Economic Factors and Financial Markets Unit 4

Which market facilitates the trading of stocks and bonds?
Capital market
Money market
Foreign exchange market
Inter-bank market
Which of the following statements about the financial markets is true?
The primary market is where shares are traded amongst investors.
Borrowing money from a bank is an example of direct financing.
All financial transactions must flow through a financial intermediary.
Financial markets provide a mechanism to implement government policy.
Which of the following items could be changed as part of a fiscal policy?
Interest rates
Money supply
Taxes
Foreign exchange
When is market equilibrium reached?
When there are more goods supplied than demanded
When there are more goods demanded than supplied
When the goods demanded are the same as the goods supplied
When the demand and supply curves shift
What does Gross Domestic Product measure?
The market value of raw materials produced domestically
The market value of final goods and services produced domestically
The market value of all goods and services sold domestically
The market value of final goods and services sold domestically
Which of the following are characteristics of investment capital?
Scarcity and mobility
Neutrality and fluidity
Liquidity and resilience
Longevity and neutrality
Which of the following statements is an example of monetary policy?
The federal government announces a new surtax for high-income earners.
The Bank of Canada raises interest rates to slow down the economy.
The federal government reduces the GST from 7% to 5%.
The federal government commits to transferring an additional $1 billion to the provinces for health care.
ABC Corporation is attempting to raise $100 million from the financial market. It is offering to issue shares to the public through an Initial Public Offering (IPO). The shares are priced at $25 and investors from all over the world are likely to subscribe to the IPO. In which market is ABC corporation attempting to raise funds?
Foreign exchange market
Primary market
Secondary market
Auction market
Which of the following statements about purchasing power is TRUE?
Purchasing power falls as inflation rises.
Purchasing power falls as inflation falls.
Purchasing power is not related to inflation.
Purchasing power falls during periods of rising real income.
What happens to the supply of the good or service produced when the sale price increases?
Increases
Decreases
Not affected at all
Changes in an unpredictable direction
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