Question 1

Housing bubbles can arise from _____.

Accepted Answer

A) high interest rate 
B) excess loanable funds 
C) expansionary fiscal policy 
D) low money supply 
A) high interest rate 
B) excess loanable funds 
C) expansionary fiscal policy 
D) low money supply B

Question 2

A rescue operation in which the government provides necessary funding to prevent a certain company's bankruptcy is also known as:

Accepted Answer

A) government bailout 
B) quantitative easing 
C) open-market operation 
D) deleveraging 
A) government bailout 
B) quantitative easing 
C) open-market operation 
D) deleveraging A

Question 3

The GFC was caused by a combination of _____.

Accepted Answer

A) a negative AD shock and a negative LRAS shock 
B) a negative AD shock and a positive LRAS shock 
C) a positive AD shock and a positive LRAS shock 
D) a positive AD shock and a negative LRAS shock 
A) a negative AD shock and a negative LRAS shock 
B) a negative AD shock and a positive LRAS shock 
C) a positive AD shock and a positive LRAS shock 
D) a positive AD shock and a negative LRAS shock A

Question 4

The situation describing a large financial company whose bankruptcy would be too costly to the financial system and economy is called:

Accepted Answer

A) government bailout 
B) quantitative easing 
C) open-market operation 
D) too-big-to-fail 
A) government bailout 
B) quantitative easing 
C) open-market operation 
D) too-big-to-fail

Question 5

Quantitative easing refers to _____.

Accepted Answer

A) the central bank buying financial assets to private institutions in an attempt to increase money supply and lower long-term interest rates 
B) the central bank selling financial assets to private institutions in an attempt to increase money supply and lower long-term interest rates 
C) the central bank buying financial assets to private institutions in an attempt to reduce money supply and lower long-term interest rates 
D) the central bank selling financial assets to private institutions in an attempt to increase money supply and raise long-term interest rates 
A) the central bank buying financial assets to private institutions in an attempt to increase money supply and lower long-term interest rates 
B) the central bank selling financial assets to private institutions in an attempt to increase money supply and lower long-term interest rates 
C) the central bank buying financial assets to private institutions in an attempt to reduce money supply and lower long-term interest rates 
D) the central bank selling financial assets to private institutions in an attempt to increase money supply and raise long-term interest rates

Question 6

_____ refers to a debt instrument backed up by some underlying asset.

Accepted Answer

A) collateralised debt obligation 
B) credit default swap 
C) loanable fund 
D) hedge fund 
A) collateralised debt obligation 
B) credit default swap 
C) loanable fund 
D) hedge fund

Question 7

Fiscal stimulus packages shifts the aggregate demand curve to the _____, which is designed to _____ output at the expense of a higher inflation rate.

Accepted Answer

A) right; raise 
B) left; reduce 
C) right; reduce 
D) left; raise 
A) right; raise 
B) left; reduce 
C) right; reduce 
D) left; raise

Question 8

Fiscal policy is a more effective policy response than monetary policy in dealing with the GFC.

Accepted Answer

A) True 
 B)False

Question 9

Liquidity trap refers to a situation in which _____.

Accepted Answer

A) even zero short-term nominal interest rates fail to stimulate the economy due to households and banks hoarding cash 
B) zero short-term nominal interest rates stimulate the economy due to additional borrowing from households and banks 
C) negative short-term nominal interest rates fail to stimulate the economy due to households and banks hoarding cash 
D) Neither households nor banks want to hold cash 
A) even zero short-term nominal interest rates fail to stimulate the economy due to households and banks hoarding cash 
B) zero short-term nominal interest rates stimulate the economy due to additional borrowing from households and banks 
C) negative short-term nominal interest rates fail to stimulate the economy due to households and banks hoarding cash 
D) Neither households nor banks want to hold cash

Question 10

The optimal policy response to the GFC shocks involves the use of a(n) _____ fiscal policy and a(n) _____ monetary policy.

