Question 1

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 2

Which of the following was not a factor that contributed to the subprime mortgage crisis?

Accepted Answer

A) false security derived from FDIC insurance on mortgage loans 
B) lower down payments 
C) households devoting 25% or more of their income to mortgage payments 
D) lending to households with adverse credit ratings 
A) false security derived from FDIC insurance on mortgage loans 
B) lower down payments 
C) households devoting 25% or more of their income to mortgage payments 
D) lending to households with adverse credit ratings

Question 3

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 4

In response to the economic downturn, the federal government enacted a fiscal stimulus bill with funding in excess of $700 billion.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Leverage is essential to a bank's profitability but it also increases risk.

Accepted Answer

A) True 
 B)False

Question 7

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 8

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 9

Name some important lessons learned from the financial crisis.

Accepted Answer

1.Most observers believe that financial

Question 10

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 11

In computing GDP, new home construction adds to

Accepted Answer

A) consumption. 
B) investment. 
C) government spending. 
D) net exports. 
A) consumption. 
B) investment. 
C) government spending. 
D) net exports.

Question 12

When the housing bubble burst, prices fell particularly severely in all of these states except:

Accepted Answer

A) Arizona. 
B) California. 
C) Nevada. 
D) Florida 
E) ​Prices fell severely in all of the above states. 
A) Arizona. 
B) California. 
C) Nevada. 
D) Florida 
E) ​Prices fell severely in all of the above states.

Question 13

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

Accepted Answer

A) Regulatory failures were the result of weaknesses across the regulatory structure. 
B) The financial system operated with too much leverage. 
C) The business cycle no longer applies to economic analysis. 
D) Monetary policy alone may not be sufficient to stabilize aggregate demand. 
A) Regulatory failures were the result of weaknesses across the regulatory structure. 
B) The financial system operated with too much leverage. 
C) The business cycle no longer applies to economic analysis. 
D) Monetary policy alone may not be sufficient to stabilize aggregate demand.

Question 14

What is the leverage implied by the bank balance sheet listed below?

Accepted Answer

A) 10-to-1 
B) 12-to-1 
C) 20-to-1 
D) 21-to-1 
A) 10-to-1 
B) 12-to-1 
C) 20-to-1 
D) 21-to-1

Question 15

Assume that Sharon purchases $5,000 worth of a stock.To do so she uses $1,000 of her own money and borrows the remaining $4,000 at a 7.0% interest rate.If the stock's value decreases by 10% in one year and she has to sell the stock at that time, what is her rate of return?

Accepted Answer

A) −10% 
B) −50% 
C) −78% 
D) −156% 
A) −10% 
B) −50% 
C) −78% 
D) −156%

Question 16

During the 2000 to 2006 time period, housing prices increased but only to a limited degree.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Borrowed funds are used in financing every component of GDP.

Accepted Answer

A) True 
 B)False

Question 19

Because the U.S.economy failed to snap back from a mild recession in 2001, the Fed pushed the federal funds rate down to 1%.What effect did this have on the economy?

Accepted Answer

​When the Fed reduced the federal funds

Question 20

The Federal Reserve stepped in to help

Accepted Answer

A) Bear Stearns but not Lehman Brothers. 
B) Lehman Brothers but not Bear Stearns. 
C) both Bear Stearns and Lehman Brothers. 
D) neither Bear Stearns nor Lehman Brothers. 
A) Bear Stearns but not Lehman Brothers. 
B) Lehman Brothers but not Bear Stearns. 
C) both Bear Stearns and Lehman Brothers. 
D) neither Bear Stearns nor Lehman Brothers.

Exam 31: He Financial Crisis and the Great Recession

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

Which of the following was not a factor that contributed to the subprime mortgage crisis?

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

In response to the economic downturn, the federal government enacted a fiscal stimulus bill with funding in excess of $700 billion.

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

Leverage is essential to a bank's profitability but it also increases risk.

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

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?

Name some important lessons learned from the 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%.

In computing GDP, new home construction adds to

When the housing bubble burst, prices fell particularly severely in all of these states except:

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

What is the leverage implied by the bank balance sheet listed below?

Assume that Sharon purchases $5,000 worth of a stock.To do so she uses $1,000 of her own money and borrows the remaining $4,000 at a 7.0% interest rate.If the stock's value decreases by 10% in one year and she has to sell the stock at that time, what is her rate of return?

During the 2000 to 2006 time period, housing prices increased but only to a limited degree.

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

Borrowed funds are used in financing every component of GDP.

Because the U.S.economy failed to snap back from a mild recession in 2001, the Fed pushed the federal funds rate down to 1%.What effect did this have on the economy?

The Federal Reserve stepped in to help

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

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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