Question 1

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  True

Question 2

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. C

Question 3

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

Accepted Answer

A) True 
 B)False  False

Question 4

In 2007,which U.S.firm showed the first indication of significant problems in the financial sector?

Accepted Answer

A)  AIG 
B)  Bear Stearns 
C)  J.P. Morgan Chase 
D)  Lehman Brothers 
A)  AIG 
B)  Bear Stearns 
C)  J.P. Morgan Chase 
D)  Lehman Brothers

Question 5

When the housing bubble burst,prices did not fall particularly severely in

Accepted Answer

A)  Arizona. 
B)  California. 
C)  Nevada. 
D)  South Dakota. 
A)  Arizona. 
B)  California. 
C)  Nevada. 
D)  South Dakota.

Question 6

It would be impossible to have an unlevered bank.

Accepted Answer

A) True 
 B)False

Question 7

What is the leverage implied by the bank balance sheet listed below?

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 8

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 9

What is the leverage implied by the bank balance sheet listed below?

Accepted Answer

A)  10-to-1 
B)  12-to-1 
C)  20-to-1 
D)  21-to-1 
A)  10-to-1 
B)  12-to-1 
C)  20-to-1 
D)  21-to-1

Question 10

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 11

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 12

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 13

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 14

In computing GDP,new home construction adds to

Accepted Answer

A)  consumption. 
B)  investment. 
C)  government spending. 
D)  net exports. 
A)  consumption. 
B)  investment. 
C)  government spending. 
D)  net exports.

Question 15

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 16

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 17

The first signs of major financial problems associated with the financial sector and real estate investment appeared in 2009.

Accepted Answer

A) True 
 B)False

Question 18

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 19

When the housing bubble burst,prices fell particularly severely in

Accepted Answer

A)  Georgia. 
B)  Nevada. 
C)  Pennsylvania. 
D)  West Virginia. 
A)  Georgia. 
B)  Nevada. 
C)  Pennsylvania. 
D)  West Virginia.

Question 20

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

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

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

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

In 2007,which U.S.firm showed the first indication of significant problems in the financial sector?

When the housing bubble burst,prices did not fall particularly severely in

It would be impossible to have an unlevered bank.

What is the leverage implied by the bank balance sheet listed below?

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

What is the leverage implied by the bank balance sheet listed below?

The 2009 fiscal stimulus bill represented approximately

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

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

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

In computing GDP,new home construction adds to

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

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

The first signs of major financial problems associated with the financial sector and real estate investment appeared in 2009.

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?

When the housing bubble burst,prices fell particularly severely in

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

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

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

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

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

In 2007,which U.S.firm showed the first indication of significant problems in the financial sector?

When the housing bubble burst,prices did not fall particularly severely in

It would be impossible to have an unlevered bank.

What is the leverage implied by the bank balance sheet listed below?

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

What is the leverage implied by the bank balance sheet listed below?

The 2009 fiscal stimulus bill represented approximately

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

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

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

In computing GDP,new home construction adds to

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

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

The first signs of major financial problems associated with the financial sector and real estate investment appeared in 2009.

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?

When the housing bubble burst,prices fell particularly severely in

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

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