Start FlashCards Download PDF Learn

Get the best Microeconomics course in your pocket!

Do you use facebook?

Photo of a smartphone with the Facebook application open
Economics is greatly impacted by how well information travels through society. Today, social media giants Twitter, Facebook, and Instagram are major forces on the information super highway. (Credit: Johan Larsson/Flickr)

Decisions ... decisions in the social media age

To post or not to post? Every day we are faced with a myriad of decisions, from what to have for breakfast, to which route to take to class, to the more complex—“Should I double major and add possibly another semester of study to my education?” Our response to these choices depends on the information we have available at any given moment; information economists call “imperfect” because we rarely have all the data we need to make perfect decisions. Despite the lack of perfect information, we still make hundreds of decisions a day.

And now, we have another avenue in which to gather information—social media. Outlets like Facebook and Twitter are altering the process by which we make choices, how we spend our time, which movies we see, which products we buy, and more. How many of you chose a university without checking out its Facebook page or Twitter stream first for information and feedback?

As you will see in this course, what happens in economics is affected by how well and how fast information is disseminated through a society, such as how quickly information travels through Facebook. “Economists love nothing better than when deep and liquid markets operate under conditions of perfect information,” says Jessica Irvine, National Economics Editor for News Corp Australia.

This leads us to the topic of this chapter, an introduction to the world of making decisions, processing information, and understanding behavior in markets —the world of economics. Each chapter in this book will start with a discussion about current (or sometimes past) events and revisit it at chapter’s end—to “bring home” the concepts in play.

Introduction

In this chapter, you will learn about:

  • What Is Economics, and Why Is It Important?
  • Microeconomics and Macroeconomics
  • How Economists Use Theories and Models to Understand Economic Issues
  • How Economies Can Be Organized: An Overview of Economic Systems

What is economics and why should you spend your time learning it? After all, there are other disciplines you could be studying, and other ways you could be spending your time. As the Bring it Home feature just mentioned, making choices is at the heart of what economists study, and your decision to take this course is as much as economic decision as anything else.

Economics is probably not what you think. It is not primarily about money or finance. It is not primarily about business. It is not mathematics. What is it then? It is both a subject area and a way of viewing the world.

Exam PDF eBook: 
Final Fin 421
Download Financial 421 Exam PDF eBook
36 Pages
2014
English US
Educational Materials



Sample Questions from the Final Fin 421 Exam

Question: Purchased funds

Choices:

FI's rely on these

are day to day withdrawals

include short term borrowings such as federal funds loans and brokered deposits

Both A and C

Question: Issuing secondary securities or liabilities to fund the purchase of primary securities or assets is classified as

Choices:

Refinancing risk

Asset transformation

Reinvestment risk

Question: Firm-specific risk is the risk of default

Choices:

associated with general-economy-wide conditions affecting all borrowers

for the borrowing firm associated with the specific types of project risk taken by that firm

for all firms associated with a FI

Question: The Bankruptcy Reform Act of 2005 makes is ________ difficult for consumers to declare bankruptcy

Choices:

less

just as

more

Question: Liquidity risk is the risk

Choices:

that day to day withdrawals and loan demands will no longer be predictable

that a sudden increase in withdrawals or loan demand may require an FI to liquidate assets in a short period and at low prices

incurred by FI when the maturities of its assets and liabilities are mismatched and interest rates are volatile

Question: Reinvestment risk

Choices:

incurs when FI's assets are longer term than its liabilities

incurs when FI's assets are shorter term than its liabilities

incurred when FI's assets are the same term as its liabilities

Question: Refinancing risk incurs

Choices:

when FI's assets are longer term than its liabilities

when FI's assets are shorter term than its liabilities

when FI's assets are the same term as its liabilities

Question: Value at risk and daily earning at risk are measures used to assess

Choices:

market risk exposure

market risk activity

highly exposed losses

Question: Interest rate risk is the risk

Choices:

incurred when FI's assets are longer term than its liabilities

incurred when the interest rates are too high

incurred by FI when the maturities of its assets and liabilities are mismatched and interest rates are volatile

Question: The major objective of a financial institution manager is to

Choices:

increase their profits

increase the return for its owners

increase foreign relationship

decrease default on loans

Question: Credit risk is the risk

Choices:

that the promised cash flows from loans and securities held FI's may be defaulted on

of default for borrowing firm associated with the specific types of project risk taken by that firm

incurred by an FI when the maturities of its assets and liabilities are mismatched and interest rates are volatile

Start FlashCards Download PDF Learn
Copy and paste the following HTML code into your website or blog.
<iframe src="https://www.jobilize.com/embed/final-fin-421-financial-421-exam-by-keyaira-brax" width="600" height="600" frameborder="0" marginwidth="0" marginheight="0" scrolling="yes" style="border:1px solid #CCC; border-width:1px 1px 0; margin-bottom:5px" allowfullscreen webkitallowfullscreen mozallowfullscreen> </iframe>