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ECO 4223 Exam Questions And Correct Answers
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ECO 4223 Exam Questions And Correct AnswersWhat is the normal relationship among interest rates on 6-month Treasury bills, 10-year
Treasury notes, and Baa corporate bonds? - Answer They tend to move together over
time with the corporate bond having the highest rate of interest
Your response is correct.
If interest rates decline, how might businesses and consumers change their economic
behavior? - Answer There will be more consumption spending on interest-sensitive
items and more investment by businesses.
How does a fall in the value of the pound sterling affect British consumers?
A fall in the value of the pound will cause American businesses to be _________ - Answer
Foreign goods are now relatively more expensive; British consumers are hurt
worse off
When the dollar is worth less in relation to currencies of other countries, are you more
likely to buy American-made or foreign-made electronics?
you would be more likely to purchase - Answer U.S. produced products
Are U.S. firms that produce semi-conductors happier when the dollar is strong or when
it is weak?
semi-conductor producers are happier when the dollar is - Answer weaker
What about a U.S. company that is in the business of importing electronic consumer
goods into the United States?
Importers of electronic goods into the U.S. are happier when the dollar is - Answer
, stronger
Which of the following is not an important financial intermediary in the economy? -
Answer the central bank
Economists collectively refer to commercial banks, savings and loan associations,
credit unions, mutual funds, mutual savings banks, insurance companies, pension
funds, and finance companies as financial intermediaries. What do financial
intermediaries do? - Answer They provide a way to link those who want to save with
those who want to invest.
Banks, savings and loan associations, mutual savings banks, and credit unions: -
Answer have been adept at innovating in response to changes in the regulatory
environment.
What was the primary cause of the recession that started in 2007? - Answer Defaults in
subprime residential mortgages.
Why do financial institution managers track the activities of the Federal Reserve System
so closely? Answer: Because the Federal Reserve impacts interest rates, inflation, and
business cycles-all of which have an important impact on the profitability of financial
institutions.
The foreign exchange market is: Answer where the currency of one country is
converted into the currency of another country
A strong U.S. dollar means that U.S. goods exported abroad will cost:
- Answer more in foreign countries and foreign goods imported will cost less in the
United States.
In which of the following situations do financial markets allow consumers to better time
their purchases? - Answer Purchasing a car or furniture.
Paying the cost of repairing a flooded basement.
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