Question 1

Fire sales of assets have occurred when

Accepted Answer

A)  There are insufficient liquid assets at banks to meet deposit withdrawals 
B)  Depositor runs on banks take place 
C)  The central bank's discount window is not available 
D)  All of the above 
A)  There are insufficient liquid assets at banks to meet deposit withdrawals 
B)  Depositor runs on banks take place 
C)  The central bank's discount window is not available 
D)  All of the above D

Question 2

The bursting of an asset price bubble

Accepted Answer

A)  Always causes major damage to the financial system and the economy 
B)  Causes more severe damage to the economy when the financial system is bypassed 
C)  Causes more severe damage to the economy when major financial institutions are affected 
D)  Cannot occur under because of efficient markets 
A)  Always causes major damage to the financial system and the economy 
B)  Causes more severe damage to the economy when the financial system is bypassed 
C)  Causes more severe damage to the economy when major financial institutions are affected 
D)  Cannot occur under because of efficient markets C

Question 3

The Dodd-Frank Act of 2010

Accepted Answer

A)  Embodied the largest fiscal stimulus in U.S history 
B)  Extended federal insurance to equity investments 
C)  Extended federal regulation to any financial institution designated to be a systemically important financial institution 
D)  Gave the Fed responsibility for regulating securities markets 
A)  Embodied the largest fiscal stimulus in U.S history 
B)  Extended federal insurance to equity investments 
C)  Extended federal regulation to any financial institution designated to be a systemically important financial institution 
D)  Gave the Fed responsibility for regulating securities markets C

Question 4

Recessions resulting from financial crises

Accepted Answer

A)  Are more severe than recessions stemming from other causes but their recoveries are faster 
B)  Are less severe than recessions stemming from other causes but their recoveries are slower 
C)  Are less severe than recessions stemming from other causes but their recoveries are faster 
D)  Are more severe than recessions stemming from other causes and their recoveries are slower 
A)  Are more severe than recessions stemming from other causes but their recoveries are faster 
B)  Are less severe than recessions stemming from other causes but their recoveries are slower 
C)  Are less severe than recessions stemming from other causes but their recoveries are faster 
D)  Are more severe than recessions stemming from other causes and their recoveries are slower

Question 5

Aggravating banking crises have been

Accepted Answer

A)  Uncertainties about the financial condition and liquidity of individual commercial banks 
B)  Poorly chosen locations of banking offices 
C)  Conflicts between state and federal regulators 
D)  None of the above 
A)  Uncertainties about the financial condition and liquidity of individual commercial banks 
B)  Poorly chosen locations of banking offices 
C)  Conflicts between state and federal regulators 
D)  None of the above

Question 6

Shadow banks during the 2008-2009 financial crisis included

Accepted Answer

A)  Money market mutual funds 
B)  A major insurance company 
C)  Structured investment vehicles (SIVs) 
D)  All of the above 
A)  Money market mutual funds 
B)  A major insurance company 
C)  Structured investment vehicles (SIVs) 
D)  All of the above

Question 7

The gold standard in place at the start of the Great Depression of the 1930s

Accepted Answer

A)  Helped to stabilize the financial system and the economy 
B)  Constrained the ability of the Fed to respond to the weakening financial system and economy 
C)  Was irrelevant to the course of events during this period 
D)  All of the above 
A)  Helped to stabilize the financial system and the economy 
B)  Constrained the ability of the Fed to respond to the weakening financial system and economy 
C)  Was irrelevant to the course of events during this period 
D)  All of the above

Question 8

A classic banking panic resulted from

Accepted Answer

A)  Fractional reserve commercial banks 
B)  Insufficient liquid assets at commercial banks to meet withdrawals 
C)  A nervous public worried about the safety of their funds on deposit 
D)  All of the above 
A)  Fractional reserve commercial banks 
B)  Insufficient liquid assets at commercial banks to meet withdrawals 
C)  A nervous public worried about the safety of their funds on deposit 
D)  All of the above

Question 9

Recent financial crises have resulted from

Accepted Answer

A)  Sharp declines in asset prices 
B)  Affected financial institutions having a mismatch between the maturity of their liabilities and the maturity of their assets 
C)  Uncertainty about the financial condition and liquidity of important financial institutions 
D)  All of the above 
A)  Sharp declines in asset prices 
B)  Affected financial institutions having a mismatch between the maturity of their liabilities and the maturity of their assets 
C)  Uncertainty about the financial condition and liquidity of important financial institutions 
D)  All of the above

Question 10

The Federal Deposit Insurance Corporation (FDIC) was established

Accepted Answer

A)  In the 1930s to assist the Fed in its conduct of monetary policy 
B)  In the wake of the 2008-2009 financial crisis to stabilize the financial system 
C)  In the 1930s to reduce the scope for bank runs by assuring retail depositors of the safety of their deposits 
D)  To help stabilize the stock market by protecting retail investors in stocks 
A)  In the 1930s to assist the Fed in its conduct of monetary policy 
B)  In the wake of the 2008-2009 financial crisis to stabilize the financial system 
C)  In the 1930s to reduce the scope for bank runs by assuring retail depositors of the safety of their deposits 
D)  To help stabilize the stock market by protecting retail investors in stocks

Question 11

An adverse feedback loop refers to

Accepted Answer

A)  A vicious interaction between worsening conditions in the financial system and slumping conditions in the economy 
B)  A deteriorating relationship between policymaking choices and the economy 
C)  A deteriorating relationship between inflation and the financial system 
D)  Panics in the banking system 
A)  A vicious interaction between worsening conditions in the financial system and slumping conditions in the economy 
B)  A deteriorating relationship between policymaking choices and the economy 
C)  A deteriorating relationship between inflation and the financial system 
D)  Panics in the banking system

Question 12

As a priority of the Fed (and some other major central banks), financial stability

Accepted Answer

A)  Ranks below monetary policy 
B)  Has taken on a comparable ranking to monetary policy 
C)  Ranks above monetary policy 
D)  Is not a central bank priority 
A)  Ranks below monetary policy 
B)  Has taken on a comparable ranking to monetary policy 
C)  Ranks above monetary policy 
D)  Is not a central bank priority

Fire sales of assets have occurred when

The bursting of an asset price bubble

The Dodd-Frank Act of 2010

Recessions resulting from financial crises

Aggravating banking crises have been

Shadow banks during the 2008-2009 financial crisis included

The gold standard in place at the start of the Great Depression of the 1930s

A classic banking panic resulted from

Recent financial crises have resulted from

The Federal Deposit Insurance Corporation (FDIC) was established

An adverse feedback loop refers to

As a priority of the Fed (and some other major central banks), financial stability

Introduction

Overview of the Financial System

The Special Role of Commercial Banks

Factors Affecting Yields

Principles of Portfolio Selection and Efficient Markets

The Money Market

The Bond Market

Securitization

The Mortgage Market

The Equity Market

Central Banking and the Federal Reserve

Monetary Policy: The Basics

Monetary Policy: Challenges Faced by Policymakers

The Foreign Exchange Market and Exchange Rate Regimes

Depository Institutions

The Pricing of Financial Assets

Mutual Funds

Hedge, Venture Capital, and Private Equity Funds

Large Institutional Investors

Filters

Exam 15: Financial Crises

Fire sales of assets have occurred when

The bursting of an asset price bubble

The Dodd-Frank Act of 2010

Recessions resulting from financial crises

Aggravating banking crises have been

Shadow banks during the 2008-2009 financial crisis included

The gold standard in place at the start of the Great Depression of the 1930s

A classic banking panic resulted from

Recent financial crises have resulted from

The Federal Deposit Insurance Corporation (FDIC) was established

An adverse feedback loop refers to

As a priority of the Fed (and some other major central banks), financial stability

Introduction

Overview of the Financial System

The Special Role of Commercial Banks

Factors Affecting Yields

Principles of Portfolio Selection and Efficient Markets

The Money Market

The Bond Market

Securitization

The Mortgage Market

The Equity Market

Central Banking and the Federal Reserve

Monetary Policy: The Basics

Monetary Policy: Challenges Faced by Policymakers

The Foreign Exchange Market and Exchange Rate Regimes

Depository Institutions

The Pricing of Financial Assets

Mutual Funds

Hedge, Venture Capital, and Private Equity Funds

Large Institutional Investors

Filters