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DSST Money And Banking

Subjects : dss, bankingt
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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.






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)






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.






4. What will investors expect for taking on higher default risk?






5. Cost of borrowing money - expressed as a percentage of the amount borrowed per year.






6. Producing an efficient allocation of capital - which increases production






7. Alters publics liquidity and influences spending through portfolio adjustment






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






9. Crucial role in creation of money






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






11. Yield curves most always...






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






13. The market for loanable funds: (or equivalently - the market for bonds) determines R. One-for-One






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.






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






17. Long-Term Debt and Equity Instruments






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






19. The total collection of pieces of property that serve to store value






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.






21. Commodity Money - Fiat Money - Checks - Electronic Payment - E-Money






22. Rare






23. Greater incentive to borrow and less to lend.






24. The degree of uncertainty associated with the return on one asset relative to alternative assets.






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






26. Most Common






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






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.






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






30. Yields similar for all maturities






31. The percent of available labor force unemployed






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






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






34. Bought at price below face value and face value repaid at maturity






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.






36. The return expected over the next period on one asset relative to the alternative asset.






37. 30 year maturities but not since 2001






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






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.






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.






41. Small depository institutions report infrequently and adjustments must be made for seasonal variations






42. Used to measure value in the economy






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






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






45. Relationship among yields of different maturities of hte same type of security.






46. Flow of earnings per unit of time






47. The central bank






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






49. Promotes economic efficiency by minimizing the time spent in exchanging goods and services






50. Anything that is generally accepted in payment for goods or services or in the repayment of debts; a stock concept