macro chapter 9 testquestions宏观经济学答案

MACRO CHAPTER 9 TEST QUESTIONS Money, Prices, and the Financial System Multiple Choice Questions 1. In the United States saving is allocated to its most productive use by: A. the Federal Reserve. B. the Federal, state, and local governments. C. regulations and laws designed to improve productivity. D. a decentralized, market-oriented financial system. 2. Decentralized market-based financial systems improve the allocation of saving by: A. insuring capital gains exceed dividend payments. B. eliminating the need for commercial banks or other financial intermediaries. C. matching net capital inflows to net capital outflows. D. providing information and risk-sharing services. 3. The financial system consists of financial _, such as commercial banks, and financial _, such as the stock market. A. markets; intermediaries B. allocations; investments C. intermediaries; markets D. markets; institutions 4. Firms that extend credit to borrowers using funds from savers are called: A. bond dealers. B. stock brokers. C. central banks. D. financial intermediaries. 5. The specialized information-gathering activities that banks use to evaluate borrowers are an example of the: A. cost-benefit principle. B. principle of comparative advantage. C. scarcity principle. D. principle of increasing opportunity cost. 6. Privately-owned firms that accept deposits from individuals and businesses and use those deposits to make loans are called: A. mortgage banks. B. brokerage firms. C. commercial banks. D. investment banks. 7. Banks help savers find productive uses for their funds because banks have specialized in: A. gathering information about and evaluating potential borrowers. B. obtaining preferential tax treatment for savers. C. securing government guarantees for loans. D. evaluating the riskiness of stocks. 8. Financial intermediaries, such as commercial banks, help borrowers, particularly small borrowers, by: A. providing information to evaluate potential lenders. B. offering tax-preferred borrowing opportunities. C. eliminating the risk of borrowing. D. providing credit that might otherwise not be available. 9. Savers may prefer to use financial intermediaries rather than lending directly to borrowers because financial intermediaries: A. reduce the cost of gathering information about borrowers. B. have a monopoly on lending. C. increase the risk of lending. D. offer higher rates of return than available elsewhere. 10. Two reasons savers keep deposits at banks are to: A. secure mortgages and to purchase stocks. B. earn a return on their savings and to facilitate making payments. C. lower interest rates and to increase the money supply. D. equalize loan supply and demand and to earn interest. 11. A bond is a(n): A. regular payment made to owners of a firm. B. claim to partial ownership of a firm. C. agreement issued by a financial intermediary linking savers and investors. D. legal promise to repay a debt. 12. The principal amount of a bond is the amount: A. originally lent. B. of interest agreed upon when the bond was originally issued. C. paid to the bondholders on a regular basis. D. of interest the bondholder is entitled to when the bond matures. 13. The maturation date of a bond is the date at which: A. coupon payments will be made. B. the principal will be repaid. C. dividend payments will be made. D. taxes on the bond are due. 14. The coupon rate is the: A. amount originally lent. B. regular payment of interest to a bondholder. C. interest rate promised when a bond is issued. D. maximum interest rate that can be paid on a bond. 15. Regular interest payments made to bondholders are called _ payments. A. diversification B. reserve C. coupon D. dividend 16. If the principal amount of a bond is $10,000,000, the coupon rate is 7%, and the inflation rate is 4%, then the annual coupon payment made to the holder of the bond is: A. $70,000. B. $300,000. C. $400,000. D. $700,000. 17. The market value of a particular bond at any given point in time is called the bonds: A. coupon rate. B. principal. C. term. D. price. 