Tackle the Test: Multiple-Choice Questions

1. Question

   Decreasing which of the following is a task of the financial system?

   
   

   
   

   1. transaction costs

      
      
   
   

   2. risk

      
      
   
   

   3. liquidity

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   I and II only

   E.

   I, II, and III

   Decreasing which of the following is a task of the financial system?

2. Question

   Which of the following is NOT a type of financial asset?

   A.

   bonds

   B.

   stocks

   C.

   bank deposits

   D.

   loans

   E.

   houses

   Which of the following is NOT a type of financial asset?

3. Question

   The federal government is said to be “dissaving” when

   A.

   there is a budget deficit.

   B.

   there is a budget surplus.

   C.

   there is no budget surplus or deficit.

   D.

   savings does not equal investment spending.

   E.

   national savings equals private savings.

   The federal government is said to be “dissaving” when

4. Question

   A nonprofit institution collects the savings of its members and invests those funds in a wide variety of assets in order to provide its members with income after retirement. This describes a

   A.

   mutual fund.

   B.

   bank.

   C.

   savings and loan.

   D.

   pension fund.

   E.

   life insurance company.

   A nonprofit institution collects the savings of its members and invests those funds in a wide variety of assets in order to provide its members with income after retirement. This describes a

5. Question

   A financial intermediary that provides liquid financial assets in the form of deposits to lenders and uses their funds to finance borrowers’ investment spending on illiquid assets is called a

   A.

   mutual fund.

   B.

   bank.

   C.

   corporation.

   D.

   pension fund.

   E.

   life insurance company.

   A financial intermediary that provides liquid financial assets in the form of deposits to lenders and uses their funds to finance borrowers’ investment spending on illiquid assets is called a