Question 1

In 2006, before the Great Recession, the economy was booming and consumer demand was high, making the:

Accepted Answer

A)   demand for loanable funds increase and shift to the right.
B)   demand for loanable funds decrease and shift to the left.
C)   supply of loanable funds increase and shift to the right.
D)   supply of loanable funds decrease and shift to the left.E) B) and C)
F) A) and C)

Question 2

In the recession that started in 2008, the savings rate:

Accepted Answer

A)   increased.
B)   decreased.
C)   stayed the same.
D)   became negative.E) B) and C)
F) None of the above

Question 3

The principal of a loan is the:

Accepted Answer

A)   original amount of the loan.
B)   set of rules and conditions borrowers agree to when taking out a loan.
C)   set of rules and conditions savers agree to when agreeing to let someone borrow their money.
D)   original amount that people want to borrow.E) B) and C)
F) A) and C)

Question 4

Making a loan is generally:

Accepted Answer

A)   less risky and less potentially rewarding than buying stock.
B)   less risky and more potentially rewarding than buying stock.
C)   more risky and less potentially rewarding than buying stock.
D)   more risky and more potentially rewarding than buying stock.E) A) and B)
F) B) and C)

Question 5

Two common economic problems that may arise from asymmetric information are:

Accepted Answer

A)   moral consequence and adverse selection.
B)   moral hazard and adverse selection.
C)   moral hazard and adverse decisions.
D)   moral consequence and adverse decisions.E) C) and D)
F) A) and D)

Question 6

When a borrower fails to pay back a loan according to the agreed-upon terms, it is called:

Accepted Answer

A)   credit risk.
B)   default.
C)   opportunity cost.
D)   inflation.E) None of the above
F) A) and D)

Question 7

Borrowing is like:

Accepted Answer

A)   selling the right to use your money for a time.
B)   buying the right to use someone else's money.
C)   selling the right to use someone else's money.
D)   buying the right to use your money for a time.E) A) and B)
F) A) and C)

Question 8

In the market for loanable funds, the demand curve:

Accepted Answer

A)   represents savers.
B)   is downward sloping.
C)   reflects that more people will choose to save the higher is the interest rate.
D)   is upward sloping.E) A) and B)
F) B) and C)

Question 9

The roles fulfilled by commercial banks and investment banks are:

Accepted Answer

A)   not allowed to be done by the same bank.
B)   rarely done by the same bank.
C)   often done by the same bank.
D)   always done by the same bank.E) None of the above
F) A) and C)

Question 10

The supply of loanable funds comes from:

Accepted Answer

A)   savings.
B)   investment.
C)   borrowers.
D)   taxes.E) C) and D)
F) B) and D)

Question 11

The demand for loanable funds comes from:

Accepted Answer

A)   investment.
B)   savings.
C)   the government printing money.
D)   households spending on nondurable goods.E) None of the above
F) A) and D)

Exam 14: The Basics of Finance

Two common economic problems that may arise from asymmetric information are:

Correct Answer
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The principal of a loan is the:

Correct Answer
verified

When a borrower fails to pay back a loan according to the agreed-upon terms, it is called:

Correct Answer
verified

In the market for loanable funds, the demand curve:

Correct Answer
verified

The roles fulfilled by commercial banks and investment banks are:

Correct Answer
verified

The demand for loanable funds comes from:

Correct Answer
verified

In the recession that started in 2008, the savings rate:

Correct Answer
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Borrowing is like:

Correct Answer
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The supply of loanable funds comes from:

Correct Answer
verified

In 2006, before the Great Recession, the economy was booming and consumer demand was high, making the:

Correct Answer
verified

Making a loan is generally:

Correct Answer
verified

Exam 14: The Basics of Finance

Two common economic problems that may arise from asymmetric information are:

Correct AnswerverifiedShow Answer

The principal of a loan is the:

Correct AnswerverifiedShow Answer

When a borrower fails to pay back a loan according to the agreed-upon terms, it is called:

Correct AnswerverifiedShow Answer

In the market for loanable funds, the demand curve:

Correct AnswerverifiedShow Answer

The roles fulfilled by commercial banks and investment banks are:

Correct AnswerverifiedShow Answer

The demand for loanable funds comes from:

Correct AnswerverifiedShow Answer

In the recession that started in 2008, the savings rate:

Correct AnswerverifiedShow Answer

Borrowing is like:

Correct AnswerverifiedShow Answer

The supply of loanable funds comes from:

Correct AnswerverifiedShow Answer

In 2006, before the Great Recession, the economy was booming and consumer demand was high, making the:

Correct AnswerverifiedShow Answer

Making a loan is generally:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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