18. The coupon rate on newly issued bonds is usually higher for bonds with _ terms and _ risk that the borrower will go bankrupt. A. shorter; greater B. shorter; smaller C. longer; greater D. longer; smaller 19. The coupon rate on newly issued bonds is usually _ for bonds with favorable tax treatment, such as municipal bonds, and _ for bonds that are very risky, such as junk bonds. A. higher; lower B. higher; higher C. lower; lower D. lower; higher 20. Fred purchases a bond, newly issued by the Big Time Corporation, for $10,000. The bond pays $400 to its holder at the end of the first, second, and third years and pays $10,400 upon its maturity at the end of four years. The principal amount of this bond is _, the coupon rate is _, and the term of this bond is _. A. $400; 40%; four years B. $10,000; 4%; four years C. $10,000; $400; 4% D. $10,400; 4%; four years 21. When the interest rate on newly issued bonds increases, the price of existing bonds: A. increases. B. decreases. C. increases only if the coupon rate is below the new rate. D. may either increase or decrease. 22. Pat pays $10,000 for a newly issued two-year government bond with a $10,000 face value and a 6 percent coupon rate. One year later, after receiving the first coupon payment, Pat sells the bond. If the current one-year interest rate on government bonds is 5 percent, then the price Pat receives is: A. $10,000. B. $500. C. greater than $10,000. D. less than $10,000. 23. Chris pays $10,000 for a newly issued two-year government bond with a $10,000 face value and a 6 percent coupon rate. One year later, after receiving the first coupon payment, Chris sells the bond. If the current one-year interest rate on government bonds is 7 percent, then the price Chris receives is: A. $10,000. B. $700. C. greater than $10,000. D. less than $10,000. 24. Sydney purchases a newly-issued, two-year government bond with a principal amount of $10,000 and a coupon rate of 6% paid annually. One year before the bonds matures (and after receiving the coupon payment for the first year), Sydney sells the bond in the bond market. What price (rounded to the nearest dollar) will Sydney receive for his bond if newly-issued one-year government bonds are paying a 5% coupon rate? A. $9,906 B. $10,000 C. $10,095 D. $10,600 25. One year before maturity the price of a bond with a principal amount of $1,000 and a coupon rate of 5% paid annually fell to $981. The one year interest rate must be: A. 8.5%. B. 7.0%. C. 5.0%. D. 1.9%. 26. When the coupon rate on newly-issued bonds increases from 5% to 6%, the prices of existing bonds: A. increase. B. decrease. C. remain unchanged. D. increase only if the coupon rate is less than 6%. 27. When the coupon rate on newly-issued bonds decreases from 6% to 5%, the prices of existing bonds: A. increase. B. decrease. C. remain unchanged. D. decrease only if the coupon rate is less than 5%. 28. Shares of stock are: A. legal promises to repay a debt. B. claims to partial ownership of a firm. C. regular payments made to owners of a firm. D. legal promises to make regular payments to the stockholder. 29. Stockholders receive returns on their financial investment in the form of _ and _. A. interest payments; dividends B. capital gains; dividends C. coupon payments; capital gains D. capital gains; interest payments 30. A regular payment received by stockholders for each share they own is called a: A. coupon payment. B. dividend. C. bond. D. capital gain. 31. The rate of return that financial investors require to hold a risky asset minus the rate of return on a safe asset is called the: A. real interest rate. B. nominal interest rate. C. risk premium. D. discount rate. 32. An increase in the perceived riskiness of the stock of Company A _ the risk premium investors require to purchase Company A stock and _ the price of Company A stock. A. increases; increases B. increases; decreases C. decreases; increases D. decreases; decreases 33. A decrease in the perceived riskiness of the stock of Company A _ the risk premium investors require to purchase Company A stock and _ the price of Company A stock. A. increases; increases B. increases; decreases C. decreases; increases D. decreases; decreases 34. You originally required a risk premium of 6 percent in addition to the rate of return on safe assets before you would purchase shares of Techno Company stock. If you and other investors reduce the risk premium you require to 4 percent, the price of Techno Company stock will: A. increase. B. decrease. C. equal the old risk premium plus the new risk premium. D. equal the new risk premium plus the rate of return on safe assets. 