Question

In: Economics

Loan defaults are when ________. customers pay back their loans customers pay back their loans early...

Loan defaults are when ________.

customers pay back their loans

customers pay back their loans early

customers do not repay their loans

conspicuous consumption happens

A well-run bank will ________.

assume all borrowers will pay their loans on time

not factor in missing payment into its planning

not factor in risk of foreclosures

assume some borrowers will not repay their loans on time

Credit is

a way to buy futures and options in the open market.

a tool for buying things you cannot afford to pay for all at once.

a way to purchase items smaller amounts over a long period of time.

a way to purchase goods using a debit card.

Which of the following does NOT qualify as "money"?

commodity money

the U.S. dollar

barter

fiat money

Consumers must choose whether they prefer to consume goods, including money, now or in the future. This is known as:

consumer confidence.

intertemporal decision making.

the law of demand.

Which is true about a certificate of deposit (CD)?

It pays a lower interest rate than a savings account.

There is a penalty to withdrawal early.

The time frame to deposit money is variable.

When organizations need money, they often borrow through what main method?

Equity

Assets

Bonds

Liabilities

It has a variable interest rate.

conspicuous consumption.

How much money can a bank loan out, and make money on, of the banks’ newly received deposits?

The bank can loan out only up to the amount of its excess reserves.

Banks only lend out 25% of the deposit made by customers.

The bank can loan out what is equal to the full amount of the new deposits.

The bank can loan out up to the amount of their checkable deposits.

Equilibrium in financial markets occurs at an interest rate where the quantity of loanable funds demanded is

less than the quantity of loanable funds supplied.

greater than the quantity of loanable funds supplied.

Money that has no significant non-monetary value is called

commodity money.

fiat money.

extrinsic value money.

intrinsic value money.

misrepresented by the supply side of the economic model.

equal to the quantity of loanable funds supplied.

Solutions

Expert Solution

Q1 Answer is C.

When customers does not pay back the loan it is called loan defaults.

Q2 Answer is A.

Banks have to assume to that the borrowers will pay back the loans on time.

Q3 Answer is B. Credit is when items are purchased when we can not afford to pay right now.

Q4 Answer is C. Barter is not a money. In barter system goods and services are exchanged with another goods and services, there was no money in existence.

Q5 Answer is B. Intertemporal decision making.

Q6 Answer is B. Certificate of deposit are made for fix time and if they are withdrawn there is penality.

Q7 Answer is A. Equity.

Organisations often raise the money by issuing the equity shares.

Q8 Answer is A. A bank can lend the money upto its excess reserves. It have to retain some reserves which are mandatory.

Q9 Answer is D. When quantity demanded is equal to quantity supplied of loanable funds then equilibrium get established.

Q10 Answer is B. Fiat money.

Fiat money is that money which have no intrnsic value, like we today have money. this money have only monetary value printed on it but does not have any other value.

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