1. All money market instruments are short-term debt. T
2. Businesses are never DSUs. |
| False |
3. Denomination intermediation is best exemplified by
D. issuing five $3,000 CDs and making one $15,000 loan.
4. Dealers bring buyer and seller together; brokers make a market.Answer F |
5. There must be an equal number of DSUs and SSUs in a period.Answer |
Selected Answer: | False |
6. A household is an SSU when income for the period exceeds spending. |
Answer: | True |
7. A dealer offers to buy shares of IBM at $116 and sell to investors at $118. The “bid” isAnswer ￥116 |
8. Intermediation, or ____ financing, involves ___ financial claim(s) linking SSU and DSU.
C. indirect; two
9. Which of the following does not take deposits? |
Selected Answer: | C. finance companies. |
10. The money market provides liquidity; the capital market finances economic growth. |
Answer: | True |
11. The only “deposit-type” institutions that do not operate for profit areAnswer B. credit unions |
12. An SSU'sAnswer |
Selected Answer: | C. income for the period exceeds expenditures |
13. Surplus spending units (SSU) are also calledAnswer |
Selected Answer: | B. lenders. |
14. All money market instruments are short-term debt. T
15. A household is an SSU when income for the period exceeds spending. T
16. Households are the major source of funds to the financial system. T
17. An SSU must hold a claim until its scheduled maturity. F
18. Which sector has been most consistently in a surplus budget position?
19. Profitability of financial intermediaries derives from all of the following except
government regulation of interest rates |
20. A financial claim is an “IOU” from a deficit spending unit. T
21. Competition among financial intermediaries tends to force interest rates downward. T...