Question 1

Which of the following is most critical for the maintenance of an efficient and productive economy?

Accepted Answer

A)  money backed by gold or silver 
B)  steadily rising prices 
C)  an unlimited and unregulated supply of money 
D)  properly functioning money 
E)  a well-organized barter system 
A)  money backed by gold or silver 
B)  steadily rising prices 
C)  an unlimited and unregulated supply of money 
D)  properly functioning money 
E)  a well-organized barter system

Question 2

Why did credit-rating agencies that evaluated mortgage-backed securities have a conflict of interest?

Accepted Answer

A)  Banks and other financial institutions were earning attractive fees creating and selling mortgage-backed securities. 
B)  Underwriters of mortgage-backed securities usually had little incentive to make sure that those who bought the securities would ultimately get paid. 
C)  Homeowners could shop around for the bank that offered the lowest mortgage rate. 
D)  Credit-rating agencies earned their fees by assessing the riskiness of these securities. 
E)  Investors found the yield on mortgage-backed securities attractive. 
A)  Banks and other financial institutions were earning attractive fees creating and selling mortgage-backed securities. 
B)  Underwriters of mortgage-backed securities usually had little incentive to make sure that those who bought the securities would ultimately get paid. 
C)  Homeowners could shop around for the bank that offered the lowest mortgage rate. 
D)  Credit-rating agencies earned their fees by assessing the riskiness of these securities. 
E)  Investors found the yield on mortgage-backed securities attractive.

Question 3

The Federal Reserve System has the power to _____

Accepted Answer

A)  raise or lower federal income tax rates. 
B)  balance the federal government budget. 
C)  increase or decrease federal government spending. 
D)  compete with commercial banks in making loans to business firms. 
E)  buy and sell federal government securities. 
A)  raise or lower federal income tax rates. 
B)  balance the federal government budget. 
C)  increase or decrease federal government spending. 
D)  compete with commercial banks in making loans to business firms. 
E)  buy and sell federal government securities.

Question 4

To say that money serves as a store of value is to say that money is a useful way to store wealth for future use.

Accepted Answer

A) True 
 B)False

Question 5

The Dodd-Frank Wall Act established the _____, a super-regulator that monitors Wall Street's largest firms and other market participants to spot and respond to emerging systemic risks.

Accepted Answer

A)  Federal Financial Institutions Examination Council 
B)  Volcker Rule 
C)  Financial Stability Oversight Council 
D)  Consumer Financial Protection Bureau 
E)  Federal Deposit Insurance Corporation 
A)  Federal Financial Institutions Examination Council 
B)  Volcker Rule 
C)  Financial Stability Oversight Council 
D)  Consumer Financial Protection Bureau 
E)  Federal Deposit Insurance Corporation

Question 6

Which quality best defines money that is valued equally in exchange?

Accepted Answer

A)  durable 
B)  portable 
C)  divisible 
D)  uniform quality 
E)  low opportunity cost 
A)  durable 
B)  portable 
C)  divisible 
D)  uniform quality 
E)  low opportunity cost

Question 7

The purchasing power of each dollar over time _____

Accepted Answer

A)  varies inversely with the economy's price level. 
B)  varies directly with the economy's price level. 
C)  is unrelated to the economy's price level. 
D)  depends upon the size of the national debt. 
E)  depends upon the level of government expenditures. 
A)  varies inversely with the economy's price level. 
B)  varies directly with the economy's price level. 
C)  is unrelated to the economy's price level. 
D)  depends upon the size of the national debt. 
E)  depends upon the level of government expenditures.

Question 8

People came to accept fiat money because they believed that others would accept it as well.

Accepted Answer

A) True 
 B)False

Question 9

TARP authorized the U.S. Treasury to purchase up to _____ in mortgage-backed securities.

Accepted Answer

A)  $50 billion 
B)  $100 billion 
C)  $300 billion 
D)  $500 billion 
E)  $700 billion 
A)  $50 billion 
B)  $100 billion 
C)  $300 billion 
D)  $500 billion 
E)  $700 billion

Question 10

A subprime mortgage is _____

Accepted Answer

A)  a mortgage in which the borrower gets an interest rate below the prime rate. 
B)  a mortgage in which the interest rate is adjustable. 
C)  a mortgage for which the home is valued below its true market value. 
D)  a mortgage in which the borrower has a poor credit rating. 
E)  a mortgage for a home that was in foreclosure. 
A)  a mortgage in which the borrower gets an interest rate below the prime rate. 
B)  a mortgage in which the interest rate is adjustable. 
C)  a mortgage for which the home is valued below its true market value. 
D)  a mortgage in which the borrower has a poor credit rating. 
E)  a mortgage for a home that was in foreclosure.

Question 11

The purpose of deregulating banks during the 1980s was to _____

Accepted Answer

A)  eliminate the risks that banks incurred. 
B)  allow banks to compete with other financial institutions. 
C)  allow U.S. banks to compete with foreign banks. 
D)  help consumers earn more interest. 
E)  decrease the cost of banking regulation. 
A)  eliminate the risks that banks incurred. 
B)  allow banks to compete with other financial institutions. 
C)  allow U.S. banks to compete with foreign banks. 
D)  help consumers earn more interest. 
E)  decrease the cost of banking regulation.

Question 12

Fiat money is backed by _____

Accepted Answer

A)  gold or silver. 
B)  fractional reserves. 
C)  the promise of a bank to redeem it upon presentation. 
D)  the commodity in which it is denominated. 
E)  nothing. 
A)  gold or silver. 
B)  fractional reserves. 
C)  the promise of a bank to redeem it upon presentation. 
D)  the commodity in which it is denominated. 
E)  nothing.

Question 13

Fiat money _____

Accepted Answer

A)  has value because people accept it. 
B)  has a high intrinsic value. 
C)  is backed by commodity reserves. 
D)  is money because of its metallic content. 
E)  is frequently clipped. 
A)  has value because people accept it. 
B)  has a high intrinsic value. 
C)  is backed by commodity reserves. 
D)  is money because of its metallic content. 
E)  is frequently clipped.

Question 14

The FDIC insures deposits in _____

Accepted Answer

A)  all the commercial banks across the United States. 
B)  Federal Reserve member banks only. 
C)  any banking institution that sells FDIC insurance. 
D)  any banking institution that purchases FDIC insurance. 
E)  any bank approved by the Fed. 
A)  all the commercial banks across the United States. 
B)  Federal Reserve member banks only. 
C)  any banking institution that sells FDIC insurance. 
D)  any banking institution that purchases FDIC insurance. 
E)  any bank approved by the Fed.

Question 15

The Dodd-Frank Wall Street Reform and Consumer Protection Act gives the Federal Reserve the authority to establish a reserve requirement for all financial institutions.

Accepted Answer

A) True 
 B)False

Question 16

The three important functions of money are _____

Accepted Answer

A)  serving as a medium of exchange, facilitating trade, and serving as a unit of account. 
B)  serving as a unit of account, facilitating trade, and serving as a store of value. 
C)  serving as a store of value, facilitating trade, and ensuring a double coincidence of wants. 
D)  facilitating trade, serving as a medium of exchange, and serving as a unit of account. 
E)  serving as a medium of exchange, a unit of account, and a store of value. 
A)  serving as a medium of exchange, facilitating trade, and serving as a unit of account. 
B)  serving as a unit of account, facilitating trade, and serving as a store of value. 
C)  serving as a store of value, facilitating trade, and ensuring a double coincidence of wants. 
D)  facilitating trade, serving as a medium of exchange, and serving as a unit of account. 
E)  serving as a medium of exchange, a unit of account, and a store of value.

Question 17

Which of the following statements is true of a barter system?

Accepted Answer

A)  In a barter system, an individual offers one good or service to get another good or service. 
B)  In a barter system, an individual offers money to get a good or service. 
C)  In a barter system, an individual offers a good or service to get money. 
D)  In a barter system, different kinds of money are exchanged for one another. 
E)  In a barter system, all individuals are self-sufficient. 
A)  In a barter system, an individual offers one good or service to get another good or service. 
B)  In a barter system, an individual offers money to get a good or service. 
C)  In a barter system, an individual offers a good or service to get money. 
D)  In a barter system, different kinds of money are exchanged for one another. 
E)  In a barter system, all individuals are self-sufficient.

