When interest rates decrease, just how could businesses and consumers readjust their financial behavior?A. Consumers and also businesses will invest in bonds or comparable debt instruments.B. Tright here will be more usage spfinishing on interest-sensitive items and also even more investment by businesses.C. Consumers and businesses will spfinish much less and save more.D. Consumers and also businesses will certainly organize smaller sized (average) cash balances.

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B. Tbelow will be more consumption spending on interest-sensitive items and more investment by businesses.
Why are financial sectors essential to the health of the economy?A. They channel funds from savers to investors.B. They eliminate the require for financial intermediaries.C. They allow consumers to time their purchases better.D. They identify and shut down inreliable firms.
A share of Microsoft common stock is:A. an asset for Microsoft because it permits Microsoft to invest in capital tools or other companiesB. similar to a bond issued by MicrosoftC. a licapability to the shareholder bereason it have to be marketed to realize a resources gainD. an asset for its owner and a liability for Microsoft.
One of the components contributing to the financial crisis of 2007-2009 was the widespreview issuance of subprime mortgeras. How does this show adverse selection?A. Lenders consciously loaned money to the riskiest homeowners through the highest interemainder prices to increase their profits.B. Financial intermediaries gave funds to potential homeowners under strict problems.C. Potential homeowners obtained funds for high-yield, high-hazard investments instead of mortgeras.D. Lenders loaned money to a pool of potential homeowners via the greatest crmodify risk and also lowest net riches.
D. Lenders loaned money to a pool of potential homeowners through the greatest crmodify risk and also lowest net wealth.

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The provision of a number of types of financial services by one firm might be beneficial bereason of:A. economic climates of range and also problematic because of moral peril.B. a decrease in asymmetric information and problematic bereason of the expenses of information production.C. The elimicountry of adverse selection and problematic bereason of transactivity expenses.D. economies of scope and also problematic bereason of disputes of interest.
As a financial institution, you make a loan to an individual seeking funds to open up a coffee shop. When the loan is made, the borrower supplies the funds to take a vacation to Greenland.This is an instance of:
Complete the following table related to the structure of financial industries. Direct Finance Instraight FinanceSaversBorrowers
Direct Finance Instraight Finance Savers: Buy securities Make depositsBorrowers: Sell securities Take out loans
If you suspect than an airline will certainly go bankrupt next week, which would you quite host, bonds issues by the company, or equities issued by the company?
The CPI as of December 2003 was 184. The price of inflation (pi) for 2004 is 2.65%. What is the value of the CPI in 2004?
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