The most famous stock index is

the Dow Jones Industrial Average

The Dow Jones Industrial Average is now based on the prices of stocks of

30 representatives of US corporations

An increase in the budget deficit

shifts the supply of loanable funds to the left

Which of the following is correct

a bond buyer can sell the bond before it matures

Which bond would you expect to pay the highest interest rate?

A bond issued by a new restaurant chain

Long term bonds are generally

more risky than short term bonds so pay a higher interest

As the maturity of a bond becomes longer, the bond will

have greater risk so tend to have a greater interest

The term of the bond is the

Length of time until the bond matures

Under the fractional reserve banking system, banks

generally lend out a majority of the funds deposited

Which of the following is correct

corporations buy bonds to raise funds

Reserve requirements are regulations concerning

the amount of reserves banks must hold against deposits

A bank has a 10% reserve ratio, 5K in deposits, & it loans out all it can given the res. ratio

it has $500 in reserves and $4500 in loans

supply money to financial system, borrowers demand money

Other things being constant, when a business issues more stock

supply of the stock is greater, thus the price would fall

When large corps, the federal govt, or state & local govts need to borrow, they usually borrow

directly from the public by selling bonds

studbud

Econ Unit 3

25 termsStudBud Administration113 plays

Imported from external platform

Flashcards25 cardsFPractice quizPHost liveL

Questions 25

Answers

1
The most famous stock index is
the NASDAQ
the Dow Jones Industrial Average
none of the above
the S & P 500
2
The Dow Jones Industrial Average is now based on the prices of stocks of
none of the above
30 representatives of US corporations
300 representatives of US corporations
500 representatives of US corporations
3
D pays $10,000 to buy a bond from Apple that promises repayment in 10 years. Which is correct?
The bond matures in 10 years
D is the principle of this bond
The term of the bond is $10,000
None of the above
4
An increase in the budget deficit
shifts the demand for loanable funds to the left
shifts the supply of loanable funds to the right
Shifts the demand for loanable funds to the right
shifts the supply of loanable funds to the left
5
Which of the following is correct
maturity of the bond refers to the amount to be paid back
a bond buyer can sell the bond before it matures
principle of the bond refers to the person selling the bond
None of the above
6
Institutions that match one person's savings with another person's investment are called
Monetary System
The Federal Reserve System
The Financial System
The Banking System
7
Which bond would you expect to pay the highest interest rate?
A bond issued by New York State
A bond of the US Government
A bond issued by General Motors
A bond issued by a new restaurant chain
8
Long term bonds are generally
less risky than short term bonds so pay a lower interest
less risky than short term bonds so pay a higher interest
more risky than short term bonds so pay a lower interest
more risky than short term bonds so pay a higher interest
9
As the maturity of a bond becomes longer, the bond will
have greater risk so tend to have a greater interest
have greater risk so tend to pay a lower interest
have less risk so tend to pay a greater interest
None of the above
10
Which of the following is in M2 but not M1
Currency
Savings Deposits
Demand Deposits (Checking)
all of the above
11
The term of the bond is the
credit risk rating of the bond
interest rate of the bond
Length of time until the bond matures
principal amount of the bond
12
Under the fractional reserve banking system, banks
generally lend out a majority of the funds deposited
cause the money supply to fall by lending out reserves
all of the above
hold more reserves than deposits
13
The bond market, stock market, banks, and mutual funds are all part of the US
Investment System
Financial System
Federal Reserve
Banking System
14
The length of time until a bond matures is called
Term
Intermediation
Maturity
Duration
15
If the tax revenue of the federal government exceeds spending then the government
runs a budget deficit
runs a national debt
will increase taxes
runs a budget surplus
16
Which of the following is correct
All of the above
because they are risky, junk bonds pay low rate of interest
some bonds have terms as short as a few months
corporations buy bonds to raise funds
17
Reserve requirements are regulations concerning
the interest rate at which banks can borrow from the fed
the amount of deposits banks are allowed to accept
the amount of reserves banks must hold against deposits
the types of loans banks are allowed to make
18
A bank has a 10% reserve ratio, 5K in deposits, & it loans out all it can given the res. ratio
it has $50 in reserves and $4950 in loans
it has $500 in reserves and $4500 in loans
none of the above
it has $555 in reserves and $4445 in loans
19
You start a new company and you buy equipment and tools economists call these expenditures
Capital Investment
None of the above
Business Consumption Expenditures
Investment in Human Capital
20
On which bond is default most likely?
A municipal bond
A junk bond
A corporate bond issued by Apple
A US government bond
21
Savers
demand money from financial system, borrowers supply money
and borrowers demand money from the financial system
supply money to financial system, borrowers demand money
and borrowers supply money to the financial system
22
Compared to bonds, stocks offer the holder
potentially higher return
higher risk
all of the above
ownership in the firm
23
Other things being constant, when a business issues more stock
demand for the stock is greater, thus the price would rise
supply of the stock is greater, thus the price would fall
the demand for the stock is less, thus the price would fall
the supply of the stock is less, thus the price would rise
24
When large corps, the federal govt, or state & local govts need to borrow, they usually borrow
directly from the public by selling bonds
indirectly from the public by buying bonds
None of the above
directly from the public by buying bonds
25
Profits paid out to stockholders are
all of the above
retained earnings
dividends
the denominator in the price-earnings ratio

Econ Unit 3 Flashcards | StudBud