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ECO 4223 Midterm Exam Questions And Correct Answers
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ECO 4223 Midterm Exam Questions AndCorrect Answers
Which one of the following is not included in the six parts of the financial system?
Response Credit cards
Which one of the following is the central bank of the United States? Response Federal
Reserve System
Which one of the following is not one of the five core principles of money and banking?
Response Stability creates risk
Investing in financial instruments in today's economy is Response Made easier by using
mutual funds
Which of the following is an example of a financial market? Answer A local coffee house
where people regularly buy and sell financial instruments
The quantity of information a person would seek before making a financial decision -
Answer Varies directly with the importance of the decision
The statement "risk requires compensation" implies that people: - Answer Will only
accept risk when they are rewarded for doing so
Mutual Funds have Answer reduced the management expenses of creating portfolios of
stocks and bonds
Central banks can enhance the welfare of a society in all of the following ways except:
Answer Serving the interest of government rather than the public at large
, In the United States, control of the quantity of money is vested in the: Answer Federal
Reserve System
Which of the following best describes financial instruments - Answer Financial
instruments can transfer resources and risk among individuals
Which of the following best describes financial markets - Answer Financial markets
lower the cost and quicken the pace at which financial instruments are bought and sold
The New York Stock Exchange is an example of: - Answer financial market
If a person borrows money to purchase a car and makes all of the monthly car
payments, then the summation of those payments made will be greater than the
purchase price of the car. This is because of one simple principle-time has value
Most financial markets in the United States are based upon a system-governed by many
rules and regulations in order for the market to be fair
How do financial institutions evaluate the creditworthiness of potential borrowers? -
Answer They gather information concerning the borrowers financial situation
Stock prices are determined by - Answer market participants
Central banks, in general terms can be said to have the main objective of: - Answer
Keeping inflation under control and, through doing so, dampening fluctuations in the
business cycle.
U.S. monetary policy can best be described as: - Answer Aiming at keeping inflation low
and steady and growth high and stable
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