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DSST Money And Banking

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. Real interest rate: the real interest rate people expect at the time they buy a bond or tax out a loan.






2. Fixed payment (incorporating part of the principal and interest payment) paid over a period of time






3. 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.






4. Alters publics liquidity and influences spending through portfolio adjustment






5. Praises rising at a fast and furious pace






6. 2 -5 -10 year maturities






7. A debt security that promises to make payments periodically for a specified period of time.






8. The relationship between yield and maturity is...






9. Lower Incentive to borrow but a greater incentive to lend.






10. Used to measure value in the economy






11. Excess liquidity is spent on goods and services






12. 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






13. Long-Term debt instruments of Corporations which are held 2-30 years. These securities have excellent credit ratings and pay interest two times a year and pay at maturity. These can be redeemed for shares of stock.






14. The interest rate at which private depository institutions lend balances to other depository institutions usually over night






15. Paper currency - has no real value






16. Lower excess demand and lower price will rise and interest rates will fall






17. If the short-term interest rates are high than the yield curve slopes?






18. 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)






19. Real interest rate: the real interest rate actually realized.






20. Short-Term Debt Instruments






21. One to Ten year maturities which fund long-term capital investments






22. The higher the default risk means the yield curve...






23. Supply and demand concept for different maturities will establish the specific rates for each maturity range. Changes in supply and demand can cause the rates to get out of line with expectations. However investors will drop preferred habitat if rate






24. Allows transfer of funds from person or business without investment opportunities to one who has them - improves economic efficiency.






25. The increase in the price of set goods and services in a given economy over a period of time - the percent change.






26. Yield to maturity; a measure of an interternporal price






27. Held ten years or more. They pay semiannual dividends and return of principal at maturity.






28. More than 10 year maturities






29. Pays owner of bond a fixed payment - until maturity when it pays off face par value






30. Flow of earnings per unit of time






31. Lower transaction costs - reduce risk - asymmetric information.






32. Purchase financial assets which lowers interest rates which stimulates business investment and consumer spending






33. 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.






34. Sold in a foreign country and denominated in that country's currency.






35. How interest rates on bonds of different maturities move over time






36. Yields similar for all maturities






37. For a commodity to function efficiently as money it must be...






38. Lower the equilibrium price and interest rate.






39. The percent of available labor force unemployed






40. The central bank






41. Negotiable in secondary market and can also be resold in the secondary market. Minimum purchase of $100 -000 but the minimum in the secondary market is $2 -000 -000.






42. The upward and downward movement of aggregate output produced in the economy.






43. Allowing consumers to time their purchases better.






44. (Nominal) Interest Rate that is adjusted for expected changes in the price level. The more accurately reflects true cost of borrowing.






45. The rate at which money circulates and the number of times the average dollar bill changes hands in a given time period






46. Many lead to more employment and output






47. Used to save purchasing power; most liquid of all assets but loses value during inflation






48. What kind of movements should we pay attention to in money supply numbers?






49. 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.






50. Medium of exchange; unit of account; store of value; increases the liquidity in the economy