1 In general， the more liquid an asset the ______
A less it is likely to yield
B greater its risk of default
C lower its market price will be
D more it will add to bank profits

2 The interest rate printed on the face of a bond is called the ______
A coupon rate
B prime rate
C printed rate
D nominal rate

3 A rise in interest rates leads to ______
A capital gains for bondholders
B capital losses for bondholders
C income gains for bondholders
D income losses for bondholders

4 If the reserve requirement ratio were equal to zero， then ______
A the deposit multiplier would be infinitely large
B required reserves would be equal to zero
C the banking system would theoretically be able to create an infinitely large amount of demand deposits
D all of the above

5 Financial intermediaries’ primary function in financial markets is to serve as ______
A ultimate borrowers
B ultimate lenders
C ultimate savers
D middlemen

6 Suppose the Fed buys $10 million in government securities from a commercial bank If the required reserve ratio is 025， what is the maximum amount by which checkable deposits in the banking system can change? ______
A +$10000000
B +$25000000
C +$40000000
D -$40000000

7 Suppose the annualized yield on a 91-day Treasury bill is 125% If you invested $10 000 in this bill， how much would you have to pay for this security? ______
A $11250
B $1001250
C $999875
D $996893

8 Who are the first to bear financial losses incurred by the bank? ______
A The depositors
B The debtors
C The bank capital shareholders
D The bank employees

9 A government is faced with a balance of payments deficit It may take action to deal with this by doing all of the following except ______
A devalue the currency
B reduce interest rates
C restrict consumer spending
D restrict imports10 According to the principle of comparative advantage， countries ______
A should specialize in producing goods they have lower opportunity cost for
B should export goods they can produce at lower input costs
C will specialize in producing goods which they can produce at lower input costs
D should specialize in producing goods they have lower absolute costs for