Question 1

FIRREA increased the core-capital leverage requirement for thrift institutions from 3% to

Accepted Answer

A) 8%. 
B) 5% 
C) 10% 
D) 25% 
A) 8%. 
B) 5% 
C) 10% 
D) 25%

Question 2

Currently,Fannie Mae and Freddie Mac are

Accepted Answer

A) privately owned government-sponsored enterprises. 
B) privately owned enterprises with no government sponsorship. 
C) government agencies. 
D) government departments. 
A) privately owned government-sponsored enterprises. 
B) privately owned enterprises with no government sponsorship. 
C) government agencies. 
D) government departments.

Question 3

China is trying to move its banking system from being strictly ________ owned by having them issue shares overseas.

Accepted Answer

A) state 
B) domestic investor 
C) depositor 
D) domestic corporate 
A) state 
B) domestic investor 
C) depositor 
D) domestic corporate

Question 4

The Federal Deposit Insurance Corporation Improvement Act of 1991

Accepted Answer

A) increased the FDIC's ability to borrow from the Treasury to deal with failed banks. 
B) increased the FDIC's ability to use the too-big-to-fail doctrine. 
C) eliminated governmentally-administered deposit insurance. 
D) eliminated restrictions on nationwide banking. 
A) increased the FDIC's ability to borrow from the Treasury to deal with failed banks. 
B) increased the FDIC's ability to use the too-big-to-fail doctrine. 
C) eliminated governmentally-administered deposit insurance. 
D) eliminated restrictions on nationwide banking.

Question 5

The Dodd-Frank legislation of 2010 permanently increased the federal deposit insurance to

Accepted Answer

A) $40,000. 
B) $100,000. 
C) $200,000. 
D) $250,000. 
A) $40,000. 
B) $100,000. 
C) $200,000. 
D) $250,000.

Question 6

Regulations designed to provide information to the marketplace so that investors can make informed decisions are called

Accepted Answer

A) disclosure requirements. 
B) efficient market requirements. 
C) asset restrictions. 
D) capital requirements. 
A) disclosure requirements. 
B) efficient market requirements. 
C) asset restrictions. 
D) capital requirements.

Question 7

During the boom years of the 1920s,bank failures were quite

Accepted Answer

A) uncommon,averaging less than 30 per year. 
B) uncommon,averaging less than 100 per year. 
C) common,averaging about 600 per year. 
D) common,averaging about 1000 per year. 
A) uncommon,averaging less than 30 per year. 
B) uncommon,averaging less than 100 per year. 
C) common,averaging about 600 per year. 
D) common,averaging about 1000 per year.

Question 8

Which of the following is not a reason financial regulation and supervision is difficult in real life?

Accepted Answer

A) Financial institutions have strong incentives to avoid existing regulations. 
B) Unintended consequences may happen if details in the regulations are not precise. 
C) Regulated firms lobby politicians to lean on regulators to ease the rules. 
D) Financial institutions are not required to follow the rules. 
A) Financial institutions have strong incentives to avoid existing regulations. 
B) Unintended consequences may happen if details in the regulations are not precise. 
C) Regulated firms lobby politicians to lean on regulators to ease the rules. 
D) Financial institutions are not required to follow the rules.

Question 9

In May 1991,the FDIC announced that it would sell the government's final 26% stake in Continental Illinois,ending government ownership of the bank that it had rescued in 1984.The FDIC took control of the bank,rather than liquidate it,because it believed that Continental Illinois

Accepted Answer

A) was a good investment opportunity for the government. 
B) could be the Chicago branch of a new governmentally-owned interstate banking system. 
C) was too big to fail. 
D) would become the center of the new midwest region central bank system. 
A) was a good investment opportunity for the government. 
B) could be the Chicago branch of a new governmentally-owned interstate banking system. 
C) was too big to fail. 
D) would become the center of the new midwest region central bank system.

Question 10

Moral hazard is an important concern of insurance arrangements because the existence of insurance

Accepted Answer

A) provides increased incentives for risk taking. 
B) is a hindrance to efficient risk taking. 
C) causes the private cost of the insured activity to increase. 
D) creates an adverse selection problem but no moral hazard problem. 
A) provides increased incentives for risk taking. 
B) is a hindrance to efficient risk taking. 
C) causes the private cost of the insured activity to increase. 
D) creates an adverse selection problem but no moral hazard problem.

Question 11

How did the increase in the interest rates in the early 80s contribute to the S&L crisis?

Accepted Answer

The S&Ls suffered from an interest-rate

Question 12

Regulatory forbearance

Accepted Answer

A) meant delaying the closing of "zombie S&Ls" as their losses mounted during the 1980s. 
B) had the advantage of benefiting healthy S&Ls at the expense of "zombie S&Ls",as insolvent institutions lost deposits to health institutions. 
C) had the advantage of permitting many insolvent S&Ls the opportunity to return to profitability,saving the FSLIC billions of dollars. 
D) increased adverse selection dramatically. 
A) meant delaying the closing of "zombie S&Ls" as their losses mounted during the 1980s. 
B) had the advantage of benefiting healthy S&Ls at the expense of "zombie S&Ls",as insolvent institutions lost deposits to health institutions. 
C) had the advantage of permitting many insolvent S&Ls the opportunity to return to profitability,saving the FSLIC billions of dollars. 
D) increased adverse selection dramatically.

Question 13

That several hundred S&Ls were not even examined once in the period January 1984 through June 1986 can be explained by

Accepted Answer

A) Congress's unwillingness to allocate the necessary funds to thrift regulators. 
B) regulators' reluctance to find the specific problem thrifts that they knew existed. 
C) slower growth in lending meant that less regulation was needed. 
D) Congress's unwillingness to listen to campaign contributors. 
A) Congress's unwillingness to allocate the necessary funds to thrift regulators. 
B) regulators' reluctance to find the specific problem thrifts that they knew existed. 
C) slower growth in lending meant that less regulation was needed. 
D) Congress's unwillingness to listen to campaign contributors.

Question 14

The global financial crisis showed the need for increased financial regulation,however,too much or poorly designed regulation could

Accepted Answer

A) choke off financial innovation. 
B) increase the efficiency of the financial system. 
C) increase economic growth. 
D) increase international financial integration. 
A) choke off financial innovation. 
B) increase the efficiency of the financial system. 
C) increase economic growth. 
D) increase international financial integration.

FIRREA increased the core-capital leverage requirement for thrift institutions from 3% to

Currently,Fannie Mae and Freddie Mac are

China is trying to move its banking system from being strictly ________ owned by having them issue shares overseas.

The Federal Deposit Insurance Corporation Improvement Act of 1991

The Dodd-Frank legislation of 2010 permanently increased the federal deposit insurance to

Regulations designed to provide information to the marketplace so that investors can make informed decisions are called

During the boom years of the 1920s,bank failures were quite

Which of the following is not a reason financial regulation and supervision is difficult in real life?

In May 1991,the FDIC announced that it would sell the government's final 26% stake in Continental Illinois,ending government ownership of the bank that it had rescued in 1984.The FDIC took control of the bank,rather than liquidate it,because it believed that Continental Illinois

Moral hazard is an important concern of insurance arrangements because the existence of insurance

How did the increase in the interest rates in the early 80s contribute to the S&L crisis?

Regulatory forbearance

That several hundred S&Ls were not even examined once in the period January 1984 through June 1986 can be explained by

The global financial crisis showed the need for increased financial regulation,however,too much or poorly designed regulation could

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Banking and the Management of Financial Institutions

Banking Industry: Structure and Competition

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory,inflation and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

The ISLM Model

Filters

Exam 11: Economic Analysis of Financial Regulation

FIRREA increased the core-capital leverage requirement for thrift institutions from 3% to

Currently,Fannie Mae and Freddie Mac are

China is trying to move its banking system from being strictly ________ owned by having them issue shares overseas.

The Federal Deposit Insurance Corporation Improvement Act of 1991

The Dodd-Frank legislation of 2010 permanently increased the federal deposit insurance to

Regulations designed to provide information to the marketplace so that investors can make informed decisions are called

During the boom years of the 1920s,bank failures were quite

Which of the following is not a reason financial regulation and supervision is difficult in real life?

In May 1991,the FDIC announced that it would sell the government's final 26% stake in Continental Illinois,ending government ownership of the bank that it had rescued in 1984.The FDIC took control of the bank,rather than liquidate it,because it believed that Continental Illinois

Moral hazard is an important concern of insurance arrangements because the existence of insurance

How did the increase in the interest rates in the early 80s contribute to the S&L crisis?

Regulatory forbearance

That several hundred S&Ls were not even examined once in the period January 1984 through June 1986 can be explained by

The global financial crisis showed the need for increased financial regulation,however,too much or poorly designed regulation could

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Banking and the Management of Financial Institutions

Banking Industry: Structure and Competition

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory,inflation and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

The ISLM Model

Filters