1、PART THREEAnswers to End-of-Chapter Problems Not Answered in TextbookChapter 1 Why Study Money, Banking, and Financial Markets?7. The basic activity of banks is to accept deposits and make loans.9. The interest rate on

2、three-month Treasury bills fluctuates more than the other interest rates and is lower on average. The interest rate on Baa corporate bonds is higher on average than the other interest rates.11. Higher stock prices mean

3、s that consumers’ wealth is higher and so they will be more likely to increase their spending.13. It makes British goods more expensive relative to American goods. Thus American businesses will find it easier to sell t

4、heir goods in the United States and abroad and the demand for their products will rise.15. When the dollar increases in value, foreign goods become less expensive relative to American goods; thus you are more likely to

5、 buy French-made jeans than American-made jeans. The resulting drop in demand for American-made jeans because of the strong dollar hurts American jeans manufacturers. On the other hand, the American company that import