Chapter 9Student: _1.In the United States saving is allocated to its most productive use by:A.the Federal Reserve.B.the federal, state, and local governments.C.regulations and laws designed to improve productivity.D.a decentralized, market-oriented financial system.2.Decentralized market-based financial systems improve the allocation of saving by:A.ensuring capital gains exceed dividend payments.B.eliminating the need for commercial banks or other financial intermediaries.C.matching net capital inflows to net capital outflows.D.providing information and risk-sharing services.3.The financial system consists of financial _, such as commercial banks, and financial markets, such as the stock market.A.corporationsB.allocationsC.intermediariesD.brokers4.Firms that extend credit to borrowers using funds from raised from savers are called:A.bond dealers.B.stock brokers.C.central banks.D.financial intermediaries.5.The specialized information-gathering activities that banks use to evaluate borrowers are an example of the:A.cost-benefit principle.B.principle of comparative advantage.C.scarcity principle.D.principle of increasing opportunity cost.6.Privately-owned firms that accept deposits from individuals and businesses and use those deposits to make loans are called:A.mortgage banks.B.brokerage firms.C.commercial banks.D.investment banks.7.Banks help savers find productive uses for their funds because banks are specialized in:A.gathering information about and evaluating potential borrowers.B.obtaining preferential tax treatment for savers.C.securing government guarantees for loans.D.evaluating the riskiness of stocks.8.Financial intermediaries, such as commercial banks, help borrowers, particularly small borrowers, by:A.providing information to evaluate financial investments.B.offering tax-preferred borrowing opportunities.C.eliminating the risk of borrowing.D.providing credit that might otherwise not be available.9.Savers may prefer to use financial intermediaries rather than lending directly to borrowers because financial intermediaries:A.reduce the cost of gathering information about borrowers.B.have a monopoly on lending.C.increase the risk of lending.D.offer higher rates of return than available elsewhere.10.Two reasons savers keep deposits at banks are to:A.secure mortgages and to purchase stocks.B.earn a return on their savings and to facilitate making payments.C.lower interest rates and to increase the money supply.D.equalize loan supply and demand and to earn interest.11.Money is:A.the same as income.B.all financial assets.C.any asset used to make purchases.D.the sum of assets minus debts.12.The direct trade of goods and services for other goods and services is called:A.financial intermediation.B.diversification.C.barter.D.using a medium of exchange.13.Double coincidence of wants is avoided if money is used as a:A.medium of exchange.B.measure of value.C.standard of deferred payment.D.store of value14.Finding both parties to a trade who have something the other party wishes to trade for is called a:A.unit of account.B.store of value.C.medium of exchange.D.double coincidence of wants.15.Money serves as a medium of exchange when:A.it is used to purchase goods and services.B.there is direct trade of goods and services.C.it is a basic measure of economic value.D.it is a means of holding wealth.16.When a baker exchanges a pie for dollars, this is an example of dollars serving as:A.barter.B.a medium of exchange.C.a unit of account.D.a store of value.17.When your grandfather keeps a bundle of $100 dollar bills behind a brick in the basement, this is an example of dollars serving as:A.bank reserves.B.a medium of exchange.C.a unit of account.D.a store of value.18.If you use $1,000 to purchase silver bullion, which you plan to keep in a safe, you are using money as:A.bank reserves.B.a medium of exchange.C.a unit of account.D.a store of value.19.If you post your car on eBay with a Buy-It-Now price of $1,800, you are using money as:A.bank reserves.B.a medium of exchange.C.a unit of account.D.a store of value.20.If you put a $20 bill in the pocket of your winter coat at the