1. The primary economic function of the financial system is to a. keep interest rates low. b. provide expert advice to savers and investors. c. match one person's consumption expenditures with another person's capital expenditures. d. match one person's saving with another person's investment. 2. Other things the same, bonds are likely to have higher interest rates if they have a. tax exemptions and short terms. b. tax exemptions and long terms. c. no tax exemptions and short terms. d. no tax exemptions and long terms. 2/6 | - 100% + 3. Which of the following is an example of financial intermediation? a. John buys shares of stock issued by a fast food company. b. A foreign government buys bonds issued by the U.S. Treasury. c. Susan makes a deposit at a bank and the bank uses this money to make an at loan to Ferguson. d. None of the above is correct. 4. The primary advantage of mutual funds is that they a. always provide the highest return. b. always allow people to "beat the market." c. allow people to diversify and reduce risk. d. allow people to diversify, which increases risk and return. 5. Consider four survivors on an island. Ron has a cooking pot wants a machete Alice has a machete wants a fishing spear Raymond has a machete wants a cooking pot Lee has a fishing spear wants a coconut Which of the following pairs of survivors has a double-coincidence of wants? a. Ron with Alice, and Ron with Lee b. Alice with Lee c. Ron with Raymond d. None of the above are correct. LO bc/23386235?X-Blackboard-Expiration=16466976000008X-Blackboard-Signature=8%2FvwcA 3/6 100% +1 6. Diana tutors Tiago for two hours before his economics final exam. Tiago pays Diana through a direct transfer from his bank on a payment app. Diana then uses her debit card to buy pizza for dinner from the local pizza parlor. This is an example of a. the exchange of money facilitating production and trade. b. trade between two people who each have a good or service that the other wants. c. an inefficient allocation of scarce resources. d. the creation of money through monetary policy. Sungmin Park ECO 205 Assignment I 7. Which list ranks assets from most to least liquid? a. currency, demand deposits, money market mutual funds b. currency, money market mutual funds, demand deposits c. money market mutual funds, demand deposits, currency d. demand deposits, money market mutual funds, currency 8. John and Jane decide to go on a vacation. As a result, they withdraw $2,500 from their LO 52296c/23386235?X-Blackboard-Expiration=16466976000008X-Blackboard-Signature-8%2FvwcAi 3/6 100% + 8. John and Jane decide to go on a vacation. As a result, they withdraw $2,500 from their savings account to purchase $2,500 worth of traveler's checks. As a result of these changes, a. M1 increases by $2,500 and M2 decreases by $2,500. b. M1 increases by $2,500 and M2 stays the same. c. M1 and M2 stay the same. d. M1 decreases by $2,500 and M2 increases by $2,500. 9. With an interest rate of 6 percent, the present value of $100 next year is approximately a. $106 b. $100 c. $94 d. $92 10. A credit market instrument that requires the borrower to make the same payment every period until the maturity date is known as a a. simple loan b, fixed-payment loan c. coupon bond d. discount bond LO