1_The bond markets are important because they are

a.

the markets where foreign exchange rates are determined.

b.

the markets where all borrowers get their funds.

c.

easily the most widely followed financial markets in the United States.

d.

the markets where interest rates are determined.

2_When stock prices fall

a.

an individual's wealth may decrease but their willingness to spend is not affected.

b.

an individual's wealth may decrease and their willingness to spend may decrease.

c.

a business firm will be more likely to sell stock to finance investment spending.

d.

an individual's wealth is not affected nor is their willingness to spend.

3_________ policy involves decisions about government spending and taxation.

a.

Fiscal

b.

Monetary

c.

Financial

d.

Systemic

4_If the price level increases from 200 in year 1 to 220 in year 2, the rate of inflation from year 1 to year 2 is

a.

10%.

b.

11%.

c.

20%.

d.

120%.

5_A person's house is part of her

a.

income.

b.

wealth.

c.

money.

d.

liabilities.