35. An increase in interest rates results in a(n) _ in the required rate of return to hold stocks and _ current stock prices. A. increase; reduces B. increase; raises C. decrease; raises D. decrease; reduces 36. The current price of a stock increases when: A. expected future dividends decrease. B. the expected future price of the stock decreases. C. interest rates decrease. D. the perceived riskiness of the stock increases. 37. You expect a share of EconNews.Com to sell for $65 a year from now and to pay a $2 dividend per share in one year. What should you pay (rounded to the nearest dollar) for the stock today if you require an 8% return? A. $60 B. $62 C. $67 D. $70 38. You expect a share of EconNews.Com to sell for $65 a year from now. If you are willing to pay $65.74 for one share of the stock today, and you require a return of 8%, what dividend payment must you expect to receive from the stock? A. $4.46 B. $5.20 C. $6.00 D. $9.25 39. You expect a share of EconNews.Com to sell for $65 a year from now. If you are willing to pay $62.73 for one share of the stock today, and you expect a dividend payment of $4, what rate of return do you require? A. 3.6% B. 6.2% C. 6.4% D. 10% 40. You expect a share of EconNews.Com to sell for $65 a year from now. If you are willing to pay $61.06 for one share of the stock today, you expect a dividend payment of $4, and the rate of return on safe assets is 5%, how much is your risk premium? A. 1.5% B. 6.5% C. 8.0% D. 13.0% 41. Stock prices increase when expected future dividends _, interest rates _, and/or the risk premium _. A. increase; increase; increases B. increase; increase; decreases C. decrease; decrease; increases D. increase; decrease; decreases 42. You own shares in a well-managed and diversified company. If a booming economy decreases investors concerns about market risk, then the price of your shares will _, holding other factors constant. A. increase B. decrease C. not change D. either increase or decrease 43. Your financial investments consist of U.S. government bonds maturing in twenty years and shares in a start-up Internet company. If interest rates on newly issued government bonds increase, then the price of your bonds will _ and the price of the shares you own will _. A. increase; increase B. decrease; decrease C. increase; not change D. decrease; not change 44. You own shares in a start-up Internet company. If large swings in the stock market increase financial investors concerns about market risk, then the price of your shares will _, holding other factors constant. A. increase B. decrease C. not change D. either increase or decrease 45. The practice of spreading ones wealth over a variety of different financial investments in order to reduce overall risk is called: A. allocation. B. following the risk premium. C. diversification. D. risk reservation. 46. Suppose you have $200 with which you can buy shares of stock from two companies: ABC Hot Chocolate Company and XYZ Lemonade. Each companys stock currently sells for $100 per share. If the temperature next year is lower than average, the stock price for ABC will increase by $20, and the stock price for XYZ will not change. If the temperature next year is higher than average, the stock price for XYZ will increase by $20, and the stock price for ABC will not change. There is a 50% chance that it will be colder than average next year, and a 25% chance that it will be warmer than average. If you purchase two shares of ABC stock and no shares of XYZ stock, there is a _ chance that your gain will be $40. Otherwise, your gain will be _. A. 50%; $0 B. 25%; $20 C. 75%; $30 D. 50%; $20 47. Suppose you have $200 with which you can buy shares of stock from two companies: ABC Hot Chocolate Company and XYZ Lemonade. Each companys stock currently sells for $100 per share. If the temperature next year is lower than average, the stock price for ABC will increase by $20, and the stock price for XYZ will not change. If the temperature next year is higher than average, the stock price for XYZ will increase by $20, and the stock price for ABC will not change. There is a 50% chance that it will be colder than average next year, and a 25% chance that it will be warmer than average. If you purchase two shares of XYZ stock and no shares of ABC stock, there is a _ chance that your gain will be $40. Otherwise, your gain will be _. A. 50%; $30 B. 25%; $0 C. 75%; $20 D. 50%; $20 48. Suppose you have $200 with which you can buy shares of stock from two companies: ABC Hot Chocolate Company and XYZ Lemonade. Each companys stock currently sells for $100 per share. If the temperature next