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1)Suppose prices in Europe decrease

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1)Suppose prices in Europe decrease. If dollar prices are constant and with no change in the

nominal exchange rate, the euro has undergone a

A) Real appreciation

B) Real depreciation

C) Nominal appreciation

D) Nominal depreciation

2.The presence of information and transactions cost result in all of the following EXCEPT:

A) reduced effificiency of fifinancial markets.

B) some funds not being lent at all

C) borrowers need to pay more for funds

D) higher returns for savers

3. Financial intermediaries reduce transactions costs by

A) charging fees to small savers.

B) charging fees to small investors.

C) taking advantage of economies of scale.

D) avoiding risky investments

4. If there were no adverse selection problems in the stock market,

A) some well-run fifirms would pay more to raise funds.

B) some poorly-run fifirms would pay less to raise funds.

C) the willingness of savers to invest in the market would be increased.

D) the volume of new stock issues would be lower.

5.All of the following are consequences of adverse selection on good fifirms EXCEPT

A) the cost of external fifinancing increases.

B) fifirms need to rely more on internal funds.

C) fifirms need to rely more on accumulated profifits.

D) fifirms will only be able to attain fifinancing from the government.