the economics of money, banking, and financial markets

251 $

© 2014 Pearson Canada Inc.$

29. 
    

    If the anatomy of a financial crisis is thought of as a sequence of events, which of the
    following events would be least likely to be the initiating cause of the financial crisis?
    A) Increase in interest rates
    B) Bank panic
    C) Stock market decline
    D) Increase in uncertainty
    Answer: B
    Diff: 2 Type: MC Page Ref: 184 - 185
    Skill: Recall
    Objective List: 9.2 Explain how increases in adverse selection and moral hazard cause financial
    crises

    
    


30. 
    

    If the anatomy of a financial crisis is thought of as a sequence of events, which of the
    following events would be least likely to be the initiating cause of the financial crisis?
    A) Increase in interest rates
    B) Stock market decline
    C) Unanticipated decline in price level
    D) Increase in uncertainty
    Answer: C
    Diff: 2 Type: MC Page Ref: 185
    Skill: Recall
    Objective List: 9.2 Explain how increases in adverse selection and moral hazard cause financial
    crises

    
    


31. 
    

    An economic downturn which causes the price level to fall and a deterioration in firms' net
    worth because of the increased burden of indebtedness results in ____.
    A) asset bubbles
    B) rising interest rates
    C) debt deflation
    D) financial recovery
    Answer: C
    Diff: 2 Type: MC Page Ref: 185
    Skill: Recall
    Objective List: 9.2 Explain how increases in adverse selection and moral hazard cause financial
    crises