year is lower than average, the stock price for ABC will increase by $20, and the stock price for XYZ will not change. If the temperature next year is higher than average, the stock price for XYZ will increase by $20, and the stock price for ABC will not change. There is a 50% chance that it will be colder than average next year, and a 25% chance that it will be warmer than average. If you purchase one share of ABC stock and one share of XYZ stock, there is a _ chance that your gain will be $20. Otherwise, your gain will be _. A. 50%; $0 B. 25%; $30 C. 75%; $0 D. 50%; $40 49. A financial intermediary that sells shares in itself to the public, and then uses the funds to buy a wide variety of financial assets is called a: A. commercial bank. B. credit union. C. stock exchange. D. mutual fund. 50. The ongoing search by savers for high returns leads the bond and stock markets to direct funds to the uses that appear: A. most likely to be productive. B. least likely to be productive. C. to have the least risk. D. to have no risk. 51. Money is: A. the same as income. B. all financial assets. C. any asset used to make purchases. D. the sum of assets minus debts. 52. The direct trade of goods and services for other goods and services is called: A. financial intermediation. B. diversification. C. barter. D. using a medium of exchange. 53. Double coincidence of wants is avoided if money is used as a: A. medium of exchange. B. measure of value. C. standard of deferred payment. D. store of value. 54. Finding both parties to a trade who have something the other party wishes to trade for is called a: A. unit of account. B. store of value. C. medium of exchange. D. double coincidence of wants. 55. Money serves as a medium of exchange when: A. it is used to purchase goods and services. B. there is direct trade of goods and services. C. it is a basic measure of economic value. D. it is a means of holding wealth. 56. When a baker exchanges a pie for dollars, this is an example of dollars serving as: A. barter. B. a medium of exchange. C. a unit of account. D. a store of value. 57. When your grandfather keeps a bundle of $100 dollar bills behind a brick in the basement, this is an example of dollars serving as: A. bank reserves. B. a medium of exchange. C. a unit of account. D. a store of value. 58. If you use $1,000 to purchase silver bullion, which you plan to keep in a safe, you are using money as: A. bank reserves. B. a medium of exchange. C. a unit of account. D. a store of value. 59. If you post your car on eBay with a Buy-It-Now price of $1,800, you are using money as: A. bank reserves. B. a medium of exchange. C. a unit of account. D. a store of value. 60. If you put a $20 bill in the pocket of your winter coat at the beginning of spring so that you will be surprised when you find it again next winter, you are using money as: A. bank reserves. B. a medium of exchange. C. a unit of account. D. a store of value. 61. The main disadvantage of using money as a store of value is that: A. other assets provide greater anonymity than cash. B. barter is a more efficient way to conduct transactions than using money. C. unlike other assets, money serves as a medium of exchange. D. other assets pay relatively higher rates of interest than money. 62. The three functions of money are: A. spending for consumption, investment, and government purchases. B. measuring balance of payments, exchange rates, and interest rates. C. implementing monetary policy, fiscal policy, and structural policy. D. serving as a medium of exchange, unit of account, and store of value. 63. Money serves as a basic yardstick for measuring economic value (a unit of account), allowing: A. people to hold their wealth in a liquid form. B. governments to restrict the issuance of private monies. C. easy comparison of the relative prices of goods and services. D. goods and services to be exchanged with a double coincidence of wants. 64. The M1 measure of money consists of the sum of: A. currency, checking deposits, and travelers checks. B. currency and travelers checks. C. currency, checking deposits, and savings deposits. D. checking deposits and travelers checks. 65. The M2 measure of money consists of the sum of: A. savings deposits, small time deposits, and money market mutual funds. B. currency, checking and savings deposits, and small time deposits. C. currency, checking and savings deposits. D. M1, savings deposits, small time deposits, and m