Since 1983, the US has typically run a financial account surplus.
a. True
b. False
QUESTION 2Which of the following affects the interest rate on a loan?
a. all of the following
b. the duration of the loan
c. the tax treatment of the loan
d. the administrative cost of the loan
e. the risk of default on the loan
QUESTION 3Between 1917 and 1982, the US ran a financial account deficit.
a. True
b. False
QUESTION 4The administration costs of a loan as a proportion of the total cost of the loan typically
a. decrease as the size of the loan increases. Therefore, the larger the loan, other things constant, the lower the interest rate
b. decrease as the size of the loan increases. Therefore, the larger the loan, other things constant, the higher the interest rate
c. increase as the size of the loan increases. Therefore, the larger the loan, other things constant, the lower the interest rate
d. increase as the size of the loan increases. Therefore, the larger the loan, other things constant, the higher the interest rate
e. increase as the size of the loan increases, but this has no impact on the interest rates charged for large loans compared to small loans
QUESTION 5International reserves include all except one of the following. Which is the exception?
a. gold
b. dollars
c. yen
d. Special Drawing Rights
e. oil
QUESTION 6If you hold a bond at a time when market interest rates are increasing, you will find that the bond's value has
a. remained the same since the interest payment remains constant
b. increased
c. increased only if the market interest rate exceeds the interest rate payable on the bond
d. declined because you will receive a lower price when you sell the bond
e. increased only if the interest payable on the bond exceeds the market interest rate
QUESTION 7International reserves are
a. foreign exchange held by governments only
b. foreign exchange held by central banks only
c. foreign exchange held by governments or central banks
d. gold only
e. various internationally acceptable assets
QUESTION 8Which of the following statements is true?
a. Interest rates charged to well-known corporations are higher than rates charged to individuals because corporations can afford it.
b. If people expect higher rates of inflation, the market interest rate will decrease because fewer people will borrow.
c. Interest rates in unstable countries are lower than rates in stable countries.
d. The risk cost of doing business in a high-crime area is greater and the cost of borrowing is, therefore, greater there.
e. The lower the tax rate, the greater the cost of borrowing.
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