Accepted Answer

A) expansionary; expansionary 
B) expansionary; contractionary 
C) contractionary; contractionary 
D) expansionary, contractionary 
A) expansionary; expansionary 
B) expansionary; contractionary 
C) contractionary; contractionary 
D) expansionary, contractionary

Question 11

Government should bailout all private companies and banks when they are in trouble, not only those too-big-to fail ones.

Accepted Answer

A) True 
 B)False

Question 12

Identify key propagation mechanisms of the Global Financial Crisis (GFC).

Accepted Answer

Some of the propagation mechanisms in wh

Question 13

The political push for affordable housing created a housing bubble and laid the foundation for the GFC.

Accepted Answer

A) True 
 B)False

Question 14

It was pure luck that Australia got through the GFC almost unharmed.

Accepted Answer

A) True 
 B)False

Question 15

The nature of the Global Financial Crisis (GFC) was primarily a negative short-run aggregate supply shock.

Accepted Answer

A) True 
 B)False

Question 16

Liquidity trap refers to a situation in which even zero short-term interest rates fail to stimulate the economy due to households and banks hoarding cash.

Accepted Answer

A) True 
 B)False

Question 17

House prices decline was one of the main causes for the Global Financial Crisis (GFC).

Accepted Answer

A) True 
 B)False

Question 18

The global saving glut contributes to large current account _____ in the recipient countries of loanable funds.

Accepted Answer

A) deficits 
B) surpluses 
C) balances 
D) items 
A) deficits 
B) surpluses 
C) balances 
D) items

Question 19

Quantitative easing refers to unconventional monetary policy of the central bank selling financial assets to private institutions in an attempt to increase money supply and lower long-term interest rates.

Accepted Answer

A) True 
 B)False

Question 20

Discuss some of the reasons behind Australia's experience during the Global Financial Crisis (GFC).

Accepted Answer

Several factors seem to have contributed

Exam 36: Global Financial Crisis of 2008 and Beyond

Housing bubbles can arise from _____.

A rescue operation in which the government provides necessary funding to prevent a certain company's bankruptcy is also known as:

The GFC was caused by a combination of _____.

The situation describing a large financial company whose bankruptcy would be too costly to the financial system and economy is called:

Quantitative easing refers to _____.

_____ refers to a debt instrument backed up by some underlying asset.

Fiscal stimulus packages shifts the aggregate demand curve to the _____, which is designed to _____ output at the expense of a higher inflation rate.

Fiscal policy is a more effective policy response than monetary policy in dealing with the GFC.

Liquidity trap refers to a situation in which _____.

The optimal policy response to the GFC shocks involves the use of a(n) _____ fiscal policy and a(n) _____ monetary policy.

Government should bailout all private companies and banks when they are in trouble, not only those too-big-to fail ones.

Identify key propagation mechanisms of the Global Financial Crisis (GFC).

The political push for affordable housing created a housing bubble and laid the foundation for the GFC.

It was pure luck that Australia got through the GFC almost unharmed.

The nature of the Global Financial Crisis (GFC) was primarily a negative short-run aggregate supply shock.

Liquidity trap refers to a situation in which even zero short-term interest rates fail to stimulate the economy due to households and banks hoarding cash.

House prices decline was one of the main causes for the Global Financial Crisis (GFC).

The global saving glut contributes to large current account _____ in the recipient countries of loanable funds.

Quantitative easing refers to unconventional monetary policy of the central bank selling financial assets to private institutions in an attempt to increase money supply and lower long-term interest rates.

Discuss some of the reasons behind Australia's experience during the Global Financial Crisis (GFC).

Ten Lessons From Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand and Government Policies

Consumers, Producers and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters

Fiscal stimulus packages shifts the aggregate demand curve to the _, which is designed to _ output at the expense of a higher inflation rate.

The optimal policy response to the GFC shocks involves the use of a(n) _ fiscal policy and a(n) _ monetary policy.