This quiz works best with JavaScript enabled. Home > Economics > Financial Economics > Financial Economics – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Economics Quiz 1 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The aim of quantitative easing is to increase economic activity by A) By selling bonds. B) By encouraging bank lending, investment and therefore help improve the rate of economic growth. C) By decreasing the interest rate. D) By reducing tax rate. Show Answer Correct Answer: B) By encouraging bank lending, investment and therefore help improve the rate of economic growth. 2. It is common to distinguish three motives for holding money:the transactions motive, the precautionary motive, and the speculative motive. The principal determinant of the size of transaction balances is: A) Tastes. B) National Income. C) Interest rates. D) None of above. Show Answer Correct Answer: B) National Income. 3. ..... refers to how quickly and with what risks an asset can be converted into money. A) Validity. B) Liquidity. C) Monopoly. D) Transactions. Show Answer Correct Answer: B) Liquidity. 4. A central bank pursues a policy of quantitative easing by purchasing government securities.What is likely to happen to interest rates and aggregate expenditure? A) Interest rates will fall and aggregate expenditure fall. B) Interest rates will fall and aggregate expenditure rise. C) Interest rates will rise and aggregate expenditure fall. D) Interest rates will risel and aggregate expenditure rise. Show Answer Correct Answer: B) Interest rates will fall and aggregate expenditure rise. 5. Currency circulation is part of A) M1. B) M0. C) M3. D) None of above. Show Answer Correct Answer: A) M1. 6. Reach and Sustainability are the primary goals of microfinance. A) True. B) False. Show Answer Correct Answer: A) True. 7. What is the key term for when a country or NGO donates resources to another country to help it develop. A) Quotas. B) Fairtrade. C) Aid. D) Tariffs. Show Answer Correct Answer: C) Aid. 8. Irrational exuberance about the future of the economy would lead to A) An increase in DLF. B) A decrease in DLF. C) An increase in SLF. D) A decrease in SLF. Show Answer Correct Answer: A) An increase in DLF. 9. The ability to express the value of goods and services in different amounts of a currency is money's function as ..... A) A medium of exchange. B) A unit of account. C) A store of value. D) None of above. Show Answer Correct Answer: B) A unit of account. 10. Gold is no longer used as money in modern societies. One of the reasons is that it is not ..... A) Scarce. B) Durable. C) Divisible. D) Portable. Show Answer Correct Answer: D) Portable. 11. Refers to the expenditure for the purchase of making of new capital goods including inventories. A) Investments. B) Hoarding. C) Dissaving. D) Bank Money. Show Answer Correct Answer: A) Investments. 12. Murabaha is a type of Islamic financing that involves the sharing of profits and losses between the bank and the borrower. A) True. B) False. Show Answer Correct Answer: B) False. 13. If the stock market sees increases in all sectors the ..... of loanable funds will ..... because of the ..... effect. A) Supply:decrease; population growth. B) Demand; fall; crowding out. C) Supply; decrease; wealth. D) Demand; decrease; default risk. Show Answer Correct Answer: C) Supply; decrease; wealth. 14. Gharar is a must in Islamic Finance A) True. B) False. Show Answer Correct Answer: B) False. 15. Sukuk and bond conventional, both provide investors with payment streams A) True. B) False. Show Answer Correct Answer: A) True. 16. Which of the following is not a function of money? A) Medium of exchange. B) Store of value. C) Decoration. D) Unit of account. Show Answer Correct Answer: C) Decoration. 17. If banks within a country's banking system generally have more money to lend out, we say that the supply of loanable funds increases (in other words, the supply curve shifts right). When this happens we would expect this to: A) Increase the real interest rate in society. B) Decrease demand for loanable funds. C) Decrease the real interest rate in society. D) Increase demand for loanable funds. Show Answer Correct Answer: C) Decrease the real interest rate in society. 18. Broad money consists of ..... plus savings accounts and money market accounts. A) M1. B) M2. C) M3. D) M0. Show Answer Correct Answer: A) M1. 19. Quantitative easing is a form of A) Expansionary fiscal policy. B) Expansionary monetary policy. C) Contractionary monetary policy. D) Contractionary fiscal policy. Show Answer Correct Answer: B) Expansionary monetary policy. 20. If UK citizens become less concerned with the future and save less at each real interest rate, A) Real interest rates rise and investment falls. B) Real interest rates rise and investment rises. C) Real interest rates fall and investment rises. D) Real interest rates fall and investment falls. Show Answer Correct Answer: A) Real interest rates rise and investment falls. Next →Related QuizzesEconomics QuizzesFinancial Economics Quiz 2Financial Economics Quiz 3Financial Economics Quiz 4 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books