Financial Economics

As all the other prices are determine in different markets, the equilibrium rate of interest is also determined by the forces of supply and demand in the financial markets.

• True

• False

The equilibrium rate of interest is determined by:

• Demand and Supply of Funds

• Savings & Investment

• Supply and Demand of Money

The loanable funds theory of interest rate determination makes certain important modifications in the classical theory.

• True

• False

Refers to the expenditure for the purchase of making of new capital goods including inventories.

• Investments

• Hoarding

• Dissaving

• Bank Money

Liquidity also known as _________________.

• how particular asset converted to cash

• price you pat to borrow money

• something containing economic value

• asset or store of value

Precautionary demand of holding monet depends upon the degree of _____________.

• uncertainty/unforseen situation

• asset or store of value

• day to day transaction

• price you pat to borrow money

The rate of interest at which speculative demand for money become perfectly elastic is called ____________.

• Liquidity Trap

• Liquidity Trap Interest Rate

• Liquidity Trap Rate

• Liquidity Trap Interest

Relationship between interest rate and speculative demand for money is called ______________.

• Liquidity Preference Curve

• Liquidity Trap

• Liquidity

• Liquidity Trap Interest Rate

The provision of small-scale loans to the poor for example by credit unions

• Microfinancing

• Micro-credit

• Micro-savings

• Micro-insurance

• Remittance management

What is the key term for when a country or NGO donates resources to another country to help it develop.

• Quotas

• Fairtrade

• Aid

• Tariffs