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Economics
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2. ___________________ bridge this gap between those seeking funds for investments and the suppliers of financial capital. 

a. Foreign exchange market

b. Financial capital markets

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Microeconomics
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Understanding How Businesses Raise Financial Capital
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Raushan Raj
Raushan RajLv8
2 Nov 2020

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Related questions

part 1

1. Why are bond markets important?

2. Why are stock markets important?

3. Why are banks important?

4. What aspects of the economy are affected by the money supply?

5. What are the four phases of a business cycle? How does money supply affect business

cycles?

6. What is the relationship between money supply growth and inflation?

7. What is monetary policy? What is fiscal policy?

8. What is the foreign exchange market?

9. How does an appreciation of a currency affect the economy?

10. How does a depreciation of a currency affect an economy?

part 2

1. What are the two components of a financial system? What is direct finance? Indirect

finance?

2. What is the role of financial markets?

3. Explain the following classifications of financial markets

a. Debt and. equity markets

b. Primary and secondary markets

c. Exchanges and over-the-counter markets

d. Money and capital markets

4. List and briefly explain each money market instrument.

5. List the capital market instruments.

6. Explain why financial intermediaries play an important role in the economy (address the

following: transactions costs, risk sharing, information costs, and economies of scope).

7. What is asymmetric information? What are the two problems that arise when there is

asymmetric information in the financial system?

8. Explain the adverse selection and moral hazard problems that are a result of asymmetric

information.

9. What are the different types of financial intermediaries in the U.S. economy?

10. Which financial intermediaries are classified as depository institutions (or banks)?

11. What are the two main reasons why the government regulates the financial system?

12. What are the different types of financial regulations implemented by the government in

the U.S.?


1.Among the problems that hinder growth in developing economies are poor infrastructure, lack of financial institutions and a sound money supply, a low saving rate, poor capital base, and lack of foreign exchange. Explain how these problems are interconnected.
2.What are the arguments for using real per capita GNI to compare living standards between countries? What weakness does this measure have?

Question 9

The dynamic of FDI is also associated with structural changes in the world economy. Among the most important structural changes in the world, we have:

a. With the increasing importance of transnational corporation, transnational and interregional competition for market share is less intensive

b. Increasing importance of outsourcing

c. New division of labor

d. b) and c) are true

Question 10

With respect to evidence of the globalization of economic activity presented by the author, indicate which of the following propositions is false:

a. Daily turnover on the foreign exchange market more than doubled from 1989 to 2001.

b. Despite the no significant liberalization of national financial markets, the level of global capital flows has expanded significantly.

c. Annual foreign exchange turnover by 2004 was more than sixty times greater than in 1973.

d. All of the above

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