Question 1

The residential housing market saw remarkable increases in

Accepted Answer

A) Housing prices at the end of the 1990's and through the first half of the 2000's 
B) Housing prices at the end of the 1980's and beginning of the 1990's 
C) Foreclosure rates at the end of the 1990's and through the first half of the 2000's 
D) Foreclosure rates at the end of the 1980's and beginning of the 1990's 
E) Both A and C 
A) Housing prices at the end of the 1990's and through the first half of the 2000's 
B) Housing prices at the end of the 1980's and beginning of the 1990's 
C) Foreclosure rates at the end of the 1990's and through the first half of the 2000's 
D) Foreclosure rates at the end of the 1980's and beginning of the 1990's 
E) Both A and C

Question 2

When the Fed increases the money supply,it generally has the effect of

Accepted Answer

A) Making banks more profitable 
B) Increasing the value of stocks 
C) Lowering interest rates 
D) Lowering the inflation rate 
E) Increasing the size of bank deposits 
A) Making banks more profitable 
B) Increasing the value of stocks 
C) Lowering interest rates 
D) Lowering the inflation rate 
E) Increasing the size of bank deposits

Question 3

Assets that are "marked to market" will be priced at

Accepted Answer

A) Their original purchase price 
B) Their original purchase price less the depreciation of the asset 
C) A price that is equal to the original purchase price plus the rate of inflation 
D) A price that is based upon the asset's current market value 
E) A price determined in the stock market 
A) Their original purchase price 
B) Their original purchase price less the depreciation of the asset 
C) A price that is equal to the original purchase price plus the rate of inflation 
D) A price that is based upon the asset's current market value 
E) A price determined in the stock market

Question 4

The Federal Reserve Open Market Committee's primary function is to open new banks.

Accepted Answer

A) True 
 B)False

Question 5

Commercial banks

Accepted Answer

A) Attract deposits by offering to pay interest 
B) Sell new issues of stocks and bond 
C) Operate on a non-profit basis 
D) Attract deposits by offering free toasters 
E) None of the above 
A) Attract deposits by offering to pay interest 
B) Sell new issues of stocks and bond 
C) Operate on a non-profit basis 
D) Attract deposits by offering free toasters 
E) None of the above

Question 6

Appropriate Federal Reserve actions to combat inflation are an increase in the discount rate,an increase in the reserve ratio and the sale of government securities.

Accepted Answer

A) True 
 B)False

Question 7

When the Open Market Committee (FOMC)purchases government securities,their actions are an attempt to

Accepted Answer

A) Raise interest rates 
B) Lower interest rates 
C) Reduce borrowing 
D) Raise the inflation rate 
E) Influence voters in the next presidential election 
A) Raise interest rates 
B) Lower interest rates 
C) Reduce borrowing 
D) Raise the inflation rate 
E) Influence voters in the next presidential election

Question 8

M2 includes

Accepted Answer

A) M1,plus savings and time deposits of small denomination,and money market mutual funds 
B) M1 plus savings and time deposits of large denomination (over $100,000) 
C) M1 plus banks acceptances and Treasury bills 
D) M1 plus currency and demand deposits 
E) None of the above 
A) M1,plus savings and time deposits of small denomination,and money market mutual funds 
B) M1 plus savings and time deposits of large denomination (over $100,000) 
C) M1 plus banks acceptances and Treasury bills 
D) M1 plus currency and demand deposits 
E) None of the above

Question 9

Banks make loans from their

Accepted Answer

A) Required reserves 
B) Excess reserves 
C) Net worth 
D) U.S.government securities 
E) None of the above 
A) Required reserves 
B) Excess reserves 
C) Net worth 
D) U.S.government securities 
E) None of the above

Question 10

To reduce inflationary pressures,the Federal Reserve authorities should

Accepted Answer

A) Sell government securities,raise reserve requirements,and lower the discount rate 
B) Sell government securities,lower reserve requirements,and lower the discount rate 
C) Buy the government securities,raise reserve requirements,and raise the discount rate 
D) Sell government securities,raise reserve requirements,and raise the discount rate 
E) Buy government securities,decrease reserve requirements,decrease the discount rate 
A) Sell government securities,raise reserve requirements,and lower the discount rate 
B) Sell government securities,lower reserve requirements,and lower the discount rate 
C) Buy the government securities,raise reserve requirements,and raise the discount rate 
D) Sell government securities,raise reserve requirements,and raise the discount rate 
E) Buy government securities,decrease reserve requirements,decrease the discount rate

