the economics of money, banking, and financial markets

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17. 
    

    Share prices are a valuation of a corporation's ____.
    A) collateral
    B) net worth
    C) current capital
    D) net earnings
    Answer: B
    Diff: 1 Type: MC Page Ref: 184
    Skill: Applied
    Objective List: 9.1 Discuss the factors that lead to financial crises

    
    


18. 
    

    A sharp decline in the stock market means that the ____ of corporations has fallen
    making lenders ____ willing to lend.
    A) net worth; less
    B) net worth; more
    C) liability; less
    D) liability; more
    Answer: A
    Diff: 2 Type: MC Page Ref: 184
    Skill: Recall
    Objective List: 9.1 Discuss the factors that lead to financial crises

    
    


19. 
    

    A(n) ____ is an increase in prices of assets above their fundamental economic values.
    A) decrease in moral hazard
    B) asset-price bubble
    C) decline in lending
    D) liability war
    Answer: B
    Diff: 2 Type: MC Page Ref: 184
    Skill: Recall
    Objective List: 9.2 Explain how increases in adverse selection and moral hazard cause financial
    crises

    
    


20. 
    

    Most financial crises have started during periods of ____ either after the start of a
    recession or a stock market crash.
    A) high uncertainty
    B) low interest rates
    C) low asset prices
    D) high financial regulation
    Answer: A
    Diff: 1 Type: MC Page Ref: 184
    Skill: Applied
    Objective List: 9.2 Explain how increases in adverse selection and moral hazard cause financial
    crises