Question 1

As a result of the financial crises in 2008, which bank had to merge with Wells Fargo?

Accepted Answer

A)  JPMorgan Chase 
B)  Wells Fargo 
C)  Bank of America 
D)  Washington Mutual 
E)  Wachovia 
A)  JPMorgan Chase 
B)  Wells Fargo 
C)  Bank of America 
D)  Washington Mutual 
E)  Wachovia

Question 2

The chair of the Board of Governors of the Fed is appointed by the president and confirmed by the Senate.

Accepted Answer

A) True 
 B)False

Question 3

If the purchasing power of a dollar measured in terms of the base year was $1, what was the price index?

Accepted Answer

A)  238 
B)  244 
C)  41 
D)  42 
E)  100 
A)  238 
B)  244 
C)  41 
D)  42 
E)  100

Question 4

Commercial banks are depository institutions that _____

Accepted Answer

A)  historically made short-term loans, primarily to businesses. 
B)  historically lent money to households. 
C)  operate as investment banks. 
D)  operate as brokerage houses. 
E)  are thrifts. 
A)  historically made short-term loans, primarily to businesses. 
B)  historically lent money to households. 
C)  operate as investment banks. 
D)  operate as brokerage houses. 
E)  are thrifts.

Question 5

Which of the following is not performed by the Fed?

Accepted Answer

A)  holding member bank reserves on deposit 
B)  making loans to member banks 
C)  issuing bank notes 
D)  serving as bankers to other banks 
E)  holding deposits of households and firms 
A)  holding member bank reserves on deposit 
B)  making loans to member banks 
C)  issuing bank notes 
D)  serving as bankers to other banks 
E)  holding deposits of households and firms

Question 6

The tendency of bankers to take unwarranted risks in making loans because deposits were insured is an example of _____

Accepted Answer

A)  anchoring bias. 
B)  self-serving bias. 
C)  moral hazard. 
D)  hazard pay. 
E)  banker's lobbying. 
A)  anchoring bias. 
B)  self-serving bias. 
C)  moral hazard. 
D)  hazard pay. 
E)  banker's lobbying.

Question 7

The Federal Open Market Committee was established to give the Fed the power to change reserve requirements.

Accepted Answer

A) True 
 B)False

Question 8

A new _____ has broad powers to write consumer-protection rules for banks and other firms that offer financial services.

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 9

The actions of the Fed _____

Accepted Answer

A)  must be approved by the president and Congress. 
B)  must be approved by the president alone. 
C)  must be approved by Congress alone. 
D)  are not subject to approval by any branch of government. 
E)  are subject to the approval of the electorate. 
A)  must be approved by the president and Congress. 
B)  must be approved by the president alone. 
C)  must be approved by Congress alone. 
D)  are not subject to approval by any branch of government. 
E)  are subject to the approval of the electorate.

Question 10

If the price index in 2017 was 244, the purchasing power of a dollar measured in terms of the base year was _____

Accepted Answer

A)  $2.38. 
B)  $0.24. 
C)  $0.41. 
D)  $4.10. 
E)  $1.00. 
A)  $2.38. 
B)  $0.24. 
C)  $0.41. 
D)  $4.10. 
E)  $1.00.

Question 11

Why are banks merging?

Accepted Answer

A)  because they want fewer customers 
B)  because they want to reduce operating costs per customer 
C)  to shrink their geographical reach 
D)  to reduce risk of bad loans to one area 
E)  to reduce the number of branches 
A)  because they want fewer customers 
B)  because they want to reduce operating costs per customer 
C)  to shrink their geographical reach 
D)  to reduce risk of bad loans to one area 
E)  to reduce the number of branches

Question 12

Identify the correct statement about the Fed.

Accepted Answer

A)  When the Federal Reserve System was established, all banks were required to become members. 
B)  When the Federal Reserve System was established, only federally chartered banks were allowed to join. 
C)  When the Federal Reserve System was established, only federally chartered banks were required to join. 
D)  When the Federal Reserve System was established, most banks joined even though none were required to join. 
E)  When the Federal Reserve System was established, membership was required for all banks in some states, but not in others. 
A)  When the Federal Reserve System was established, all banks were required to become members. 
B)  When the Federal Reserve System was established, only federally chartered banks were allowed to join. 
C)  When the Federal Reserve System was established, only federally chartered banks were required to join. 
D)  When the Federal Reserve System was established, most banks joined even though none were required to join. 
E)  When the Federal Reserve System was established, membership was required for all banks in some states, but not in others.

Question 13

To minimize the effect of short-term political pressure on the Fed's Board of Governors, the governors are all appointed to their terms _____

Accepted Answer

A)  in different years, and their terms are long. 
B)  in different years, and their terms are short. 
C)  in the same year, and their terms are long. 
D)  in the same year, and their terms are short. 
E)  in the same year, and their terms are shorter than that of the chairman of the Federal Reserve Board. 
A)  in different years, and their terms are long. 
B)  in different years, and their terms are short. 
C)  in the same year, and their terms are long. 
D)  in the same year, and their terms are short. 
E)  in the same year, and their terms are shorter than that of the chairman of the Federal Reserve Board.

