Exam (elaborations)
ECO 4223 MONEY AND BANKING QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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ECO 4223 MONEY AND BANKING QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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ECO 4223 MONEY AND BANKINGQUESTIONS AND ANSWERS WITH
SOLUTIONS 2024
Financial Markets include - ANSWER bonds, stocks, foreign exchange
Financial Institutions include - ANSWER banks, insurance companies, mutual funds
financial markets - ANSWER markets in which funds are transferred from people who have an excess of
available funds to people who have a shortage
security - ANSWER (financial instrument) is a claim on the issuers future income or assets
bond - ANSWER a debt security that promises to make payments periodically for a specified period of
time
interest rate - ANSWER the cost of borrowing funds or the price paid for the rental of funds, usually
expressed as a percentage of the amount borrowed
common stock - ANSWER represents a share of ownership in a corporation that is a security that is a
claim on the earnings and assets of the corporation
financial intermediaries - ANSWER institutions that borrow funds from people who have saved and in
turn make loans to people who need funds
banks - ANSWER financial institutions that accept deposits and make loans
what is the largest financial intermediarie - ANSWER banks
types of banks - ANSWER Commercial, savings and loan associations, mutal savings, and credit unions
,financial innovation - ANSWER the development of new financial products and services
e-finance - ANSWER the ability to deliver financial services electronically
financial crises - ANSWER major disruptions in financial markets that are characterized by sharp declines
in asset prices and the failures of many financial and non financial firms
type of financial crise - ANSWER great recession
money - ANSWER anything that is generally accepted as payment for goods and services or in the
repayment of debts
business cycle - ANSWER the upward and downward movement of aggregate output produced in the
economy
money - ANSWER plays an important role in the business cycle
recessions - ANSWER periods of declining aggregate output
monetary theory - ANSWER the theory that relates the quantity of money and monetary policy to
changes in aggregate economic activity and inflation
aggregate price level - ANSWER the average price of goods and services in an economy
Inflation - ANSWER a continuous increase in the price level, affects individuals, businesses and the
government
what might cause inflation? - ANSWER continuing increase in the money supply
inflation rate - ANSWER rate of change of the price level, measured as a % of change per year
, monetary policy - ANSWER the management of money and interest rates
central bank - ANSWER responsible for the conduct of a nations monetary policy
united states central bank - ANSWER federal reserve system
fiscal policy - ANSWER involves decisions about government spending and taxation
budget defict - ANSWER an excess of government expenditures with respect to tax revenues for a
particular time period, typically a year (borrowing)
budget surplus - ANSWER when tax revenues exceed government expenditures (low debt burden)
foreign exchange market - ANSWER where the conversion of currency from one country to another
happens
Foregin Exchange Rate - ANSWER the price of one country's currency in terms of another's is determined
Gross Domestic Product (GDP) - ANSWER is the market value of all final goods and services produced in a
country during the course of a year
aggregated income - ANSWER the total income of factors of production (land, labor, capital) from
producing goods and services in the economy during the course of the year
aggregated income = - ANSWER aggregated output
Nominal GDP - ANSWER when the total value of final goods and services is calculated using current
prices (can be misleading)
Real GPD - ANSWER measures the quantities of goods and services and does not change because prices
have changed, but rather only if actual quantiles have changed.
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