Question 18

A lender of last resort is a financial institution that is willing and able to lend to _____

Accepted Answer

A)  individuals who have other debts outstanding. 
B)  individuals who do not have a positive net worth. 
C)  banks that are not members of the Federal Reserve System. 
D)  fractional reserve system banks experiencing runs on their deposits. 
E)  Federal Reserve System member banks experiencing runs on their deposits. 
A)  individuals who have other debts outstanding. 
B)  individuals who do not have a positive net worth. 
C)  banks that are not members of the Federal Reserve System. 
D)  fractional reserve system banks experiencing runs on their deposits. 
E)  Federal Reserve System member banks experiencing runs on their deposits.

Question 19

The earliest type of exchange involved _____

Accepted Answer

A)  coins. 
B)  barter. 
C)  commodity money. 
D)  fiduciary money. 
E)  fiat money. 
A)  coins. 
B)  barter. 
C)  commodity money. 
D)  fiduciary money. 
E)  fiat money.

Question 20

The powers of the Federal Reserve System do not include _____

Accepted Answer

A)  the ability to buy and sell U.S. government securities. 
B)  the ability to extend loans to commercial banks. 
C)  the ability to provide deposit insurance for customers of member banks. 
D)  the ability to impose reserve requirements on both member and nonmember commercial banks. 
E)  the authority to clear checks. 
A)  the ability to buy and sell U.S. government securities. 
B)  the ability to extend loans to commercial banks. 
C)  the ability to provide deposit insurance for customers of member banks. 
D)  the ability to impose reserve requirements on both member and nonmember commercial banks. 
E)  the authority to clear checks.

Which of the following is most critical for the maintenance of an efficient and productive economy?

Why did credit-rating agencies that evaluated mortgage-backed securities have a conflict of interest?

The Federal Reserve System has the power to _____

To say that money serves as a store of value is to say that money is a useful way to store wealth for future use.

The Dodd-Frank Wall Act established the _____, a super-regulator that monitors Wall Street's largest firms and other market participants to spot and respond to emerging systemic risks.

Which quality best defines money that is valued equally in exchange?

The purchasing power of each dollar over time _____

People came to accept fiat money because they believed that others would accept it as well.

TARP authorized the U.S. Treasury to purchase up to _____ in mortgage-backed securities.

A subprime mortgage is _____

The purpose of deregulating banks during the 1980s was to _____

Fiat money is backed by _____

Fiat money _____

The FDIC insures deposits in _____

The Dodd-Frank Wall Street Reform and Consumer Protection Act gives the Federal Reserve the authority to establish a reserve requirement for all financial institutions.

The three important functions of money are _____

Which of the following statements is true of a barter system?

A lender of last resort is a financial institution that is willing and able to lend to _____

The earliest type of exchange involved _____

The powers of the Federal Reserve System do not include _____

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 13: Money and the Financial System.

Which of the following is most critical for the maintenance of an efficient and productive economy?

Why did credit-rating agencies that evaluated mortgage-backed securities have a conflict of interest?

The Federal Reserve System has the power to _____

To say that money serves as a store of value is to say that money is a useful way to store wealth for future use.

The Dodd-Frank Wall Act established the _____, a super-regulator that monitors Wall Street's largest firms and other market participants to spot and respond to emerging systemic risks.

Which quality best defines money that is valued equally in exchange?

The purchasing power of each dollar over time _____

People came to accept fiat money because they believed that others would accept it as well.

TARP authorized the U.S. Treasury to purchase up to _____ in mortgage-backed securities.

A subprime mortgage is _____

The purpose of deregulating banks during the 1980s was to _____

Fiat money is backed by _____

Fiat money _____

The FDIC insures deposits in _____

The Dodd-Frank Wall Street Reform and Consumer Protection Act gives the Federal Reserve the authority to establish a reserve requirement for all financial institutions.

The three important functions of money are _____

Which of the following statements is true of a barter system?

A lender of last resort is a financial institution that is willing and able to lend to _____

The earliest type of exchange involved _____

The powers of the Federal Reserve System do not include _____

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters