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Finance Quiz for Economics Students

1. This document contains questions about financial markets and concepts. It covers topics like money markets, capital markets, functions of financial markets, and monetary and fiscal policy. 2. The questions are multiple choice, matching, and short answer format assessing understanding of key terms and concepts. 3. The document tests knowledge in areas like the roles of central banks, characteristics of different market segments, functions served by financial markets, and distinguishing between primary and secondary markets.

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Seid Kassaw
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104 views2 pages

Finance Quiz for Economics Students

1. This document contains questions about financial markets and concepts. It covers topics like money markets, capital markets, functions of financial markets, and monetary and fiscal policy. 2. The questions are multiple choice, matching, and short answer format assessing understanding of key terms and concepts. 3. The document tests knowledge in areas like the roles of central banks, characteristics of different market segments, functions served by financial markets, and distinguishing between primary and secondary markets.

Uploaded by

Seid Kassaw
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Part One: Choose the best answer (1pt each)

1. From the following which one is false


A. Money generally earns the lowest rate of return of all assets traded in the
financial system.
B. Central bank is the "Lender of last resort" to commercial banks in times of crisis.
C. Money market securities offer significantly lower returns than most other
securities
D. None of the above
2. When the cost of credit declines and loanable funds become more readily available:-
A. Total spending in the economy C. The economy's growth accelerates
increases D. All of the above
B. More jobs are created

3. Is a market that allows supplier and demanders of long-term funds to make


transactions?

A. Capital market C. Derivative market


B. Foxex Market D. None of the above

4. Provide funding, take up credit risk or offer favorable terms to development projects


mostly in developing countries that couldn't be obtained by the private sector.

A. Banks for international settlement C. The World Bank


B. World trade organization D. Nome of the above

5. Is a segment of the financial market in which financial instruments with high


liquidity and very short maturities are traded?

A. Capital market C. Foxex Market


B. Money market D. Derivative market
Part Two: Match column “A” with “B”
Column “A” Column “B”
1. Wealth function A. It is a means of raising funds by converting
2. Liquidity function securities and other financial assets into cash
balances.
3. Policy function
B. It is a means to store purchasing power until
4. Credit function needed at a future date for spending on goods
5. Risk protection and services.
C. It provides a means to protect business,
function
consumers, and Governments against danger to
people, property and income.
D. Is to provide a continuous supply of funds for the
business, consumers and governments; to
support both the consumption and investment
spending in the economy.
E. A mechanism through which economy is
stabilized and excessive inflation is avoided.

Part Three: Give Short Answer (5pt)


1. Explain the following (1pt each)
A. Monetary policy
B. Fiscal policy
2. Define the following (1pt each)
A. Primary market
B. Secondary market
3. Mention the five components of the financial system and give at least one
example for each (1.25pt)

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