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Ch 10 Questions
Investments
| Question | Answer |
|---|---|
| The interest rate that investors can earn without bearing any risk in a non-inflationary environment is known as the | real risk-free rate |
| Which of the following is NOT an effect of a contractionary monetary policy? | The Federal Reserve will sell securities?? |
| The interest rate charged to banks from the Federal Reserve to borrow funds is called the | discount rate |
| The rate of interest is determined by the demand for and supply of | consumer goods?? |
| The most frequently recommended metal for investors to consider during inflationary periods is | gold |
| Which of the following is NOT a component of calculating gross domestic product (GDP)? | Inflation |
| The monetary base measure of tracking changes in the money supply includes all of the following EXCEPT | checking accounts |
| Which of the following is the interest rate charged by banks when they lend their reserves to each other? | Excess reserves rate?? |
| Under open market operations, which of the following actions will the Federal Reserve undertake to increase the supply of money? | Increase the interest rate?? |
| Which of the following is NOT an effect of increased taxation on corporations? | Companies may pay lower dividends?? |
| The key difference between the money supply identified in M1 and M2 is the impact of | currency?? |
| Higher interest rates produce lower security prices because | higher borrowing costs will reduce the attractiveness of buying securities on credit |
| Which of the following economic impacts would lead to an increase in gross domestic product (GDP)? | Lowering the interest rate |
| Which of the following items is NOT part of the money supply known as M1? | Savings accounts |
| The onset of the COVID-19 pandemic caused the Federal Reserve to | rapidly drop the target federal funds rate close to zero |
| Under deficit spending, the federal government may seek funds to cover the spending from all of the following EXCEPT | the general public?? |
| Which of the following is NOT an effect of lowering interest rates? | Increase in the demand for borrowing money?? |
| Which of the following statements reflects why the Federal Reserve's most important tool of monetary policy is buying and selling of securities? | It can affect changes in personal income tax rates?? |
| Which of the following commodities has not been recommended to investors during inflationary periods? | Meats |
| What is the impact of importing of goods into the United States from Canada on the calculation of gross domestic product (GDP)? | It increases the GDP of the United States?? |
| One strategy for investors to consider during periods of inflation include | shifting from financial assets to physical assets |