Question 1

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. A

Question 2

In what year did the economy return to normal conditions following the Great Depression?

Accepted Answer

A) 1933 
B) 1937 
C) 1941 
D) 1945 
A) 1933 
B) 1937 
C) 1941 
D) 1945 D

Question 3

What are the two most common reasons for a sovereign debt crisis?

Accepted Answer

Chronic government budget deficits that eventually result in the interest payments required on government bonds taking up an unsustainably large fraction of government spending, or a severe recession that increases government spending and reduces tax revenues, resulting in soaring budget deficits.

Question 4

By how much did real GDP decline between 1929 and 1933?

Accepted Answer

A) 18% 
B) 20% 
C) 27% 
D) 81% 
A) 18% 
B) 20% 
C) 27% 
D) 81%

Question 5

The third stage in the regulatory process is

Accepted Answer

A) a crisis. 
B) response by the financial system. 
C) regulation. 
D) regulatory response. 
A) a crisis. 
B) response by the financial system. 
C) regulation. 
D) regulatory response.

Question 6

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.

Question 7

The primary motive for financial innovation during the regulatory process is

Accepted Answer

A) profit. 
B) adherence to the new regulations. 
C) return to the way business was conducted prior to the new regulations. 
D) increase coordination with other financial institutions. 
A) profit. 
B) adherence to the new regulations. 
C) return to the way business was conducted prior to the new regulations. 
D) increase coordination with other financial institutions.

Question 8

The Consumer Financial Protection Bureau is part of the

Accepted Answer

A) Treasury Department 
B) Federal Reserve System 
C) Justice Department 
D) Commerce Department 
A) Treasury Department 
B) Federal Reserve System 
C) Justice Department 
D) Commerce Department

Question 9

The recession that became the Great Depression began

Accepted Answer

A) two months prior to the stock market crash of 1929. 
B) with the stock market crash of 1929. 
C) one year after the stock market crash of 1929. 
D) with the banking panics of the early 1930s. 
A) two months prior to the stock market crash of 1929. 
B) with the stock market crash of 1929. 
C) one year after the stock market crash of 1929. 
D) with the banking panics of the early 1930s.

Question 10

A stress test of banks, such as that undertaken in the Spring of 2009, is designed to:

Accepted Answer

A) ensure that banks have followed proper accounting standards 
B) make sure that banks are properly managed 
C) gauge how well banks would fare if the economy worsens 
D) estimate the impact of a bank panic on the overall economy 
A) ensure that banks have followed proper accounting standards 
B) make sure that banks are properly managed 
C) gauge how well banks would fare if the economy worsens 
D) estimate the impact of a bank panic on the overall economy

Question 11

One of the most important enforcement tools of the Consumer Finance Protection Bureau is:

Accepted Answer

A) the threat of civil charges against those who violate the laws involving money transfers, foreclosure and many other financial services 
B) the ability to audit financial firms and institutions 
C) the ability to initiate new regulations 
D) the authority to impose criminal penalties 
A) the threat of civil charges against those who violate the laws involving money transfers, foreclosure and many other financial services 
B) the ability to audit financial firms and institutions 
C) the ability to initiate new regulations 
D) the authority to impose criminal penalties

Question 12

The process in which a cycle of falling asset prices and falling prices of goods and services can increase the severity of an economic downturn is called:

Accepted Answer

A) financial crisis 
B) bank run 
C) sovereign debt crisis 
D) debt-deflation process 
A) financial crisis 
B) bank run 
C) sovereign debt crisis 
D) debt-deflation process

Question 13

Why do banking panics normally lead to recessions?

Accepted Answer

Bank failures can directly affect the ab

Question 14

What is meant by senior debt?

Accepted Answer

A) debt that has been around for the longest period of time 
B) debt that must be paid before junior debt is paid 
C) debt owed to the federal government 
D) debt issued by the federal government as opposed to states or corporations 
A) debt that has been around for the longest period of time 
B) debt that must be paid before junior debt is paid 
C) debt owed to the federal government 
D) debt issued by the federal government as opposed to states or corporations

Question 15

Banks face liquidity risk because

Accepted Answer

A) they can have difficulty meeting their depositor's demands to withdraw money. 
B) they are unable to borrow from the Federal Reserve. 
C) households and businesses may seek to borrow a large amount of funds in a short period of time. 
D) governments tend to run high budget deficits. 
A) they can have difficulty meeting their depositor's demands to withdraw money. 
B) they are unable to borrow from the Federal Reserve. 
C) households and businesses may seek to borrow a large amount of funds in a short period of time. 
D) governments tend to run high budget deficits.

