All Matches

Solution Library

Expert Answer

Textbooks

Search Textbook questions, tutors and Books

Oops, something went wrong!

Change your search query and then try again

Result Not Found

Books FREE
Tutors
Study Help
Ask a Question

Search
Sign In
Register

study help
business
money banking financial markets

Questions and Answers of Money Banking Financial Markets

Draw a money demand and supply graph that shows how the Federal Reserve can decrease the short-run nominal interest rate.
How will the bond market adjust to an increase in the expected inflation rate? Use a demand and supply graph for bonds to illustrate your answer.
Why does the supply curve for bonds slope up? Why does the demand curve for bonds slope down?
Compare the bond market approach to the loanable funds approach by explaining the following for each approach:a. What the good isb. Who the buyer isc. Who the seller isd. What the price is
What are the determinants of asset demand?
Go to the web site of the Federal Reserve Bank of St. Louis (FRED) (fred.stlouisfed.org) and download and graph the data series for the 10-year U.S. Treasury note (GS10) from January 1954 until the
Go to the web site of the Federal Reserve Bank of St. Louis (FRED) (fred.stlouisfed.org) and find the most recent value and the value from the same quarter four years earlier for Gross Government
Briefly explain what typically happens to interest rates during a recession. Use a demand and supply graph for bonds to illustrate your answer.
Why might the demand curve for bonds shift to the left? Why might the supply curve for bonds shift to the right?
What actions did the Federal Reserve and Treasury take in dealing with the financial crisis?What is the moral hazard problem?How is it related to the Federal Reserve’s and Treasury’s actions?
Suppose that Congress changes the law to require all firms to accept paper currency in exchange for whatever they are selling. Briefly discuss who would gain and who would lose from this legislation.
According to an article in the Wall Street Journal:“The highest U.S. dollar denomination, the $100 bill, trades at a significant premium in many emerging markets.” Why might people in these
Sweden, some banks have closed their ATMs, no longer allow depositors to make cash withdrawals in person at branches, and no longer accept cash deposits.a. What are the benefits to a bank from taking
One of the ways the Federal Reserve carries out its responsibilities for conducting monetary policy is by trying to affect the level of key interest rates. In early 2016, Federal Reserve Chair Janet
Consider the following information from September 15, 2016, for a coupon bond with a face value of $1,000 and a maturity date ofSeptember 15, 2018:Coupon rate: 5.0%Price: $955.11Yield to maturity:
Consider a $1,000 face value bond that sells for an initial price of $450. It will pay no coupons for the first 10 years and will then pay a 6.25% coupon each year for the remaining 20 years. Write
A certified financial planner notes that with an unsubsidized student loan, the borrower has the choice of whether to make interest payments on the loan while still in college. She advises that
Norman Jones, an economic historian at the University of Utah, has described the views of the ancient Greek philosopher Aristotle on interest:Aristotle defined money as a good that was consumed by
What is the difference between an investor and a trader? What is financial arbitrage?
Why do consumers usually prefer fixed-payment loans to simple loans when buying cars and houses?
What are TIPS? Why would an investor buy TIPS rather than conventional Treasury bonds?
If you own a bond and market interest rates increase, will you experience a capital gain or a capital loss? Briefly explain.
Briefly define each of the five key financial assets. Is every financial asset also a financial security? Is it possible that what a saver would consider a financial asset a borrower would consider a
What do economists mean by a “bubble”? Why do many economists believe that there was a housing bubble in the United States between 2000 and 2005?
Go to the web site of the Bureau of Economic Analysis (www.bea.gov) and use the data there to calculate the percentage change in GDP for each year from 2000 through 2015. Graph your data. Briefly
What is the difference between direct finance and indirect finance? Which involves financial intermediaries, and which involves financial markets?
By the 2000s, what significant changes had taken place in the mortgage market? What is a “subprime” borrower? What is an “Alt-A” borrower?
Briefly explain why the financial system is one of the most highly regulated sectors of the economy.
What problems did the decline in housing prices that began in 2006 cause for the financial system?
What is the Federal Reserve? Who appoints the members of the Federal Reserve’s Board of Governors? How do the Fed’s current responsibilities compare with its responsibilities when Congress
Briefly describe the three key services that the financial system provides to savers.
Why is a bubble more likely to occur in the housing market than in the market for automobiles or the market for refrigerators?
A student remarks:When I pay my car insurance premiums, I never get that money back. My insurance premiums represent payments for a service I receive from the insurance company. When I deposit money
Panel (b) of Figure 1.3 shows a price index of houses. The late Karl Case of Wellesley College and Robert Shiller of Yale University developed this index. Many economists consider changes in the
In a talk at the White House after the end of the financial crisis, President Barack Obama argued:“Ultimately in this country we rise and fall together: banks and small businesses, consumers and
How does the creation of a secondary market in mortgages help to promote home ownership? Why might the federal government decide to intervene in the housing market to promote home ownership?
An article in the Economist magazine notes the following about peer-to-peer lending sites: “Instead of a bank intermediating between savers and borrowers, the two parties deal with each other
Households have a much larger fraction of their savings in pension funds than in bank deposits. If you are saving for retirement, why might you be better off putting your funds in an IRA or a 401(k)
Typically, you will receive a very low interest rate on money you deposit in a bank. Interest rates on car loans and business loans are much higher. Why, then, do most people prefer putting their
Suppose financial intermediaries did not exist and only direct finance were possible. How would this affect the process of an individual buying a car or a house?
During the 2007–2009 recession, many people who had taken out mortgages to buy homes had trouble making the payments on their mortgages.Because housing prices were falling, the amount that people
What makes a dollar bill money? What makes a personal check money? Are there circumstances under which you would be reluctant to accept a dollar bill as money? A personal check?
Why does the Federal Reserve care about the payments system? What does the Fed consider to be the five desirable outcomes for the payments system?
Are the assets included in M1 more or less liquid than the assets included in M2? Briefly explain.
Is the equation of exchange a theory? Briefly explain.
Go to the web site of the Federal Reserve Bank of St. Louis (FRED) (fred. stlouisfed.org) and find the most recent values for the M1 Money Stock (M1), the Currency Component of M1 (CURRENCY), Total
What are the costs of a barter system?
Give two examples of commodity money.
Briefly describe each of the four main functions of money.
Why did governments begin issuing paper currency?
Since 1970, which measure of the money supply has grown more rapidly, M1 or M2? Briefly explain why. Has the growth of M1 been more or less stable than the growth rate of M2?
What does the quantity theory indicate is the cause of inflation?
What role does specialization play in an economy’s standard of living?
Is money the only store of value? If not, give some other examples of stores of value. Must money be a store of value to serve its function as a medium of exchange? Briefly explain.
What is the “blockchain” technology? Is it likely to lead to the United States becoming a “cashless society”? Briefly explain.
Define liquidity. Rank the following assets in terms of liquidity, from most to least liquid: money market mutual fund, savings account, corporate stock, dollar bill, house, gold bar, checking
Why do governments allow hyperinflation to occur?
Why might an individual find a $20 Federal Reserve Note to be more desirable as a form of money than a $20 gold coin? Which would the government find more desirable to produce? Briefly explain.
What is the difference between commodity money and fiat money?
Suppose that an economy in 10,000 b.c. used a rare stone as its money. Suppose also that the number of stones declined over time as stones were accidentally destroyed or used as weapons. What would
If you ask someone who hasn’t taken a course in economics to define the money supply, he or she is likely to say something like: “The money supply equals the total amount of paper currency and
Briefly discuss the pros and cons of a central bank being independent of the rest of the government.
Go to the St. Louis Fed’s data site (FRED) (fred.stlouisfed.org) and, for January 1990 to the most recent available month, download and graph both the compounded annual rates of change of M2 (M2SL)
What are the key differences between using a deerskin as money and using a dollar bill as money?
Suppose that you live in a simple farm economy where milk is accepted as the primary form of money. Discuss the difficulties with using milk as money in regard to:a. A medium of exchangeb. A unit of
One historian has given the following description of the economy of the Roman Empire in the third century under the emperor Diocletian:The coinage had become so debased as to be virtually worthless.
Explain whether each of the following is included in only M1, only M2, or both M1 and M2:a. Traveler’s checksb. Savings depositsc. Certificates of depositd. Checking account deposits
If during 2018 the money supply increases by 4%, the inflation rate is 2%, and the growth of real GDP is 3%, what must have happened to the value of velocity during 2018?
Should the packs of Marlboro cigarettes used to pay taxi drivers in Russia in the late 1980s be considered money? Briefly explain.
Discuss whether your money, wealth, or income increases in each of the following situations:a. The value of your house increases.b. Your boss gives you a 10% raise.c. You take cash out of the bank
An article in the Wall Street Journal on blockchain notes: “The technology could cut $20 billion in annual costs in global banking.” What is blockchain technology, and how would it reduce the
Until 1933, the United States was on the gold standard, and people could receive gold from the federal government in exchange for their paper currency. Although the federal government is no longer
A student makes the following statement: “If the money supply in a country increases, then the level of total production in that country must also increase.” Briefly explain whether you agree
Following the end of World War II in 1945, the Reichsmark, the German currency, lost so much value that a barter economy developed. During this period, many Germans used U.S. cigarettes as currency.
In late 2009, Amazon introduced PayPhrase, an electronic payments system intended to compete with PayPal. Less than three years later, in early 2012, Amazon discontinued the program. PayPal is by far
Suppose you withdraw $1,000 from your checking account and use the funds to buy a certificate of deposit at your bank. What is the immediate effect of these actions on M1 and M2?
Why aren’t credit cards included in M1 or M2?
How does a high rate of inflation affect the value of money? How does it affect the usefulness of money as a medium of exchange?
According to an article in the Wall Street Journal: “The $100 bill is America’s most popular currency denomination. It also could be the most endangered.”a. Have you ever used a $100 bill to
According to an article on nbcnews.com, in Sweden, “Shoe stores, clothing shops and restaurants are increasingly reliant on card-only or mobile banking transactions, and some—like the brand
In Figure 2.2, panel (b) shows that during a period in the early 1990s, the rate of M1 growth was increasing rapidly, while the rate of M2 growth was decreasing. Briefly explain how this outcome was
What does the statistical evidence show about the link between the growth rate of the money supply and the inflation rate in the long run? Is the link between the growth rate of the money supply and
According to an article in the Economist, “Zimbabwe abandoned its worthless currency not long after monthly inflation hit 80 billion per cent in November 2008. Zimbabweans now use American
When the German government succeeded in ending the hyperinflation in 1924, was this better news for borrowers or for lenders? Briefly explain.
In 1919, the British economist John Maynard Keynes wrote the influential book The Economic Consequences of the Peace, in which he argued that the reparations for World War I that Germany was being
An article in the Wall Street Journal notes: “The Federal Reserve, though it has enormous power over the U.S. economy, is designed to be independent of Congress and the president.” If the Fed has
What is the difference between the yield to maturity on a coupon bond and the rate of return on the bond?
What is the difference between the nominal interest rate on a loan and the real interest rate?
Go to the web site of the Federal Reserve Bank of St. Louis (FRED) (fred.stlouisfed.org) and download and graph the data series for the 3-month Treasury bill (TB3MS), the 10-year Treasury note
What are the main reasons that lenders charge interest on loans?
What is the difference between a debt instrument and an equity?
Why is yield to maturity a better measure of the interest rate on a bond than is the coupon rate?
What does it mean to describe a bond as being bought and sold in a “secondary market”?
Why does a bond with a longer maturity have greater interest-rate risk than a bond with a shorter maturity?
What is the difference between the real interest rate and the expected real interest rate?
Go to the web site of the Federal Reserve Bank of St. Louis (FRED) (fred.stlouisfed.org) and download the data for the 1-year Treasury bill (TB1YR) for the period from 1980 to the most recent month.
If you deposit $1,000 in a bank CD that pays interest of 2% per year, how much will you have after two years?
What are the four basic categories of debt instruments? Which categories of debt instruments pay interest before the instrument matures? Which category of debt instrument pays back some of the
In each of the following parts, write an expression that shows the relationship among the listed terms:a. The price of a coupon bond, the coupon payments, the face value, and the yield to maturity.b.
Suppose that for a price of $950, you purchase a 10-year Treasury bond that has a face value of $1,000 and a coupon rate of 4%. If you sell the bond one year later for $1,150, what was your rate of

Showing 1300 - 1400 of 1701

First
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18

Get In Touch

About Us
Contact Us
Career
Jobs
FAQ
Campus Ambassador

Company Info

Security
Copyrights
Privacy Policy
Terms & Condition
SolutionInn Fee
Scholarship

Services

Sitemap
Fun
Definitions
Become Tutor
Study Help Categories
Recent Questions
Expert Questions

Copyright © 2024 SolutionInn All Rights Reserved.

Get the SolutionInn - Study Help App