Question 1

There is essentially no risk of default for U.S.government securities.

Accepted Answer

A) True 
 B)False

Question 2

Leverage is essential to a bank's profitability but it also increases risk.

Accepted Answer

A) True 
 B)False

Question 3

In hindsight,mortgage-backed securities implied very limited risk because the underlying mortgages were spread across different geographic areas.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following are not valid arguments against the effectiveness of the fiscal stimulus bill?

Accepted Answer

A)  Employment continued to fall into early 2010. 
B)  Without stimulus recessions come to an end naturally. 
C)  State and local government spending increased. 
D)  Monetary policy played a large role in stimulating the economy. 
A)  Employment continued to fall into early 2010. 
B)  Without stimulus recessions come to an end naturally. 
C)  State and local government spending increased. 
D)  Monetary policy played a large role in stimulating the economy.

Question 5

During the 2000 to 2006 time period,housing prices increased but only to a limited degree.

Accepted Answer

A) True 
 B)False

Question 6

Which elements of GDP were affected by the financial crisis and the lack of available credit?

Accepted Answer

A)  consumption and business investment only 
B)  consumption and government spending only 
C)  consumption,business investment and government spending only 
D)  consumption,business investment,government spending and imports/exports 
A)  consumption and business investment only 
B)  consumption and government spending only 
C)  consumption,business investment and government spending only 
D)  consumption,business investment,government spending and imports/exports

Question 7

In 2008,interest rates on Treasury securities fell even though most other interest rates were rising.

Accepted Answer

A) True 
 B)False

Question 8

Most economists feel that overly strict financial regulation from 2000 to 2006 contributed to the financial crisis of 2007-2009.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following was a lesson from the 2007-2009 financial crisis?

Accepted Answer

A)  The financial system needed more leverage in order to operate. 
B)  The job of stabilizing the economy should be assigned exclusively to monetary policy. 
C)  Monetary policy is finished once the Fed reduces the federal funds rate to zero. 
D)  The business cycle still exists. 
A)  The financial system needed more leverage in order to operate. 
B)  The job of stabilizing the economy should be assigned exclusively to monetary policy. 
C)  Monetary policy is finished once the Fed reduces the federal funds rate to zero. 
D)  The business cycle still exists.

Question 10

Which of the following are accurate arguments suggesting that the fiscal stimulus did work?

Accepted Answer

A)  Real GDP growth moved from negative to positive in 2009. 
B)  Employment increased in 2009. 
C)  The economy has natural self-correcting mechanisms. 
D)  The return on bailout assets reduced the deficit. 
A)  Real GDP growth moved from negative to positive in 2009. 
B)  Employment increased in 2009. 
C)  The economy has natural self-correcting mechanisms. 
D)  The return on bailout assets reduced the deficit.

Question 11

What amount of money was appropriated by Congress for fiscal stimulus bill of 2009?

Accepted Answer

A)  $225 billion 
B)  $252 billion 
C)  $700 billion 
D)  $787 billion 
A)  $225 billion 
B)  $252 billion 
C)  $700 billion 
D)  $787 billion

Question 12

During the real estate boom of the early 2000s,some banks operated with leverage ratios in excess of 30-to-1.

Accepted Answer

A) True 
 B)False

Question 13

Subprime mortgages frequently featured small or zero down payments.

Accepted Answer

A) True 
 B)False

Question 14

Mortgage-backed securities became a significant issue because I.
Housing prices fell across all regions.
II)
These securities were not as widely distributed as previously thought.

Accepted Answer

A)  I above only 
B)  II above only 
C)  both I and II above 
D)  neither I nor II above 
A)  I above only 
B)  II above only 
C)  both I and II above 
D)  neither I nor II above

Question 15

Spending on newly constructed homes is part of the investment component of GDP.

Accepted Answer

A) True 
 B)False

Question 16

The Fed's loan that effectively nationalized AIG was approved by Congress.

Accepted Answer

A) True 
 B)False

Question 17

The 2009 fiscal stimulus bill represented approximately

Accepted Answer

A)  5.5% of GDP and was designed to close the expansionary gap. 
B)  5.5% of GDP and was designed to close the recessionary gap. 
C)  7.8% of GDP and was designed to close the expansionary gap. 
D)  7.8% of GDP and was designed to close the recessionary gap. 
A)  5.5% of GDP and was designed to close the expansionary gap. 
B)  5.5% of GDP and was designed to close the recessionary gap. 
C)  7.8% of GDP and was designed to close the expansionary gap. 
D)  7.8% of GDP and was designed to close the recessionary gap.

