A factor that contributed to financial globalization was the shift of developed countries from:

fixed exchange rates to floating exchange rates.

When an emerging market suffers an economic decline, foreign investors usually:

quickly withdraw their money from the emerging market.

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BF21 - 5.02 Understand financial markets

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5.02 Understand financial markets to recognize their importance in business

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Questions 13

Answers

1
When the Consumer Price Index (CPI) increases sharply, stock prices usually:
fluctuate daily.
rise.
stay the same.
fall.
2
In calculating GDP, economists try to avoid double counting because it would:
increase the price of products.
inflate the value of GDP.
cause legal problems.
lower the standard of living.
3
A factor that contributed to financial globalization was the shift of developed countries from:
floating exchange rates to fixed exchange rates.
pegged exchange rates to declining exchange rates.
fixed exchange rates to floating exchange rates.
declining exchange rates to pegged exchange rates.
4
One factor that has stimulated financial globalization is the increase in:
foreign regulation.
protectionism.
investment preferences.
domestic competition.
5
Falling interest rates typically cause:
a stock market to crash.
no change in stock prices.
stock prices to increase.
stock prices to decrease.
6
This year’s nominal GDP is higher than last year’s even though production stayed the same. Why?
a trade deficit.
increased imports.
inflation.
unemployment.
7
A decline in the financial markets can be caused by:
lower inflation.
higher employment.
higher unemployment.
growth in major industry sectors.
8
When nominal gross domestic product (GNP) rises, the money supply typically:
decreases.
fluctuates daily.
stays the same.
increases.
9
Ups and downs in the level of economic activity over a period of time are called a/an:
economic system.
economic growth.
inventory level.
business cycle.
10
When an emerging market suffers an economic decline, foreign investors usually:
quickly withdraw their money from the emerging market.
use the opportunity to invest more in the emerging market.
pay less for each transaction in the emerging market.
help the emerging market to recover economically.
11
What do bond yields typically do during an economic expansion?
drop to near zero
remain unchanged
gradually decrease
increase
12
Gross domestic product that has been adjusted for inflation is known as:
capital goods.
GDP per capita.
aggregate demand.
real GDP.
13
The period of time during the business cycle when production and employment increase is
trough.
expansion.
peak.
contraction.

BF21 - 5.02 Understand financial markets Flashcards | StudBud