself in need of additional funds to meet the monthly rent for the next quarter and the owner uses the loan proceeds to pay the rent. This is an example of: |
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Definition
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Term
| Uncertainties that are not quantifiable... |
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Definition
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Term
| If a fair coin is tossed, the probability of coming up with a head or a tail is: |
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Definition
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Term
| If a bond's rating improves it should cause: |
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Definition
The bond's price to increase and its yield to decrease, all other factors constant |
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Term
| The U.S. Treasury Yield Curve: |
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Definition
| Shows the relationship among bonds with the same risk characteristics but different maturities |
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Term
| The reason financial intermediaries play such an important role in economies has to do with all of the following except: |
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Definition
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Term
| When a bank takes savings from many small savers and lends it to many borrowers, the bank: |
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Definition
| Decreases the risk to savers through diversification |
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Term
| Over the past half century, the proportion of banks' total assets held as securities has: |
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Definition
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Term
| Commercial banks increased their involvement in mortgages over the years due to: |
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Definition
| The ability to securitize mortgages which made them more liquid |
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Term
| Money Center Banks differ from community banks in all of the following ways except: |
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Definition
| They are usually much smaller |
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Term
| A bank's off-balance-sheet activities usually: |
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Definition
| Increase its net income but do not change its assets or liabilities |
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Term
| In the ten years after the FDIC limit was increased to $100,000 |
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Definition
| More than four times the number of banks and savings and loans failed than did during the first 46 years of FDIC's existence |
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Term
| Since the 1920's, the ratio of assets to capital has almost tripled for commercial banks. Many economists believe this is the direct result of: |
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Definition
| Gov't provided deposit insurance |
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Term
| The bank failures that occurred during the early years of the Great Depression: |
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Definition
| Hurt small depositors the most, since it was mostly small banks that failed |
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Term
| Which of the following is an accurate statement about universal banks? |
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Definition
| As in Germany, universal banks in the United States do everything under one roof, including direct investment in the shares of nonfinancial firms |
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Term
| In its role as the bankers' bank, a central bank performs each of the following, except: |
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Definition
| Providing deposit insurance |
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Term
| The Federal Funds rate is stated as: |
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Definition
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Term
| Which of the following statements best completes the following: "The Fed's independence can only be revoked by …"? |
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Definition
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Term
| If Bank A sells a $100,000 U.S. Treasury bond to the Fed, Bank A's required reserves will: |
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Definition
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Term
| If the Fed were to increase the required reserve rate from ten percent to twenty percent, the simple deposit expansion multiplier would: |
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Definition
| Be half as large as it was before the increase |
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Term
| If the required reserve rate is ten percent and banks do not hold any excess reserves and there are no changes in currency holdings, a $1 million open market purchase by the Fed will result in what change in loans? |
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Definition
| An increase of $10 million |
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Term
| One outcome that would result if the Fed paid interest on reserves would be: |
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Definition
| The federal government's deficit would be larger (or surplus smaller) |
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Term
| If the market federal funds rate were below the target rate, the response from the Fed would likely be to: |
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Definition
| Sell U.S. Treasury Securities |
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Term
| The main purpose of reserve requirements today is to: |
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Definition
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Term
| If reserve demand is volatile, in order for the central bank to keep interest rates from being volatile, it must: |
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Definition
| Let the quantity of reserves fluctuate |
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