A particularly attractive feature of the ________ is that it tells you what the market is predicting about future short-term interest rates by just looking at the slope of the yield curve. A) segmented markets theory B) expectations theory C) liquidity premium theory D) separable markets theory ANSWER C
Date: September 10th, 2020
A credit market instrument that requires the borrower to make the same payment every period until the maturity date is known as a A) simple loan. B) fixed-payment loan. C) coupon bond. D) discount bond. ANSWER B
Date: September 10th, 2020
Explain why, when all adjustment have taken place, the perfectly competitive firm will operate at the minimum of its short-run and long-run average total cost curves and earn zero economic profit. What will be an ideal response? ANSWER Because perfectly competitive firms are price takers, the only means they have to increase profits in […]
Date: September 10th, 2020
The majority of members of the Federal Open Market Committee are A) Federal Reserve Bank presidents. B) members of the Federal Advisory Council. C) presidents of member banks. D) the seven members of the Board of Governors. ANSWER D
Date: September 10th, 2020
The ________ of the term structure states the following: the interest rate on a long-term bond will equal an average of short-term interest rates expected to occur over the life of the long-term bond plus a term premium that responds to supply and demand conditions for that bond. A) segmented markets theory B) expectations theory […]
Date: September 10th, 2020
Why is the money multiplier smaller than the simple deposit multiplier? What will be an ideal response? ANSWER In the case of the money multiplier, individuals may hold some of their assets in cash rather than depositing them in a checking account and banks may hold excess reserves. The simple deposit multiplier assumes all […]
Date: September 10th, 2020
A joint venture allows a foreign firm to easier adjust to a new market and often meet various institutional requirements. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
Assume the government decides to impose a per-unit tax on a good produced in a perfectly competitive market. a. Graphically illustrate the short-run effects of the tax on the cost conditions faced by a representative firm in the market. b. Explain the adjustment process to long-run equilibrium in the market. What has happened to long-run […]
Date: September 10th, 2020
Marginal cost is defined as the change in ________ cost when output changes by one unit. In the short run, marginal cost can also be measured by the change in ________ cost when output changes by one unit. A) total; fixed B) variable; fixed C) fixed; variable D) total; variable ANSWER D
Date: September 10th, 2020
Which of the following has NOT resulted from more active liability management on the part of banks? A) increased bank holdings of cash items B) aggressive targeting of goals for asset growth by banks C) increased use of negotiable CDs to raise funds D) an increased proportion of bank assets held in loans ANSWER […]
Date: September 10th, 2020
