Question 1

The recession of 2007-2009 was the most severe economic downturn in the U.S.since the

Accepted Answer

A)  1930s. 
B)  1950s. 
C)  1970s. 
D)  1980s. 
A)  1930s. 
B)  1950s. 
C)  1970s. 
D)  1980s.

Question 2

A larger interest rate spread in 2003-2006 is one of the factors that led to the recession of 2007.

Accepted Answer

A) True 
 B)False

Question 3

If a 10-year Treasury bond pays 1.5% and a 10-year corporate bond pays 6.0%,what is the interest rate spread on this particular corporate bond?

Accepted Answer

A)  4.0% 
B)  4.5% 
C)  7.5% 
D)  9.0% 
A)  4.0% 
B)  4.5% 
C)  7.5% 
D)  9.0%

Question 4

A bank would be considered insolvent when the value of its liabilities exceed its

Accepted Answer

A)  assets. 
B)  required reserves. 
C)  actual reserves. 
D)  net worth. 
A)  assets. 
B)  required reserves. 
C)  actual reserves. 
D)  net worth.

Question 5

Which of the following was not a lesson from the 2007-2009 financial crisis?

Accepted Answer

A)  Financial regulations were too "light" prior to the crisis. 
B)  Excessive complexity made the financial system more fragile and dangerous. 
C)  Both monetary policy and fiscal policy are needed in order for the economy to recover. 
D)  Regulatory failures were based primarily on poor job performance. 
A)  Financial regulations were too "light" prior to the crisis. 
B)  Excessive complexity made the financial system more fragile and dangerous. 
C)  Both monetary policy and fiscal policy are needed in order for the economy to recover. 
D)  Regulatory failures were based primarily on poor job performance.

Question 6

If a 10-year Treasury bond pays 3.1% and a 10-year corporate bond pays 7.4%,what is the interest rate spread on this particular corporate bond?

Accepted Answer

A)  4.3% 
B)  7.4% 
C)  10.5% 
D)  22.9% 
A)  4.3% 
B)  7.4% 
C)  10.5% 
D)  22.9%

Question 7

What amount of money was appropriated by Congress for the Troubled Asset Relief Program?

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 8

Assume that Sharon purchases $5,000 worth of a stock.To do so she uses $1,000 of her own money and borrows the remaining $4,000 at a 7.0% interest rate.If the stock's value decreases by 10% in one year and she has to sell the stock at that time,what is her rate of return?

Accepted Answer

A)  −10% 
B)  −50% 
C)  −78% 
D)  −156% 
A)  −10% 
B)  −50% 
C)  −78% 
D)  −156%

Question 9

Which of the following was not a typical characteristic of subprime mortgages?

Accepted Answer

A)  low down payments 
B)  loans to borrowers with poor credit histories 
C)  limited incomes with which to make loan payments 
D)  fixed interest rates 
A)  low down payments 
B)  loans to borrowers with poor credit histories 
C)  limited incomes with which to make loan payments 
D)  fixed interest rates

Question 10

An increase in the price of a particular bond implies an increase in the interest rate for that bond.

Accepted Answer

A) True 
 B)False

Question 11

In 2008,the Fed utilized expansionary monetary policy which was made

Accepted Answer

A)  more effective as banks held more excess reserves. 
B)  less effective as banks held more excess reserves. 
C)  more effective as banks held less excess reserves. 
D)  less effective as banks held less excess reserves. 
A)  more effective as banks held more excess reserves. 
B)  less effective as banks held more excess reserves. 
C)  more effective as banks held less excess reserves. 
D)  less effective as banks held less excess reserves.

Question 12

What is the leverage implied by the bank balance sheet listed below? Assets
Liabilities & Net Worth
Reserves
$280,000
Checking deposits
$2,800,000
Loans Outstanding
$2,920,000
Total
$3,200,000
Net Worth
Stockholders' Equity
$400,000
Total
$3,200,000

Accepted Answer

A)  2-to-1 
B)  7-to-1 
C)  8-to-1 
D)  10-to-1 
A)  2-to-1 
B)  7-to-1 
C)  8-to-1 
D)  10-to-1

Question 13

The monetary and fiscal stimulus response to the Great Recession resulted in an immediate increase in real GDP.

Accepted Answer

A) True 
 B)False

Question 14

Assume that Michaela purchases $12,000 worth of a stock.To do so she uses $2,000 of her own money and borrows the remaining $10,000 at an 8.0% interest rate.If the stock's value increases by 20% in one year and she sells the stock at that time,what is her rate of return?

Accepted Answer

A)  13% 
B)  16% 
C)  20% 
D)  80% 
A)  13% 
B)  16% 
C)  20% 
D)  80%

Question 15

The United States has not experienced a recession as severe as the 2007-2009 downturn since the 1930s.

Accepted Answer

A) True 
 B)False

Question 16

It would be impossible to have an unlevered bank.

Accepted Answer

A) True 
 B)False

Question 17

Borrowed funds are used in financing every component of GDP.

Accepted Answer

A) True 
 B)False

Question 18

Expansionary monetary policy is essentially finished once the Fed reduces the federal funds rate to zero.

