Question 1

The creation of a lender of last resort in the United States

Accepted Answer

A)  occurred in response to banking panics. 
B)  was mandated in the U.S. Constitution. 
C)  occurred in response to the S&L crisis of the 1980s. 
D)  has been recommended by the Treasury in its report of late 1992. 
A)  occurred in response to banking panics. 
B)  was mandated in the U.S. Constitution. 
C)  occurred in response to the S&L crisis of the 1980s. 
D)  has been recommended by the Treasury in its report of late 1992.

Question 2

How does deflation affect those with debt?

Accepted Answer

A decline in the price level m

Question 3

Sovereign debt refers to

Accepted Answer

A)  debt owned by the government. 
B)  bonds issued by the government. 
C)  debt owed to the government. 
D)  debt only issued by nations with kings or queens. 
A)  debt owned by the government. 
B)  bonds issued by the government. 
C)  debt owed to the government. 
D)  debt only issued by nations with kings or queens.

Question 4

All of the following were actions taken by the government or the Fed in response to the financial crisis of 2007-2009 EXCEPT

Accepted Answer

A)  purchasing of most toxic assets such as mortgage-backed securities. 
B)  reducing the federal funds rate to near zero. 
C)  insuring deposits in money market mutual funds. 
D)  effective nationalization of Fannie Mae and Freddie Mac. 
A)  purchasing of most toxic assets such as mortgage-backed securities. 
B)  reducing the federal funds rate to near zero. 
C)  insuring deposits in money market mutual funds. 
D)  effective nationalization of Fannie Mae and Freddie Mac.

Question 5

What are the four explanations given as to why the Fed did not intervene to stabilize the banking system during the Great Depression?

Accepted Answer

First,no one was in charge.Second,the Fe

Question 6

Which of the following did NOT significantly exacerbate the banking crisis of the early 1930s?

Accepted Answer

A)  the Fed's decision not to make loans to insolvent banks 
B)  the large number of small, poorly diversified banks 
C)  the large number of rural banks that held agricultural loans during a time of falling commodity prices 
D)  the large amount of fraud carried out by bank managers 
A)  the Fed's decision not to make loans to insolvent banks 
B)  the large number of small, poorly diversified banks 
C)  the large number of rural banks that held agricultural loans during a time of falling commodity prices 
D)  the large amount of fraud carried out by bank managers

Question 7

In September 2008,the Fed and the U.S.Treasury

Accepted Answer

A)  saved both Lehman Brothers and AIG from bankruptcy. 
B)  saved Lehman Brothers, but not AIG, from bankruptcy. 
C)  saved AIG, but not Lehman Brothers, from bankruptcy. 
D)  saved neither Lehman Brothers nor AIG from bankruptcy. 
A)  saved both Lehman Brothers and AIG from bankruptcy. 
B)  saved Lehman Brothers, but not AIG, from bankruptcy. 
C)  saved AIG, but not Lehman Brothers, from bankruptcy. 
D)  saved neither Lehman Brothers nor AIG from bankruptcy.

Question 8

What are the likely effects of a sovereign debt crisis in terms of the government's ability to finance its debt?

Accepted Answer

If the government defaults,it

Question 9

Which investment caused the Reserve Primary Fund to incur heavy losses?

Accepted Answer

A)  mortgage-backed securities 
B)  real estate investment trusts 
C)  commercial paper issued by Bear Stearns 
D)  commercial paper issued by Lehman Brothers 
A)  mortgage-backed securities 
B)  real estate investment trusts 
C)  commercial paper issued by Bear Stearns 
D)  commercial paper issued by Lehman Brothers

Question 10

Who was effectively in charge of the Fed during the early 1930s?

Accepted Answer

A)  Secretary of Treasury 
B)  Head of the Federal Reserve Bank of New York 
C)  Comptroller of the Currency 
D)  no one 
A)  Secretary of Treasury 
B)  Head of the Federal Reserve Bank of New York 
C)  Comptroller of the Currency 
D)  no one

Question 11

As a part of the Dodd-Frank Act of 2010,Congress amended a portion of the Federal Reserve Act so the Fed could

Accepted Answer

A)  now make loans to individual companies. 
B)  only make loans to commercial banks. 
C)  no longer make loans to individual companies. 
D)  no longer make any loans to private corporations. 
A)  now make loans to individual companies. 
B)  only make loans to commercial banks. 
C)  no longer make loans to individual companies. 
D)  no longer make any loans to private corporations.

Question 12

NOW accounts were developed in order to

Accepted Answer

A)  circumvent Regulation Q. 
B)  provide banks with a checkable deposit on which they did not have to pay interest. 
C)  provide banks with a liquid, interest-earning asset. 
D)  provide banks with a means of earning interest on the funds in their reserve accounts with the Fed. 
A)  circumvent Regulation Q. 
B)  provide banks with a checkable deposit on which they did not have to pay interest. 
C)  provide banks with a liquid, interest-earning asset. 
D)  provide banks with a means of earning interest on the funds in their reserve accounts with the Fed.

Question 13

What does it mean for a money market mutual fund to "break the buck"?

Accepted Answer

A)  The value of its share declines below $1. 
B)  It incurs losses on its investments. 
C)  It increases its fees to more than 1% of net asset value. 
D)  It is unable to meet the demand for withdrawals by investors. 
A)  The value of its share declines below $1. 
B)  It incurs losses on its investments. 
C)  It increases its fees to more than 1% of net asset value. 
D)  It is unable to meet the demand for withdrawals by investors.

Question 14

Why do bank panics normally lead to recessions?