Question 11

A key assumption in the quantity theory of money is that

Accepted Answer

A) The supply of money is increasing at a constant rate 
B)  The price level is stable over long periods of time 
C) The level of output of goods and services changes frequently in response to changes in velocity 
D) The velocity of money is constant 
E) None of the above 
A) The supply of money is increasing at a constant rate 
B)  The price level is stable over long periods of time 
C) The level of output of goods and services changes frequently in response to changes in velocity 
D) The velocity of money is constant 
E) None of the above

Question 12

Who controls the aggregate volume of demand deposits in the banking system?

Accepted Answer

A) The U.S.Treasury 
B) The Federal Reserve Board of Governors 
C) Congress 
D) Bankers 
E) The President of the United States 
A) The U.S.Treasury 
B) The Federal Reserve Board of Governors 
C) Congress 
D) Bankers 
E) The President of the United States

Question 13

Which of the following is among the assets of a commercial bank?

Accepted Answer

A) Demand deposits 
B) Net worth 
C) Any liability 
D) Loans and investments 
E) Time deposits 
A) Demand deposits 
B) Net worth 
C) Any liability 
D) Loans and investments 
E) Time deposits

Question 14

A financial intermediary

Accepted Answer

A) Seeks deposits 
B) Makes loans 
C) Matches up savers and borrowers 
D) All of the above 
E) Operates in between two banks 
A) Seeks deposits 
B) Makes loans 
C) Matches up savers and borrowers 
D) All of the above 
E) Operates in between two banks

Question 15

The Gramm-Leach-Bliley Act allows banks to

Accepted Answer

A) Sell insurance 
B) Underwrite insurance 
C) Sell securities 
D) Invest in real estate 
E) Do all of the above 
A) Sell insurance 
B) Underwrite insurance 
C) Sell securities 
D) Invest in real estate 
E) Do all of the above

Question 16

When a share of stock is sold on the New York Stock Exchange,it is traded

Accepted Answer

A) In a prime financial market 
B) In a primary financial market 
C) For a promise to pay a fixed return 
D) To another stock exchange 
E) In a secondary financial market 
A) In a prime financial market 
B) In a primary financial market 
C) For a promise to pay a fixed return 
D) To another stock exchange 
E) In a secondary financial market

Question 17

The key to the Federal Reserve's control over the money supply is its ability to create money by making loans.

Accepted Answer

A) True 
 B)False

Question 18

A credit default swap

Accepted Answer

A) Is what happens when homeowners swap their mortgages with their neighbors 
B) Is a way for investors in collateralized debt obligations (or CDO's)to make even more money 
C) Is a way for investors in collateralized debt obligations (or CDO's)to reduce the risk of an increase in mortgage foreclosures 
D) Is a way for investors to increase the risks to homeowners 
E) Exists only in markets with subprime mortgages 
A) Is what happens when homeowners swap their mortgages with their neighbors 
B) Is a way for investors in collateralized debt obligations (or CDO's)to make even more money 
C) Is a way for investors in collateralized debt obligations (or CDO's)to reduce the risk of an increase in mortgage foreclosures 
D) Is a way for investors to increase the risks to homeowners 
E) Exists only in markets with subprime mortgages

Question 19

If the reserve ratio is 10% and a new demand deposit of $10,000 is made,what is the maximum deposit creation possible?

Accepted Answer

A) $1,000 
B) $9,000 
C) $10,000 
D) $90,000 
E) $100,000 
A) $1,000 
B) $9,000 
C) $10,000 
D) $90,000 
E) $100,000

Question 20

The Following Questions Refer to the graph below.  
-Based on the diagram,the opportunity cost of money is higher if

Accepted Answer

A) The interest rate is i0 
B) The interest rate is i1 
C) The money supply is curve MS1 
D) The money supply is curve MS2 
E) The opportunity cost of money is not shown in the diagram 
A) The interest rate is i0 
B) The interest rate is i1 
C) The money supply is curve MS1 
D) The money supply is curve MS2 
E) The opportunity cost of money is not shown in the diagram

The residential housing market saw remarkable increases in

When the Fed increases the money supply,it generally has the effect of

Assets that are "marked to market" will be priced at

The Federal Reserve Open Market Committee's primary function is to open new banks.

