Financial Markets and Institutions (2-downloads)

1. Why are financial markets important to the health of

the economy?

2. When interest rates rise, how might businesses and

consumers change their economic behavior?

3. How can a change in interest rates affect the prof-

itability of financial institutions?

4. Is everybody worse off when interest rates rise?

5. What effect might a fall in stock prices have on busi-

ness investment?

6. What effect might a rise in stock prices have on con-

sumers’ decisions to spend?

7. How does a decline in the value of the pound ster-

ling affect British consumers?

8. How does an increase in the value of the pound ster-

ling affect American businesses?

9. How can changes in foreign exchange rates affect the

profitability of financial institutions?

10. Looking at Figure 1.3, in what years would you have

chosen to visit the Grand Canyon in Arizona rather

than the Tower of London?