the economics of money, banking, and financial markets

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9. 
   

   Factors that lead to worsening conditions in financial system include ____.
   A) increases in net worth
   B) unanticipated increases in the price level
   C) unanticipated increases in the value of the domestic currency
   D) unanticipated declines in the value of the domestic currency
   Answer: D
   Diff: 2 Type: MC Page Ref: 183
   Skill: Recall
   Objective List: 9.1 Discuss the factors that lead to financial crises

   
   


10. 
    

    Factors that lead to worsening conditions in financial system include ____.
    A) declining interest rates
    B) unanticipated increases in the price level
    C) the deterioration in banks' balance sheets
    D) increases in bond prices
    Answer: C
    Diff: 1 Type: MC Page Ref: 183
    Skill: Recall
    Objective List: 9.1 Discuss the factors that lead to financial crises

    
    


11. 
    

    When there is a deterioration in financial institutions' balance sheets ____.
    A) economic activity contracts
    B) asset prices increase
    C) financial engineering takes place
    D) financial globalization increases its pace
    Answer: A
    Diff: 1 Type: MC Page Ref: 183 - 184
    Skill: Recall
    Objective List: 9.1 Discuss the factors that lead to financial crises

    
    


12. 
    

    Government safety nets ____.
    A) weaken market discipline
    B) reduce moral hazard
    C) incent banks to take less risk
    D) require banks to loan less funds
    Answer: A
    Diff: 1 Type: MC Page Ref: 184
    Skill: Recall
    Objective List: 9.1 Discuss the factors that lead to financial crises