Question 16

Banks have a maturity mismatch since

Accepted Answer

A) they borrow long term, but lend short term. 
B) they borrow short term, but lend long term. 
C) some of their loans are short term while others are long term. 
D) some of their borrowings are short term while others are long term. 
A) they borrow long term, but lend short term. 
B) they borrow short term, but lend long term. 
C) some of their loans are short term while others are long term. 
D) some of their borrowings are short term while others are long term.

Question 17

Which of the following did NOT play a role in keeping Greece from defaulting between 2010 and 2012?

Accepted Answer

A) International Monetary Fund 
B) United Nations 
C) European Union 
D) European Central Bank 
A) International Monetary Fund 
B) United Nations 
C) European Union 
D) European Central Bank

Question 18

Banks with which type of loans were most likely to fail during the early 1930s?

Accepted Answer

A) mortgage loans 
B) agricultural loans 
C) commercial real estate loans 
D) international loans 
A) mortgage loans 
B) agricultural loans 
C) commercial real estate loans 
D) international loans

Question 19

Which investment bank avoided bankruptcy by being purchased by JP Morgan Chase in March 2008?

Accepted Answer

A) Morgan Stanley 
B) Lehman Brothers 
C) Bear Stearns 
D) Merrill Lynch 
A) Morgan Stanley 
B) Lehman Brothers 
C) Bear Stearns 
D) Merrill Lynch

Question 20

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.

NOW accounts were developed in order to

In what year did the economy return to normal conditions following the Great Depression?

What are the two most common reasons for a sovereign debt crisis?

By how much did real GDP decline between 1929 and 1933?

The third stage in the regulatory process is

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

The primary motive for financial innovation during the regulatory process is

The Consumer Financial Protection Bureau is part of the

The recession that became the Great Depression began

A stress test of banks, such as that undertaken in the Spring of 2009, is designed to:

One of the most important enforcement tools of the Consumer Finance Protection Bureau is:

The process in which a cycle of falling asset prices and falling prices of goods and services can increase the severity of an economic downturn is called:

Why do banking panics normally lead to recessions?

What is meant by senior debt?

Banks face liquidity risk because

Banks have a maturity mismatch since

Which of the following did NOT play a role in keeping Greece from defaulting between 2010 and 2012?

Banks with which type of loans were most likely to fail during the early 1930s?

Which investment bank avoided bankruptcy by being purchased by JP Morgan Chase in March 2008?

Congress created the Federal Reserve System

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

Investment Banks, Mutual Funds, Hedge Funds, and the Shadow Banking System

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

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Exam 12: Financial Crises and Financial Regulation

NOW accounts were developed in order to

In what year did the economy return to normal conditions following the Great Depression?

What are the two most common reasons for a sovereign debt crisis?

By how much did real GDP decline between 1929 and 1933?

The third stage in the regulatory process is

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

The primary motive for financial innovation during the regulatory process is

The Consumer Financial Protection Bureau is part of the

The recession that became the Great Depression began

A stress test of banks, such as that undertaken in the Spring of 2009, is designed to:

One of the most important enforcement tools of the Consumer Finance Protection Bureau is:

The process in which a cycle of falling asset prices and falling prices of goods and services can increase the severity of an economic downturn is called:

Why do banking panics normally lead to recessions?

What is meant by senior debt?

Banks face liquidity risk because

Banks have a maturity mismatch since

Which of the following did NOT play a role in keeping Greece from defaulting between 2010 and 2012?

Banks with which type of loans were most likely to fail during the early 1930s?

Which investment bank avoided bankruptcy by being purchased by JP Morgan Chase in March 2008?

Congress created the Federal Reserve System

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

Investment Banks, Mutual Funds, Hedge Funds, and the Shadow Banking System

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