Question 18

The Federal Reserve helped J.P.Morgan purchased Bear Stearns by agreeing to purchase some unwanted Bear Stearns assets.

Accepted Answer

A) True 
 B)False

Question 19

As a result of the Great Recession,most financial markets hit bottom around

Accepted Answer

A)  September 2008 
B)  March 2009 
C)  September 2009 
D)  March 2010 
A)  September 2008 
B)  March 2009 
C)  September 2009 
D)  March 2010

Question 20

A bubble is best defined as

Accepted Answer

A)  an increase in the price of an asset resulting from fundamentals causes. 
B)  an increase in the price of an asset resulting from factors other than fundamentals causes. 
C)  a decrease in the price of an asset resulting from fundamentals causes. 
D)  a decrease in the price of an asset resulting from factors other than fundamentals causes. 
A)  an increase in the price of an asset resulting from fundamentals causes. 
B)  an increase in the price of an asset resulting from factors other than fundamentals causes. 
C)  a decrease in the price of an asset resulting from fundamentals causes. 
D)  a decrease in the price of an asset resulting from factors other than fundamentals causes.

There is essentially no risk of default for U.S.government securities.

Leverage is essential to a bank's profitability but it also increases risk.

In hindsight,mortgage-backed securities implied very limited risk because the underlying mortgages were spread across different geographic areas.

Which of the following are not valid arguments against the effectiveness of the fiscal stimulus bill?

During the 2000 to 2006 time period,housing prices increased but only to a limited degree.

Which elements of GDP were affected by the financial crisis and the lack of available credit?

In 2008,interest rates on Treasury securities fell even though most other interest rates were rising.

Most economists feel that overly strict financial regulation from 2000 to 2006 contributed to the financial crisis of 2007-2009.

Which of the following was a lesson from the 2007-2009 financial crisis?

Which of the following are accurate arguments suggesting that the fiscal stimulus did work?

What amount of money was appropriated by Congress for fiscal stimulus bill of 2009?

During the real estate boom of the early 2000s,some banks operated with leverage ratios in excess of 30-to-1.

Subprime mortgages frequently featured small or zero down payments.

Mortgage-backed securities became a significant issue because I. Housing prices fell across all regions. II) These securities were not as widely distributed as previously thought.

Spending on newly constructed homes is part of the investment component of GDP.

The Fed's loan that effectively nationalized AIG was approved by Congress.

The 2009 fiscal stimulus bill represented approximately

The Federal Reserve helped J.P.Morgan purchased Bear Stearns by agreeing to purchase some unwanted Bear Stearns assets.

As a result of the Great Recession,most financial markets hit bottom around

A bubble is best defined as

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Exam 14: The Financial Crisis and The Great Recession

There is essentially no risk of default for U.S.government securities.

Leverage is essential to a bank's profitability but it also increases risk.

In hindsight,mortgage-backed securities implied very limited risk because the underlying mortgages were spread across different geographic areas.

Which of the following are not valid arguments against the effectiveness of the fiscal stimulus bill?

During the 2000 to 2006 time period,housing prices increased but only to a limited degree.

Which elements of GDP were affected by the financial crisis and the lack of available credit?

In 2008,interest rates on Treasury securities fell even though most other interest rates were rising.

Most economists feel that overly strict financial regulation from 2000 to 2006 contributed to the financial crisis of 2007-2009.

Which of the following was a lesson from the 2007-2009 financial crisis?

Which of the following are accurate arguments suggesting that the fiscal stimulus did work?

What amount of money was appropriated by Congress for fiscal stimulus bill of 2009?

During the real estate boom of the early 2000s,some banks operated with leverage ratios in excess of 30-to-1.

Subprime mortgages frequently featured small or zero down payments.

Mortgage-backed securities became a significant issue because I. Housing prices fell across all regions. II) These securities were not as widely distributed as previously thought.

Spending on newly constructed homes is part of the investment component of GDP.

The Fed's loan that effectively nationalized AIG was approved by Congress.

The 2009 fiscal stimulus bill represented approximately

The Federal Reserve helped J.P.Morgan purchased Bear Stearns by agreeing to purchase some unwanted Bear Stearns assets.

As a result of the Great Recession,most financial markets hit bottom around

A bubble is best defined as

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters