the economics of money, banking, and financial markets

358 #

© 2014 Pearson Canada Inc.#

8. 
   

   The Business Development Bank of Canada raises money by ____.
   A) issuing notes in domestic and foreign financial markets
   B) selling shares in domestic capital markets
   C) selling shares in foreign capital markets
   D) borrowing from the federal government
   Answer: D
   Diff: 2 Type: MC Page Ref: 288
   Skill: Recall
   Objective List: 12.8 Understanding government financial intermediation

   
   


9. 
   

   Fannie Mae and Freddie Mac ____.
   A) are U.S. government agencies that provide funds to the mortgage market
   B) are the names of U.S. central banks
   C) demonstrated great stability during the subprime crisis
   D) are pivot points in the business cycle
   Answer: A
   Diff: 1 Type: MC Page Ref: 308
   Skill: Recall
   Objective List: 12.8 Understanding government financial intermediation

   
   


10. 
    

    According to critics, how did the Fed's involvement in organizing the rescue of Long-Term
    Capital increase moral hazard?
    Answer: Critics have argued that the Fed intervention increased moral hazard by weakening
    discipline imposed by the market on fund managers because future Fed interventions of this type
    would be expected.
    Diff: 3 Type: SA Page Ref: 286
    Skill: Recall
    Objective List: 12.8 Understanding government financial intermediation