Commercial banks

Appropriate Federal Reserve actions to combat inflation are an increase in the discount rate,an increase in the reserve ratio and the sale of government securities.

When the Open Market Committee (FOMC)purchases government securities,their actions are an attempt to

M2 includes

Banks make loans from their

To reduce inflationary pressures,the Federal Reserve authorities should

A key assumption in the quantity theory of money is that

Who controls the aggregate volume of demand deposits in the banking system?

Which of the following is among the assets of a commercial bank?

A financial intermediary

The Gramm-Leach-Bliley Act allows banks to

When a share of stock is sold on the New York Stock Exchange,it is traded

The key to the Federal Reserve's control over the money supply is its ability to create money by making loans.

A credit default swap

If the reserve ratio is 10% and a new demand deposit of $10,000 is made,what is the maximum deposit creation possible?

The Following Questions Refer to the graph below. -Based on the diagram,the opportunity cost of money is higher if

Alleviating Human Misery: The Role of Economic Reasoning

Economic Systems, Resource Allocation, and Social Well-Being: Lessons From Chinas Transition

Government Control of Prices in Mixed Systems: Who Are the Winners and Losers

Pollution Problems: Must We Foul Our Own Nests

Economics of Crime and Its Prevention: How Much Is Too Much

The Economics of Education: Crisis and Reform

Poverty Problems and Discrimination: Why Are so Many Still so Poor

The Economics of Monopoly Power: Can Markets Be Controlled

The Economics of Professional Sports: What Is the Real Score

Competition in the Global Market-Place: Should We Protect Ourselves From International Trade

Economic Growth: Why Is the Economic Road so Bumpy

Unemployment and Inflation: Can We Find a Balance

Government Spending,Taxation,and the National Debt: Who Wins and Who Loses

Social Security and Medicare: How Secure Is Our Safety Net for the Elderly

Filters

Exam 12: Money,Banking and the Financial System: Old Problems With New Twists

The residential housing market saw remarkable increases in

When the Fed increases the money supply,it generally has the effect of

Assets that are "marked to market" will be priced at

The Federal Reserve Open Market Committee's primary function is to open new banks.

Commercial banks

Appropriate Federal Reserve actions to combat inflation are an increase in the discount rate,an increase in the reserve ratio and the sale of government securities.

When the Open Market Committee (FOMC)purchases government securities,their actions are an attempt to

M2 includes

Banks make loans from their

To reduce inflationary pressures,the Federal Reserve authorities should

A key assumption in the quantity theory of money is that

Who controls the aggregate volume of demand deposits in the banking system?

Which of the following is among the assets of a commercial bank?

A financial intermediary

The Gramm-Leach-Bliley Act allows banks to

When a share of stock is sold on the New York Stock Exchange,it is traded

The key to the Federal Reserve's control over the money supply is its ability to create money by making loans.

A credit default swap

If the reserve ratio is 10% and a new demand deposit of $10,000 is made,what is the maximum deposit creation possible?

The Following Questions Refer to the graph below. -Based on the diagram,the opportunity cost of money is higher if

Alleviating Human Misery: The Role of Economic Reasoning

Economic Systems, Resource Allocation, and Social Well-Being: Lessons From Chinas Transition

Government Control of Prices in Mixed Systems: Who Are the Winners and Losers

Pollution Problems: Must We Foul Our Own Nests

Economics of Crime and Its Prevention: How Much Is Too Much

The Economics of Education: Crisis and Reform

Poverty Problems and Discrimination: Why Are so Many Still so Poor

The Economics of Monopoly Power: Can Markets Be Controlled

The Economics of Professional Sports: What Is the Real Score

Competition in the Global Market-Place: Should We Protect Ourselves From International Trade

Economic Growth: Why Is the Economic Road so Bumpy

Unemployment and Inflation: Can We Find a Balance

Government Spending,Taxation,and the National Debt: Who Wins and Who Loses

Social Security and Medicare: How Secure Is Our Safety Net for the Elderly

Filters