Accepted Answer

A) True 
 B)False

Question 19

The Federal Reserve stepped in to help

Accepted Answer

A)  Bear Stearns but not Lehman Brothers. 
B)  Lehman Brothers but not Bear Stearns. 
C)  both Bear Stearns and Lehman Brothers. 
D)  neither Bear Stearns nor Lehman Brothers. 
A)  Bear Stearns but not Lehman Brothers. 
B)  Lehman Brothers but not Bear Stearns. 
C)  both Bear Stearns and Lehman Brothers. 
D)  neither Bear Stearns nor Lehman Brothers.

Question 20

Which of the following was not a lesson from the 2007-2009 financial crisis?

Accepted Answer

A)  Regulatory failures were the result of weaknesses across the regulatory structure. 
B)  The financial system operated with too much leverage. 
C)  The business cycle no longer applies to economic analysis. 
D)  Monetary policy alone may not be sufficient to stabilize aggregate demand. 
A)  Regulatory failures were the result of weaknesses across the regulatory structure. 
B)  The financial system operated with too much leverage. 
C)  The business cycle no longer applies to economic analysis. 
D)  Monetary policy alone may not be sufficient to stabilize aggregate demand.

The recession of 2007-2009 was the most severe economic downturn in the U.S.since the

A larger interest rate spread in 2003-2006 is one of the factors that led to the recession of 2007.

If a 10-year Treasury bond pays 1.5% and a 10-year corporate bond pays 6.0%,what is the interest rate spread on this particular corporate bond?

A bank would be considered insolvent when the value of its liabilities exceed its

Which of the following was not a lesson from the 2007-2009 financial crisis?

If a 10-year Treasury bond pays 3.1% and a 10-year corporate bond pays 7.4%,what is the interest rate spread on this particular corporate bond?

What amount of money was appropriated by Congress for the Troubled Asset Relief Program?

Assume that Sharon purchases $5,000 worth of a stock.To do so she uses $1,000 of her own money and borrows the remaining $4,000 at a 7.0% interest rate.If the stock's value decreases by 10% in one year and she has to sell the stock at that time,what is her rate of return?

Which of the following was not a typical characteristic of subprime mortgages?

An increase in the price of a particular bond implies an increase in the interest rate for that bond.

In 2008,the Fed utilized expansionary monetary policy which was made

What is the leverage implied by the bank balance sheet listed below? Assets Liabilities & Net Worth Reserves $280,000 Checking deposits $2,800,000 Loans Outstanding $2,920,000 Total $3,200,000 Net Worth Stockholders' Equity $400,000 Total $3,200,000

The monetary and fiscal stimulus response to the Great Recession resulted in an immediate increase in real GDP.

Assume that Michaela purchases $12,000 worth of a stock.To do so she uses $2,000 of her own money and borrows the remaining $10,000 at an 8.0% interest rate.If the stock's value increases by 20% in one year and she sells the stock at that time,what is her rate of return?

The United States has not experienced a recession as severe as the 2007-2009 downturn since the 1930s.

It would be impossible to have an unlevered bank.

Borrowed funds are used in financing every component of GDP.

Expansionary monetary policy is essentially finished once the Fed reduces the federal funds rate to zero.

The Federal Reserve stepped in to help

Which of the following was not a lesson from the 2007-2009 financial crisis?

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

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Exam 14: The Financial Crisis and The Great Recession

The recession of 2007-2009 was the most severe economic downturn in the U.S.since the

A larger interest rate spread in 2003-2006 is one of the factors that led to the recession of 2007.

If a 10-year Treasury bond pays 1.5% and a 10-year corporate bond pays 6.0%,what is the interest rate spread on this particular corporate bond?

A bank would be considered insolvent when the value of its liabilities exceed its

Which of the following was not a lesson from the 2007-2009 financial crisis?

If a 10-year Treasury bond pays 3.1% and a 10-year corporate bond pays 7.4%,what is the interest rate spread on this particular corporate bond?

What amount of money was appropriated by Congress for the Troubled Asset Relief Program?

Assume that Sharon purchases $5,000 worth of a stock.To do so she uses $1,000 of her own money and borrows the remaining $4,000 at a 7.0% interest rate.If the stock's value decreases by 10% in one year and she has to sell the stock at that time,what is her rate of return?

Which of the following was not a typical characteristic of subprime mortgages?

An increase in the price of a particular bond implies an increase in the interest rate for that bond.

In 2008,the Fed utilized expansionary monetary policy which was made

What is the leverage implied by the bank balance sheet listed below? Assets Liabilities & Net Worth Reserves $280,000 Checking deposits $2,800,000 Loans Outstanding $2,920,000 Total $3,200,000 Net Worth Stockholders' Equity $400,000 Total $3,200,000

The monetary and fiscal stimulus response to the Great Recession resulted in an immediate increase in real GDP.

Assume that Michaela purchases $12,000 worth of a stock.To do so she uses $2,000 of her own money and borrows the remaining $10,000 at an 8.0% interest rate.If the stock's value increases by 20% in one year and she sells the stock at that time,what is her rate of return?

The United States has not experienced a recession as severe as the 2007-2009 downturn since the 1930s.

It would be impossible to have an unlevered bank.

Borrowed funds are used in financing every component of GDP.

Expansionary monetary policy is essentially finished once the Fed reduces the federal funds rate to zero.

The Federal Reserve stepped in to help

Which of the following was not a lesson from the 2007-2009 financial crisis?

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