26. Financial markets are a. Unimportant to the economy because finance professi

Question

26. Financial markets are a. Unimportant to the economy because finance professionals do not produce anything useful b. Important to the economy because finance jobs pay well. e. Harmful to the economy because the main function of finance professionals is to engage in speculation. d. Important to the economy because they allocate resources from people will little use for them to people with productive investment ideas 27, Which activity represents the medium of exchange function of money? Sam saved $30 a week from his part-time job. a. b. By comparing prices Sam found that the Panasonic model costs less than the Sony model. Sam gave the salesperson $139.99 in exchange for the DVD-player. Sam settled for a C in his economics class for the pleasure of watching movies on his DVD-player e. d. 28. Which activity represents the unit of account function of money? a. Sam saved $30 a week from his part-time job b. By comparing prices Sam found that the Panasonic model costs less than the Sony model c. Sam gave the salesperson $139.99 in exchange for the DVD-player. d. Sam spent most of his semester watching movies on the DVD-player. 29, Paper dollars are while gold coins are a. commodity money; fiat money b. fiat money; commodity money c. commodity money; commodity money d fiat money; fiat money 30. Which of the following statements is true about the US Federal Reserve System? Only the 7 members of the Board of Governors vote in the Federal Open Market Committee (FOMC) a. b. Only the 12 Presidents of the Federal District Banks vote in the FOMC. e. All 7 members of the Board of Governors and 5 of the Presidents of the Federal District Banks (on a rotating basis) vote in the FOMC. d. All 7 members of the Board of Governors and all 12 Presidents of the Federal District Banks vote in the FOMC. 31. The mandate given to the Federal Reserve by the Congress is to a. Maintain price stability in the form of around 2% annual inflation. b. Maintain the maximum sustainable level of employment. c. Do both of the above. d. Do none of the above:; The Federal Reserve is not a government institution.

Explanation / Answer

Question 26

Financial markets act as medium that facilitate transfer of savings into investment.

In other words, financial markets acts as medium which allocates resources from people that have little use of such resources to people who have productive investment ideas to use such resources.

The correct answer is the option (d).

Question 27

Medium of exchange function of money implies use of money to pay for goods and services.

So, when Sam gave the salesperson $139.99 in exchange for the DVD-player then money is performing the medium of exchange function.

The correct answer is the option (c).

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