Question 1

Losses in which holding resulted in BNP Paribas not allowing investors to redeem shares from three of its investment funds?

Accepted Answer

A) mortgage-backed securities 
B) Lehman Brothers 
C) Bear Stearns 
D) Real Estate Investment Trusts 
A) mortgage-backed securities 
B) Lehman Brothers 
C) Bear Stearns 
D) Real Estate Investment Trusts

Question 2

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

Question 3

Disintermediation refers to the

Accepted Answer

A) failure of financial intermediaries due to moral hazard problems. 
B) failure of financial intermediaries due to adverse selection problems. 
C) movement of savers and borrowers from banks to financial markets. 
D) removal of government regulations of financial intermediaries. 
A) failure of financial intermediaries due to moral hazard problems. 
B) failure of financial intermediaries due to adverse selection problems. 
C) movement of savers and borrowers from banks to financial markets. 
D) removal of government regulations of financial intermediaries.

Question 4

The process by which simultaneous withdrawals by a particular bank's depositors results in the bank closing is known as a

Accepted Answer

A) contagion. 
B) bank run. 
C) financial crisis. 
D) bank panic. 
A) contagion. 
B) bank run. 
C) financial crisis. 
D) bank panic.

Question 5

What are the primary reasons for and against a policy of "too big to fail."

Accepted Answer

The major argument in favor of such a po

Question 6

The second stage in the regulatory process is

Accepted Answer

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

Question 7

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 8

As of 2012, what portion of bank assets were owned by the five largest bank holding companies?

Accepted Answer

A) 10% 
B) 25% 
C) 50% 
D) 80% 
A) 10% 
B) 25% 
C) 50% 
D) 80%

Question 9

In what ways did the stock market crash of 1929 increase the severity of the downturn?

Accepted Answer

It reduced household wealth. I

Question 10

Research by Reinhart and Rogoff indicate that most of the increase in national debt as a result of a financial crisis is due to

Accepted Answer

A) government bail outs of financial institutions. 
B) increase spending on social welfare programs. 
C) government stimulus programs. 
D) sharp declines in tax revenues. 
A) government bail outs of financial institutions. 
B) increase spending on social welfare programs. 
C) government stimulus programs. 
D) sharp declines in tax revenues.

Question 11

Negotiable certificates of deposit were developed in order to

Accepted Answer

A) compete for loan business that had been going to the commercial paper market. 
B) circumvent interest rate regulations on deposits. 
C) increase assets that were acceptable as collateral for discount loans. 
D) circumvent reserve requirements. 
A) compete for loan business that had been going to the commercial paper market. 
B) circumvent interest rate regulations on deposits. 
C) increase assets that were acceptable as collateral for discount loans. 
D) circumvent reserve requirements.

Question 12

How does the relationship between housing prices and rental rates provide evidence for or against the existence of a housing bubble?

Accepted Answer

The fundamental value of a house should

Question 13

What happened to real interest rates during the early 1930s?

Accepted Answer

A) They declined as nominal interest rates declined. 
B) They rose as nominal interest rates rise. 
C) They declined due to deflation. 
D) They rose due to deflation. 
A) They declined as nominal interest rates declined. 
B) They rose as nominal interest rates rise. 
C) They declined due to deflation. 
D) They rose due to deflation.

Question 14

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

Accepted Answer

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

Question 15

What actions must a central bank take if it is trying to maintain a pegged exchange rate, but there's downward pressure on the value of its currency.

Accepted Answer

It uses previously accumulated foreign c

Question 16

By the summer of 2008, about what percent of subprime mortgages were overdue by at least 30 days?

Accepted Answer

A) 10% 
B) 25% 
C) 34% 
D) 50% 
A) 10% 
B) 25% 
C) 34% 
D) 50%

Question 17

What happened to consumer prices as measured by the CPI between 1929 and 1933?

Accepted Answer

A) rose by more than 20% 
B) didn't change 
C) declined by about 25% 
D) declined by about 80% 
A) rose by more than 20% 
B) didn't change 
C) declined by about 25% 
D) declined by about 80%

Question 18

Many economists believe

Accepted Answer

A) the Fed could have reduced the severity of the Great Depression by raising interest rates. 
B) the Fed could have reduced the severity of the Great Depression by encouraging banks to make fewer loans to insolvent businesses. 
C) bank failures increased the severity of the Great Depression. 
D) the severity of the Great Depression and the policies of the Fed were unrelated. 
A) the Fed could have reduced the severity of the Great Depression by raising interest rates. 
B) the Fed could have reduced the severity of the Great Depression by encouraging banks to make fewer loans to insolvent businesses. 
C) bank failures increased the severity of the Great Depression. 
D) the severity of the Great Depression and the policies of the Fed were unrelated.

Question 19

Describe the debt-deflation process.

Accepted Answer

As banks are forced to sell assets, the

Question 20

Most of the TARP funds were used to

Accepted Answer

A) fund a stimulus package. 
B) pay for losses incurred by Fannie Mae and Freddie Mac. 
C) finance the operations of the Federal Reserve. 
D) make direct purchases of preferred stock in banks to increase their capital. 
A) fund a stimulus package. 
B) pay for losses incurred by Fannie Mae and Freddie Mac. 
C) finance the operations of the Federal Reserve. 
D) make direct purchases of preferred stock in banks to increase their capital.

Losses in which holding resulted in BNP Paribas not allowing investors to redeem shares from three of its investment funds?

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

Disintermediation refers to the

The process by which simultaneous withdrawals by a particular bank's depositors results in the bank closing is known as a

What are the primary reasons for and against a policy of "too big to fail."

The second stage in the regulatory process is

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

As of 2012, what portion of bank assets were owned by the five largest bank holding companies?

In what ways did the stock market crash of 1929 increase the severity of the downturn?

Research by Reinhart and Rogoff indicate that most of the increase in national debt as a result of a financial crisis is due to

Negotiable certificates of deposit were developed in order to

How does the relationship between housing prices and rental rates provide evidence for or against the existence of a housing bubble?

What happened to real interest rates during the early 1930s?

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

What actions must a central bank take if it is trying to maintain a pegged exchange rate, but there's downward pressure on the value of its currency.

By the summer of 2008, about what percent of subprime mortgages were overdue by at least 30 days?

What happened to consumer prices as measured by the CPI between 1929 and 1933?

Many economists believe

Describe the debt-deflation process.

Most of the TARP funds were used 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

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

Exam 12: Financial Crises and Financial Regulation

Losses in which holding resulted in BNP Paribas not allowing investors to redeem shares from three of its investment funds?

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

Disintermediation refers to the

The process by which simultaneous withdrawals by a particular bank's depositors results in the bank closing is known as a

What are the primary reasons for and against a policy of "too big to fail."

The second stage in the regulatory process is

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

As of 2012, what portion of bank assets were owned by the five largest bank holding companies?

In what ways did the stock market crash of 1929 increase the severity of the downturn?

Research by Reinhart and Rogoff indicate that most of the increase in national debt as a result of a financial crisis is due to

Negotiable certificates of deposit were developed in order to

How does the relationship between housing prices and rental rates provide evidence for or against the existence of a housing bubble?

What happened to real interest rates during the early 1930s?

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

What actions must a central bank take if it is trying to maintain a pegged exchange rate, but there's downward pressure on the value of its currency.

By the summer of 2008, about what percent of subprime mortgages were overdue by at least 30 days?

What happened to consumer prices as measured by the CPI between 1929 and 1933?

Many economists believe

Describe the debt-deflation process.

Most of the TARP funds were used 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

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