Quiz No.

4  Chapter  4  Financial Markets

Total points 14/20

Student Name: 14 of 20 points

Name: *

Shain fernandez

One of the characteristics of bonds are sold for a price that * 0/2
varies inversely with no interest rate

True

False

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with interest rate

Investment" is a term economists reserve for *2/2

the purchase of new capital goods

True

False
Banks are different from other financial intermediaries * 2/2
because banks do not need to hold reserves against their
deposits

True

False

An open market sale of bonds will cause

a reduction in the monetary base
* 0/2

True

False

Other:

A contractionary open market operation leads to *0/2

a decrease in bonds price and an increase in the interest
rate.

True

False

Other:
An expansionary open market operation leads to a * 2/2
decrease in bonds price and a decrease in the interest rate.

True

False

Other:

When people hold currency and chequable deposits: * 2/2

1) the central bank does not directly control money supply
2) the commercial banks directly control money supply.
3) the central bank and commercial banks directly control money supply.
4) the public and the central bank directly control money supply.
5) the central bank directly control money supply

Option 1

Option 2

Option 3

Option 4

Option 5

Other:
An open market sale of securities will tend to cause:
* 2/2
1) a reduction in the supply of central bank money.
2) a reduction in the demand for reserves.
3) a reduction in the demand for currency.
4) an increase in the supply of central bank money.
5) no change in the supply of central bank money

Option 1

Option 2

Option 3

Option 4

Option 5

Other:

An increase in income will tend to cause: * 2/2

1) an increase in bond prices and a reduction in income
2) an increase in bond prices and an increase in the interest rate (i).
3) a reduction in bond prices and a reduction in income
4) a reduction in bond prices and an increase in income
5) an reduction in bond prices and no change in the interest rate

Option 1

Option 2

Option 3

Option 4

Option 5

Other:
 Financial
markets and institutions * 2/2

A.   involve the
movement of huge quantities of money.

B.     affect the

profits of businesses.

C.    affect the types of goods and services produced

in an economy.

D.   only (a) and (b)

of the above.

E.  all of the above.

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