Accepted Answer

Bank failures can directly affect the ab

Question 15

The situation where the price of an asset rises well above its fundamental value is called

Accepted Answer

A)  contagion. 
B)  a bubble. 
C)  a panic. 
D)  disintermediation. 
A)  contagion. 
B)  a bubble. 
C)  a panic. 
D)  disintermediation.

Question 16

With respect to Lehman Brothers,Fed chair Ben Bernanke argued that

Accepted Answer

A)  because Lehman Brothers was insolvent, the Federal Reserve Act barred the Fed from saving the company. 
B)  even though Lehman Brothers was not considered insolvent, the Federal Reserve Act barred the Fed from saving the company. 
C)  because Lehman Brothers was not considered insolvent, the Federal Reserve Act required the Fed to save the company from bankruptcy. 
D)  because Lehman Brothers was insolvent, the Federal Reserve Act required the Fed to save the company from bankruptcy. 
A)  because Lehman Brothers was insolvent, the Federal Reserve Act barred the Fed from saving the company. 
B)  even though Lehman Brothers was not considered insolvent, the Federal Reserve Act barred the Fed from saving the company. 
C)  because Lehman Brothers was not considered insolvent, the Federal Reserve Act required the Fed to save the company from bankruptcy. 
D)  because Lehman Brothers was insolvent, the Federal Reserve Act required the Fed to save the company from bankruptcy.

Question 17

The era of bank panics in the United States was effectively ended by

Accepted Answer

A)  establishing the Fed as lender of last resort. 
B)  implementing the gold standard. 
C)  abandoning the gold standard. 
D)  introducing deposit insurance. 
A)  establishing the Fed as lender of last resort. 
B)  implementing the gold standard. 
C)  abandoning the gold standard. 
D)  introducing deposit insurance.

Question 18

According to research by Reinhart and Rogoff,recessions that involve financial crises have typically been ________ than recessions that do not involve financial crises.

Accepted Answer

A)  longer and deeper 
B)  longer but milder 
C)  shorter but deeper 
D)  shorter and milder 
A)  longer and deeper 
B)  longer but milder 
C)  shorter but deeper 
D)  shorter and milder

Question 19

Congress created the Federal Reserve System

Accepted Answer

A)  to serve as a lender of last resort. 
B)  to process the receipt of taxes received by the Internal Revenue Service. 
C)  to regulate the value of the U.S. dollar against foreign currencies. 
D)  to provide a source of mortgage loans to the residential housing market. 
A)  to serve as a lender of last resort. 
B)  to process the receipt of taxes received by the Internal Revenue Service. 
C)  to regulate the value of the U.S. dollar against foreign currencies. 
D)  to provide a source of mortgage loans to the residential housing market.

Question 20

In 1971,money market mutual funds were introduced as an alternative to

Accepted Answer

A)  commercial paper. 
B)  Treasury bills. 
C)  repurchase agreements. 
D)  bank deposits. 
A)  commercial paper. 
B)  Treasury bills. 
C)  repurchase agreements. 
D)  bank deposits.

The creation of a lender of last resort in the United States

How does deflation affect those with debt?

Sovereign debt refers to

All of the following were actions taken by the government or the Fed in response to the financial crisis of 2007-2009 EXCEPT

What are the four explanations given as to why the Fed did not intervene to stabilize the banking system during the Great Depression?

Which of the following did NOT significantly exacerbate the banking crisis of the early 1930s?

In September 2008,the Fed and the U.S.Treasury

What are the likely effects of a sovereign debt crisis in terms of the government's ability to finance its debt?

Which investment caused the Reserve Primary Fund to incur heavy losses?

Who was effectively in charge of the Fed during the early 1930s?

As a part of the Dodd-Frank Act of 2010,Congress amended a portion of the Federal Reserve Act so the Fed could

NOW accounts were developed in order to

What does it mean for a money market mutual fund to "break the buck"?

Why do bank panics normally lead to recessions?

The situation where the price of an asset rises well above its fundamental value is called

With respect to Lehman Brothers,Fed chair Ben Bernanke argued that

The era of bank panics in the United States was effectively ended by

According to research by Reinhart and Rogoff,recessions that involve financial crises have typically been ________ than recessions that do not involve financial crises.

Congress created the Federal Reserve System

In 1971,money market mutual funds were introduced as an alternative to

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 12: Financial Crises and Financial Regulation

The creation of a lender of last resort in the United States

How does deflation affect those with debt?

Sovereign debt refers to

All of the following were actions taken by the government or the Fed in response to the financial crisis of 2007-2009 EXCEPT

What are the four explanations given as to why the Fed did not intervene to stabilize the banking system during the Great Depression?

Which of the following did NOT significantly exacerbate the banking crisis of the early 1930s?

In September 2008,the Fed and the U.S.Treasury

What are the likely effects of a sovereign debt crisis in terms of the government's ability to finance its debt?

Which investment caused the Reserve Primary Fund to incur heavy losses?

Who was effectively in charge of the Fed during the early 1930s?

As a part of the Dodd-Frank Act of 2010,Congress amended a portion of the Federal Reserve Act so the Fed could

NOW accounts were developed in order to

What does it mean for a money market mutual fund to "break the buck"?

Why do bank panics normally lead to recessions?

The situation where the price of an asset rises well above its fundamental value is called

With respect to Lehman Brothers,Fed chair Ben Bernanke argued that

The era of bank panics in the United States was effectively ended by

According to research by Reinhart and Rogoff,recessions that involve financial crises have typically been ________ than recessions that do not involve financial crises.

Congress created the Federal Reserve System

In 1971,money market mutual funds were introduced as an alternative to

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters