Economics > EXAM > Monetary Economics (ECS3701) Selected Examination Questions and suggested solutions [Distinction]202 (All)
Financial markets promote economic efficiency by - -channeling funds from savers to investors. -The bond markets are important because they are - -the markets where interest rates are determined. ... -The interest rate on Baa (medium quality) corporate bonds is _____, on average, than other interest rates, and the spread between it and other rates became _____ in the 1970s. - -higher; larger -High interest rates might _____ purchasing a house or car but at the same time high interest rates might _____ saving. - -discourage; encourage -A share of common stock is a claim on a corporation's - -earnings and assets. -Stock prices are - -extremely volatile. -Channeling funds from individuals with surplus funds to those desiring funds when the saver does not purchase the borrower's security is known as - -financial intermediation. -The upward and downward movement of aggregate output produced in the economy is referred to as the - -business cycle. -Money is defined as - -anything that is generally accepted in payment for goods and services or in the repayment of debt. -The organization responsible for the conduct of monetary policy in the United States is the - -Federal Reserve System. -The management of money and interest rates is called _____ policy and is conducted by a nation's _____ bank. - -monetary; central -Evidence from business cycle fluctuations in the United States indicates that - -recessions are usually preceded by a decline in the growth rate of money. -It is true that inflation is a - -continually rising price level. -There is a _____ association between inflation and the growth rate of money _____. - -positive; supply -Complete Milton Friedman's famous statement, "Inflation is always and everywhere a _____ phenomenon." - -monetary -Which of the following is most likely to result from a stronger [Show More]
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