Question 2:

1.) A surplus spending unit is one whose

1. Income and expenditures for the period are equal.
2. Income for the period exceeds consumption and real investment expenditures.
3. Expenditures for the period exceed receipts.
4. Uses credit cards for all consumer purchases.

2.) Which of the following is an example of indirect financing?

1. An SSU purchasing a financial claim from a DSU.
2. An SSU purchasing a financial claim from a dealer.
3. An SSU purchasing a financial claim from a commercial banker.
4. An SSU purchasing a financial claim from an underwriter.

3.) Financial institutions facilitate the flow of funds

1. From savers to borrowers by buying the direct securities of borrowers and issuing indirect liability claims to savers.
2. By issuing direct financial claims to savers and purchasing the indirect securities of borrowers.
3. By bringing savers and borrowers together for a fee.
4. By keeping their underwriting spread at a reasonable cost.

4.) Most financial intermediaries:

1. Issue direct claims and purchase direct financial assets.
2. Issue indirect claims and purchase indirect financial assets.
3. Purchase large amounts of real, tangible assets.
4. Purchase direct financial claims and issue indirect securities.

5.) Denomination intermediation refers to

1. Issuing insured deposits and making risky business loans.
2. Issuing two-year CDs and making a 90-day note.
3. Issuing $3,000 average balance checking accounts and making $15,000 auto loans.
4. Promising redeem ability to SSUs and investing the funds in a one-year business loan.

6.) Surplus spending units (SSU) are also called

1. Lenders.
2. Borrowers.
3. Sellers of securities.
4. Balanced budget units.

7.) The ease with which a financial claim can be resold refers to its

1. Liquidity.
2. Default risk.
3. Marketability.
4. Redeem ability.

8.) Intermediation financing, also called________financing, involves________financial claims(s) between saver and borrower.

1. Indirect; two.
2. Direct; two.
3. Indirect; one.
4. Direct; one.