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Test your basic knowledge |
DSST Money And Banking
Start Test
Study First
Subjects
:
dss
,
bankingt
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The upward and downward movement of aggregate output produced in the economy.
Intermediate-term Maturity (Capital Market)
business cycle
Upward Slops
Short-Term Maturity
2. It determines the equilibrium interest rate in terms of the supply of land demanded for money . People store their wealth in money and bonds. If the market for money is in equilibrium (Ms=Md) then the bond markets are also in equilibrium (Bs=Bd)
increases in money supply causes
Downward Slopes
Why returns are more volatile for Long-Term bonds
Keynesian Model
3. At lower prices (higher i) - ceteris paribus - the quantity demanded of bonds is higher- an inverse relationship ' ' the quantity supplied of bonds is lower- a positive relationship.
Supply and Demand for Bonds
Term structure theory
Term Structure
interest rate
4. What will investors expect for taking on higher default risk?
How do regulations ensure the soundness of Financial Intermediaries?
recession
Higher Returns
Corporate Bond Default risk
5. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.
interest rate
Intermediate-term Maturity (Capital Market)
Real world obervations
Bd < Bs
6. Producing an efficient allocation of capital - which increases production
Together
monetary policy
Fisher Effect
How Financial Markets promote economic efficiency
7. Alters publics liquidity and influences spending through portfolio adjustment
unemployment rate
Eurocurrency
increases in money supply causes
When real rate is low
8. Used to save purchasing power; most liquid of all assets but loses value during inflation
Repo
increases in money supply causes
Store of Value
Interest rate
9. Crucial role in creation of money
Corporate Bond Default risk
Yield to Maturity for simple loans
monetary policy
banks and money supply
10. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.
Ex Ante
Yield to Maturity for simple loans
financial markets
bond market (money markets)
11. Yield curves most always...
Slope upward
Together
Hs a greater upward shift
inflation
12. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.
Function of Financial Intermediaries
Simple Loan
function of financial markets
financial markets
13. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One
increases in money supply causes
Fisher Effect
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
federal funds rate
14. A bank loan typically used by a company to finance storage or shipment of goods. This bank draft is like a check - and guarantees future payment. These securities are active in the Secondary Market
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15. Real interest rate: the real interest rate actually realized.
Ex Post
T-Bonds
Eurocurrency
Price vs Yields to Maturity
16. Lower excess supply and lower price will fall and interest rates will rise
Bd < Bs
How do regulations ensure the soundness of Financial Intermediaries?
Store of Value
Expected Return
17. Long-Term Debt and Equity Instruments
Capital Markets
hyperinflation
Long-run Movements
central bank
18. Lower Incentive to borrow but a greater incentive to lend.
T-Bills
Wealth
When real rate is high
Term Structure
19. The total collection of pieces of property that serve to store value
Interest rate
bond market (money markets)
common stock
Wealth
20. Seller will buy back the asset at a later date and typically at a higher price. These securities are usually government securities and are used by banks and Large Corporations.
Yield on a Discount Basis
OTC
role of money
Repo
21. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money
OTC
Evolution of the Payment System
central bank
Certificate of Deposit
22. Rare
Bd = Bs
direct impact
T-Bonds
Downward Slopes
23. Greater incentive to borrow and less to lend.
How Financial Markets directly improve the well-being of consumers
When real rate is low
Risk
Fisher Effect
24. The degree of uncertainty associated with the return on one asset relative to alternative assets.
federal funds rate
Keynesian Model
Wealth
Risk
25. If the short-term interest rates are high than the yield curve slopes?
Downward
Evolution of the Payment System
Long-Term Maturities (Bond Market)
Present Discount Value
26. Most Common
Income effect
Upward Slops
Expected Return
role of money
27. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period
Velocity
Mortgage-Backed Securities
indirect impact
Downward
28. Does not deal directly with the public and responsible for executing of the national monetary policy; implements policy by altering money supply and influencing bank behavior.
Money (money supply)
interest rate
central bank
Bd > Bs
29. The higher the default risk means the yield curve...
Hs a greater upward shift
Expected Return
T-Bills
Eurocurrency Market
30. Yields similar for all maturities
T-Notes
Function of Financial Intermediaries
Flat yield curves
Risk
31. The percent of available labor force unemployed
Short-Term Maturity
hyperinflation
inflation
unemployment rate
32. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending
Store of Value
indirect impact
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Real world obervations
33. Expectations theory forms the foundation of the slope of the curve. Liquidity Premium Theory makes Long Term permanent modifications that suggests an up ward slopping curve. Over short periods - relatives supplies of securities have an impact on yiel
business cycle
Term structure theory
Unit of Account
Risk
34. Bought at price below face value and face value repaid at maturity
Keynesian Model
unemployment rate
Discount (zero coupon) Bond
Real Interest Rate
35. 3 -6 -12 month securities with no explicit one payment and is sold at a discount. These securities are highly liquid - and can be traded in the secondary market. These are some of the safest securities.
function of financial markets
T-Bills
Federal Funds Market
Bd = Bs
36. The return expected over the next period on one asset relative to the alternative asset.
Humped Yield Curves
banks and money supply
Yield Curve
Expected Return
37. 30 year maturities but not since 2001
Tbonds
Downward
Corporate Bonds
direct impact
38. One to Ten year maturities which fund long-term capital investments
Keynesian Model
Fiat Money
Intermediate-term Maturity (Capital Market)
Store of Value
39. Prices of Long-Term securities are more volatile possibly suffer Capital Loss if owner needs to sell security prior to maturity. Prefer to hold Short-term securities for liquidity. Suggests Long term rates will always be higher than short term.
What will an increase in the money supply engineered by the Federal Reserve do to the supply curve for money?
Why Revisions are issued to money data
The Liquidity Premium Modification
Commodity Money
40. A rise in the price level causes the demand for money at each interest rates to increase and the demand curve to shift to the right.
tax structure
easily standardized - widely accepted - divisible and not deteriorate quickly
Price-level effect
Keynesian Model
41. Small depository institutions report infrequently and adjustments must be made for seasonal variations
Downward
Why Revisions are issued to money data
Income effect
Risk
42. Used to measure value in the economy
Unit of Account
Kind of risk for a bond that's maturity equals the holding period
Discount (zero coupon) Bond
Bd < Bs
43. The increase in the price of set goods and services in a given economy over a period of time - the percent change.
business cycle
inflation
Store of Value
T-Bills
44. Yield to maturity; a measure of an interternporal price
financial markets
common stock
Interest rate
bond
45. Relationship among yields of different maturities of hte same type of security.
Function of Financial Intermediaries
Term Structure
Kind of risk for a bond that's maturity equals the holding period
Velocity
46. Flow of earnings per unit of time
Why Revisions are issued to money data
Income
T-Bills
Forms of Commercial Papers
47. The central bank
federal funds rate
who determines our money supply
Commodity Money
Bd = Bs
48. Medium of exchange; unit of account; store of value; increases the liquidity in the economy
foreign exchange market
Keynesian Model
Hs a greater upward shift
role of money
49. Promotes economic efficiency by minimizing the time spent in exchanging goods and services
Bd = Bs
Flat yield curves
Medium of Exchange
inflation
50. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept
Money (money supply)
interest rate
Downward
Upward