Question 14

Which of the following is not a power of the Federal Reserve System?

Accepted Answer

A)  setting the prime interest rate 
B)  issuing Federal Reserve notes 
C)  buying and selling U.S. government securities 
D)  extending loans to member banks 
E)  clearing checks 
A)  setting the prime interest rate 
B)  issuing Federal Reserve notes 
C)  buying and selling U.S. government securities 
D)  extending loans to member banks 
E)  clearing checks

Question 15

The U.S. dollar is backed by gold.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is true?

Accepted Answer

A)  Money-market mutual funds were originally introduced by the Federal Reserve Bank of New York. 
B)  Money-market mutual funds initially constituted serious competition to banks and thrifts for the deposits of savers. 
C)  Money-market mutual funds were not originally offered by commercial banks and still are not offered by them. 
D)  Money-market mutual funds represent a pooling of cash assets from many countries, like dollars, francs, and pesos. 
E)  Money-market mutual funds are not able to offer their customers check-writing privileges. 
A)  Money-market mutual funds were originally introduced by the Federal Reserve Bank of New York. 
B)  Money-market mutual funds initially constituted serious competition to banks and thrifts for the deposits of savers. 
C)  Money-market mutual funds were not originally offered by commercial banks and still are not offered by them. 
D)  Money-market mutual funds represent a pooling of cash assets from many countries, like dollars, francs, and pesos. 
E)  Money-market mutual funds are not able to offer their customers check-writing privileges.

Question 17

The emergence of the subprime mortgage market following the recession of 2001 set off a boom in the housing industry.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a goal of the Fed?

Accepted Answer

A)  maintaining a high level of employment 
B)  maintaining stability in interest rates 
C)  maintaining high prices to encourage production 
D)  maintaining stability in financial markets 
E)  maintaining stability in foreign exchange markets 
A)  maintaining a high level of employment 
B)  maintaining stability in interest rates 
C)  maintaining high prices to encourage production 
D)  maintaining stability in financial markets 
E)  maintaining stability in foreign exchange markets

Question 19

An important function of commercial banks is to _____

Accepted Answer

A)  print new currency. 
B)  issue fiat money. 
C)  mint coins. 
D)  redeem currency for precious metals. 
E)  make loans. 
A)  print new currency. 
B)  issue fiat money. 
C)  mint coins. 
D)  redeem currency for precious metals. 
E)  make loans.

Question 20

Which of the following is not a depository institution?

Accepted Answer

A)  a commercial bank 
B)  a thrift institution 
C)  a pension fund 
D)  a savings-and-loan institution 
E)  a credit union 
A)  a commercial bank 
B)  a thrift institution 
C)  a pension fund 
D)  a savings-and-loan institution 
E)  a credit union

As a result of the financial crises in 2008, which bank had to merge with Wells Fargo?

The chair of the Board of Governors of the Fed is appointed by the president and confirmed by the Senate.

If the purchasing power of a dollar measured in terms of the base year was $1, what was the price index?

Commercial banks are depository institutions that _____

Which of the following is not performed by the Fed?

The tendency of bankers to take unwarranted risks in making loans because deposits were insured is an example of _____

The Federal Open Market Committee was established to give the Fed the power to change reserve requirements.

A new _____ has broad powers to write consumer-protection rules for banks and other firms that offer financial services.

The actions of the Fed _____

If the price index in 2017 was 244, the purchasing power of a dollar measured in terms of the base year was _____

Why are banks merging?

Identify the correct statement about the Fed.

To minimize the effect of short-term political pressure on the Fed's Board of Governors, the governors are all appointed to their terms _____

Which of the following is not a power of the Federal Reserve System?

The U.S. dollar is backed by gold.

Which of the following statements is true?

The emergence of the subprime mortgage market following the recession of 2001 set off a boom in the housing industry.

Which of the following is not a goal of the Fed?

An important function of commercial banks is to _____

Which of the following is not a depository institution?

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.

As a result of the financial crises in 2008, which bank had to merge with Wells Fargo?

The chair of the Board of Governors of the Fed is appointed by the president and confirmed by the Senate.

If the purchasing power of a dollar measured in terms of the base year was $1, what was the price index?

Commercial banks are depository institutions that _____

Which of the following is not performed by the Fed?

The tendency of bankers to take unwarranted risks in making loans because deposits were insured is an example of _____

The Federal Open Market Committee was established to give the Fed the power to change reserve requirements.

A new _____ has broad powers to write consumer-protection rules for banks and other firms that offer financial services.

The actions of the Fed _____

If the price index in 2017 was 244, the purchasing power of a dollar measured in terms of the base year was _____

Why are banks merging?

Identify the correct statement about the Fed.

To minimize the effect of short-term political pressure on the Fed's Board of Governors, the governors are all appointed to their terms _____

Which of the following is not a power of the Federal Reserve System?

The U.S. dollar is backed by gold.

Which of the following statements is true?

The emergence of the subprime mortgage market following the recession of 2001 set off a boom in the housing industry.

Which of the following is not a goal of the Fed?

An important function of commercial banks is to _____

Which of the following is not a depository institution?

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