Question 1

Both monetary policy and fiscal policy were used in response to the recession of 2007-2009.

Accepted Answer

A) True 
 B)False

Question 2

Borrowed funds are used in financing every component of GDP.

Accepted Answer

A) True 
 B)False

Question 3

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 4

If a 10-year Treasury bond pays 1.5% and a 10-year corporate bond pays 4.4%,then the spread on this particular corporate bond is 5.9%.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Assuming that the reserve ratio is 10%,what amount of excess reserves are held by with the bank balance sheet listed below?

Accepted Answer

A)  zero 
B)  $240,000 
C)  $280,000 
D)  $320,000 
A)  zero 
B)  $240,000 
C)  $280,000 
D)  $320,000

Question 7

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 8

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 9

If the reserve ratio was 10% for the bank with the balance sheet listed below,then this bank is being

Accepted Answer

A)  aggressive as indicated by a small amount of excess reserves. 
B)  aggressive as indicated by a large amount of excess reserves. 
C)  cautious as indicated by a small amount of excess reserves. 
D)  cautious as indicated by a large amount of excess reserves. 
A)  aggressive as indicated by a small amount of excess reserves. 
B)  aggressive as indicated by a large amount of excess reserves. 
C)  cautious as indicated by a small amount of excess reserves. 
D)  cautious as indicated by a large amount of excess reserves.

Question 10

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 11

As a result of the Great Recession,job growth did not resume until

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 12

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 13

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 14

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 15

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 16

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 17

What was the lowest federal funds rate target the Fed set in response to the financial crisis?

Accepted Answer

A)  0% 
B) 1.8% 
C) 2.0% 
D) 2.2% 
A)  0% 
B) 1.8% 
C) 2.0% 
D) 2.2%

Question 18

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 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Both monetary policy and fiscal policy were used in response to the recession of 2007-2009.

Borrowed funds are used in financing every component of GDP.

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

If a 10-year Treasury bond pays 1.5% and a 10-year corporate bond pays 4.4%,then the spread on this particular corporate bond is 5.9%.

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

Assuming that the reserve ratio is 10%,what amount of excess reserves are held by with the bank balance sheet listed below?

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

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

If the reserve ratio was 10% for the bank with the balance sheet listed below,then this bank is being

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?

As a result of the Great Recession,job growth did not resume until

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

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

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

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

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?

What was the lowest federal funds rate target the Fed set in response to the financial crisis?

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

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

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

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

Both monetary policy and fiscal policy were used in response to the recession of 2007-2009.

Borrowed funds are used in financing every component of GDP.

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

If a 10-year Treasury bond pays 1.5% and a 10-year corporate bond pays 4.4%,then the spread on this particular corporate bond is 5.9%.

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

Assuming that the reserve ratio is 10%,what amount of excess reserves are held by with the bank balance sheet listed below?

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

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

If the reserve ratio was 10% for the bank with the balance sheet listed below,then this bank is being

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?

As a result of the Great Recession,job growth did not resume until

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

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

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

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

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?

What was the lowest federal funds rate target the Fed set in response to the financial crisis?

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

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

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

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