Question 1

The biggest borrowers in 2006, in descending order were

Accepted Answer

In 2006, the federal government was the largest borrower, followed by nonfinancial businesses, and then local and state governments.

Question 2

In the year 2006, the federal government sold assets of around $14 billion and then borrowed almost

Accepted Answer

In 2006, the federal government of the United States borrowed almost $635 billion, reflecting the difference between its spending and revenue, a part of which is covered by selling assets and issuing debt.

Question 3

In 2006 the value of M1 was close to

Accepted Answer

In 2006, the value of M1, which includes physical currency and coin, demand deposits, traveler's checks, and other checkable deposits, was close to $1.4 trillion. This figure is consistent with historical data on the money supply from the Federal Reserve.

Question 4

The value of M2 in 2006 was just over

Accepted Answer

In 2006, the value of M2, which includes cash, checking deposits, and easily convertible near money, was just over $6.8 trillion.

Question 5

Between 1960 and 2006, the cost of living index, which measures the prices of consumer goods, increased

Accepted Answer

Between 1960 and 2006, the cost of living index, which measures the prices of consumer goods, indeed increased more than five times. This reflects the general inflation and price increases for consumer goods over this period.

Question 6

Between the 1982-84 base period and 2006, the cost of living index, which measures the prices of consumer goods, increased

Accepted Answer

The cost of living index doubled from 100 to 200 between the 1982-84 base period and 2006, indicating a 100% increase in the prices of consumer goods.

Question 7

In the United States, banks hold approximately one quarter of the total resources of all US financial institutions, which in 2006 was

Accepted Answer

Banks hold approximately one quarter of the total resources of all US financial institutions, which in 2006 was $9.5 trillion.

Question 8

Money market funds held in US financial institutions went from zero in 1970 to just over $_______ in

Accepted Answer

Money market funds held in US financial institutions went from zero in 1970 to just over $2 trillion in 2008.

Question 9

In the United States financial system M2Z is a

Accepted Answer

M2Z is a money measure that is close to the transactions demand for money, developed by the St. Louis Federal Reserve Bank, and its value was over $6.9 trillion in 2006.

Question 10

What is the difference between internal finance and external finance?

Accepted Answer

The answer of What is the difference between internal finance...

Question 11

What exactly is the relationship between the process of creating financial assets and liabilities and the acts of saving and investment? Why is that relationship important to your financial and economic well-being?

Accepted Answer

The answer of What exactly is the relationship between the...

Question 12

What do the following terms mean? Deficit-budget unit (DBU)? Surplus-budget unit (SBU)? Balanced-budget unit (BBU)? Why are these concepts important?

Accepted Answer

The answer of What do the following terms mean? Deficit-budget...

Question 13

Explain what money is. What are its principal functions or roles within the system of money and capital markets? Within the economy?

Accepted Answer

The answer of Explain what money is. What are its...

Question 14

Can you distinguish between inflation and deflation? What do they have to do with money, if anything?

Accepted Answer

The answer of Can you distinguish between inflation and deflation?...

Question 15

What is direct finance? Semi-direct finance? Indirect finance?

Accepted Answer

The answer of What is direct finance? Semi-direct finance? Indirect...

Question 16

In the evolution of the financial system, which came first - direct, indirect or semi-direct finance? Why do you think this is so?

Accepted Answer

The answer of In the evolution of the financial system,...

Question 17

What are the essential differences between primary and secondary securities? Why are these instruments important to the operation of the financial system?

Accepted Answer

The answer of What are the essential differences between primary...

Question 18

Which financial institutions are the largest within the financial system? Why do you think these are the largest financial institutions?

Accepted Answer

The answer of Which financial institutions are the largest within...

Question 19

What factors influence the particular financial assets each financial institution acquires?

Accepted Answer

The answer of What factors influence the particular financial assets...

Question 20

Identify which economic units are completely self-financed. Which economic units are deficit-budget units? Surplus-budget units? Balanced-budget units?

Accepted Answer

The answer of Identify which economic units are completely self-financed....

Quiz 2: Financial Assets, Money, Financial Transactions, and Financial Institutions