The Economics Of Money Banking And Financial Markets 6th Canadian Edition By Mishkin – Test Bank

Chapter 1   Why Study Money, Banking, and Financial Markets?

1.1   Why Study Financial Markets?

1) Financial markets promote economic efficiency by ________.

1. A) channeling funds from investors to savers
2. B) creating inflation
3. C) channelling funds to those who have a productive use for them
4. D) reducing investment

Answer:  C

Diff: 1      Type: MC

Skill:  Recall

Objective:  1.1 Recognize the importance of financial markets in the economy.

2) Well-functioning financial markets promote ________.

1. A) inflation
2. B) deflation
3. C) unemployment
4. D) economic growth

Answer:  D

Diff: 1      Type: MC

Skill:  Recall

Objective:  1.1 Recognize the importance of financial markets in the economy.

3) A key factor in producing high economic growth is ________.

1. A) eliminating foreign trade
2. B) well-functioning financial markets
3. C) high interest rates
4. D) stock market volatility

Answer:  B

Diff: 1      Type: MC

Skill:  Recall

Objective:  1.1 Recognize the importance of financial markets in the economy.

4) Markets in which funds are transferred from those who do not have a productive use for them to those who do are called ________.

1. A) commodity markets
2. B) fund-available markets
3. C) derivative exchange markets
4. D) financial markets

Answer:  D

Diff: 1      Type: MC

Skill:  Recall

Objective:  1.1 Recognize the importance of financial markets in the economy.

5) ________ markets transfer funds from people who do not have a productive use for them to people who do.

1. A) Commodity
2. B) Fund-available
3. C) Financial
4. D) Derivative exchange

Answer:  C

Diff: 1      Type: MC

Skill:  Recall

Objective:  1.1 Recognize the importance of financial markets in the economy.