Quiz Questions On Financial System! Trivia

19 Questions | Total Attempts: 2306

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Quiz Questions On Financial System! Trivia - Quiz

Quiz questions on financial system trivia! A financial system makes it possible for investors, lenders and borrowers to interact with each other. This system is mainly divided into financial institutions, markets, instruments and services. These parts help to ensure economic growth and development by ensuring that money is circulated to all sectors of the economy. Do take up the quiz and see how well you understand the basics of this system.


Questions and Answers
  • 1. 
    When opening a construction company, you might need to buy trucks, tools, and storage shed.  Economists call these expenditures
    • A. 

      Business consumption expenditures.

    • B. 

      Investment in human capital.

    • C. 

      Capital investment.

    • D. 

      None of the above is correct.

  • 2. 
    Institutions in the economy that help to match one person's saving with another person's investment are collectively called
    • A. 

      The financial system.

    • B. 

      The Federal Reserve System.

    • C. 

      The banking system.

    • D. 

      The monetary system.

  • 3. 
    Savers
    • A. 

      And borrowers demand money from the financial system.

    • B. 

      And borrowers supply money to the financial system.

    • C. 

      Demand money from the financial system; borrowers supply money to the financial system.

    • D. 

      Supply money to the financial system; borrowers demand money from the financial system.

  • 4. 
    What are the two basic categories of financial institutions?
    • A. 

      The foreign exchange markets and the stock markets

    • B. 

      The market for loanable funds and the market for capital

    • C. 

      The financial markets and financial intermediaries

    • D. 

      The lending market and the checkable deposit market

  • 5. 
    The term of a bond is the
    • A. 

      The interest rate of the bond.

    • B. 

      Credit risk rating of the bond.

    • C. 

      The principal amount of the bond.

    • D. 

      Length of time until the bond matures.

  • 6. 
    Long term bonds are generally
    • A. 

      Riskier than short-term bonds and so pay higher interest.

    • B. 

      More risky than short-term bonds and so pay lower interest.

    • C. 

      Less risky than short-term bonds and so pay higher interest.

    • D. 

      Less risky than short-term bonds and so pay lower interest.

  • 7. 
    Rudolph has the choice of two bonds, one that pays 5 percent interest and the other that pays 10 percent interest. Which of the following is most likely?
    • A. 

      The 10 percent bond is more risky than the 5 percent bond

    • B. 

      The 10 percent bond has a shorter term than the 5 percent bond

    • C. 

      The 10 percent bond is a U.S. government bond, and the 5 percent bond is a junk bond

    • D. 

      The 10 percent bond is a municipal bond, and the 5 percent bond is a corporate bond

  • 8. 
    The sale of stocks
    • A. 

      And bonds to raise money are called debt finance.

    • B. 

      And bonds to raise money is called equity finance.

    • C. 

      To raise money is called debt finance, while the sale of bonds to raise funds is called equity finance.

    • D. 

      To raise money is called equity finance, while the sale of bonds to raise funds is called debt finance.

  • 9. 
    People who buys stock in a corporation such as Starbucks provide
    • A. 

      Debt finance and so become part owners of Starbucks.

    • B. 

      Debt finance and so become creditors of Starbucks.

    • C. 

      Equity finance and so become part owners of Starbucks.

    • D. 

      Equity finance and so become creditors of Starbucks.

  • 10. 
    Suppose that the government finds a major defect in one of a company‚Äôs product and demands them to take it off the market.  We would expect that
    • A. 

      The supply of the stock (and thus the price) rises.

    • B. 

      The supply of the stock (and thus the price) falls.

    • C. 

      The demands for the stock (and thus the price) rises.

    • D. 

      The demand for the stock (and thus the price) falls.

  • 11. 
    Financial intermediaries are
    • A. 

      The same as financial markets.

    • B. 

      Individuals who make a profit by buying a stock low and selling it high.

    • C. 

      The more general name for financial assets such as stocks, bonds, and checking accounts.

    • D. 

      Financial institutions through which savers can indirectly provide funds to borrowers.

  • 12. 
    A mutual fund
    • A. 

      Sells stocks and bonds on behalf of small and not-very-well-known firms who would otherwise have to pay high interest to obtain credit.

    • B. 

      Is an institution that sells shares to the public and uses the proceeds to buy a selection of various types of stocks, bonds, or both stocks and bonds.

    • C. 

      Is a financial market where small firms sell stocks and bonds to raise funds.

    • D. 

      Is money set aside by local governments to lend to small firms who want to invest in projects that are mutually beneficial to the firm and community?

  • 13. 
    Y = C + I + G + NX is an identity because
    • A. 

      The right-hand and left-hand sides are equal.

    • B. 

      Equality holds due to the way the variables are defined.

    • C. 

      Each symbol identifies a variable.

    • D. 

      None of the above is correct.

  • 14. 
    In a closed economy, the total income that remains after paying for consumption and government purchases is
    • A. 

      Public saving.

    • B. 

      Private saving.

    • C. 

      National saving.

    • D. 

      National disposable income.

  • 15. 
    Suppose that in a closed economy GDP is equal to 8,000, Taxes are equal to 2,000, Consumption equals 5,000, and Government expenditures equal 1,000.  What is national saving?
    • A. 

      0

    • B. 

      2000

    • C. 

      3000

    • D. 

      None of the above is correct.

  • 16. 
    If the tax revenue of the federal government exceeds spending, then the government
    • A. 

      Runs a national debt.

    • B. 

      Will increase taxes.

    • C. 

      Runs a budget deficit.

    • D. 

      Runs a budget surplus.

  • 17. 
    The slope of the demand for loanable funds curve represents the
    • A. 

      The positive relationship between the real interest rate and investment.

    • B. 

      The positive relationship between the real interest rate and saving.

    • C. 

      The negative relation between the real interest rate and investment.

    • D. 

      The negative relation between the real interest rate and saving.

  • 18. 
    A higher interest rate induces people to
    • A. 

      Save more, so the supply of loanable funds slopes upward.

    • B. 

      Save less, so the supply of loanable funds slopes downward.

    • C. 

      Invest more so the supply of loanable funds slopes upward.

    • D. 

      Invest less so the supply of loanable funds slopes downward.

  • 19. 
    The real interest rate is
    • A. 

      The nominal interest rate corrected for inflation.

    • B. 

      The interest rate as usually reported.

    • C. 

      The nominal interest rate minus the inflation rate.

    • D. 

      Both a and c are correct.

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