Question 1

According to the equation of exchange,

Accepted Answer

A) The right-hand side will equal the left-hand side only if velocity does not change from year to year 
B) Velocity must be constant 
C) An increase in the quantity of money will lead to an increase in the price level,other things constant 
D) Prices cannot change 
E) All of the above 
A) The right-hand side will equal the left-hand side only if velocity does not change from year to year 
B) Velocity must be constant 
C) An increase in the quantity of money will lead to an increase in the price level,other things constant 
D) Prices cannot change 
E) All of the above

Question 2

Banking regulation is intended to prevent

Accepted Answer

A) Bank failures 
B) Excess bank profits 
C) Bank losses 
D) Banks from selling securities 
E) Banking monopolies 
A) Bank failures 
B) Excess bank profits 
C) Bank losses 
D) Banks from selling securities 
E) Banking monopolies

Question 3

An increase in the supply of money will decrease interest rates.

Accepted Answer

A) True 
 B)False

Question 4

Besides homeowners,who attempted to profit from increasing home prices during the housing bubble in the early part of the 2000s?

Accepted Answer

A) Large corporations 
B) Speculators 
C) Foreign investors 
D) Individuals who had low incomes 
E) All of the above 
A) Large corporations 
B) Speculators 
C) Foreign investors 
D) Individuals who had low incomes 
E) All of the above

Question 5

Collateralized debt obligations are a way that lenders can reduce the risk of individual mortgage lending.

Accepted Answer

A) True 
 B)False

Question 6

If the reserve ratio is 20% and a new demand deposit of $10,000 is made,what is the maximum deposit creation possible?

Accepted Answer

A) $1,500 
B) $10,000 
C) $15,000 
D) $40,000 
E) $50,000 
A) $1,500 
B) $10,000 
C) $15,000 
D) $40,000 
E) $50,000

Question 7

The value of money varies

Accepted Answer

A) Directly with the interest rate 
B) Directly with the price level 
C) Directly with the volume of employment 
D) Inversely with the price level 
E) With none of the above 
A) Directly with the interest rate 
B) Directly with the price level 
C) Directly with the volume of employment 
D) Inversely with the price level 
E) With none of the above

Question 8

During most of the 1800s,the federal monetary authority was called

Accepted Answer

A) The Bank of America 
B) The Bank of Washington 
C) The First National Bank 
D) The Third Bank of the United States 
E) None of the above 
A) The Bank of America 
B) The Bank of Washington 
C) The First National Bank 
D) The Third Bank of the United States 
E) None of the above

Question 9

The quantity theory of money stresses the importance of the velocity of money.

Accepted Answer

A) True 
 B)False

Question 10

The Federal Reserve can decrease the supply of money by

Accepted Answer

A) Selling U.S.government securities 
B) Buying U.S.government securities 
C) Selling goods and services 
D) Buying goods and services 
E) Decreasing the reserve requirement 
A) Selling U.S.government securities 
B) Buying U.S.government securities 
C) Selling goods and services 
D) Buying goods and services 
E) Decreasing the reserve requirement

Question 11

The growth in the residential real estate market is largely a product of

Accepted Answer

A) A large increase in the demand for housing 
B) An unexpected growth in US population 
C) A decline in housing prices 
D) A tightening of government policies that restrict homeownership 
E) A decrease in mortgage availability 
A) A large increase in the demand for housing 
B) An unexpected growth in US population 
C) A decline in housing prices 
D) A tightening of government policies that restrict homeownership 
E) A decrease in mortgage availability

Question 12

The money multiplier is derived from the legal reserve requirement.

Accepted Answer

A) True 
 B)False

Question 13

The issue of the appropriate monetary policy target has been resolved to the satisfaction of all policy makers.

Accepted Answer

A) True 
 B)False

Question 14

The federal government stepped in during 2008 to prevent several commercial banks and investment banks from failing based upon the idea that

Accepted Answer

A) They were "too big to fail" 
B) Any business failure would hurt shareholders 
C) These banks made large political contributions and this was a way for politicians to pay them back 
D) Government would make large profits by doing so 
E) None of the above 
A) They were "too big to fail" 
B) Any business failure would hurt shareholders 
C) These banks made large political contributions and this was a way for politicians to pay them back 
D) Government would make large profits by doing so 
E) None of the above

Question 15

Commercial banks operate

Accepted Answer

A) By attracting deposits and making loans 
B) Both pay and charge interest 
C) By engaging in financial intermediation 
D) All of the above 
E) Under the control of state governments 
A) By attracting deposits and making loans 
B) Both pay and charge interest 
C) By engaging in financial intermediation 
D) All of the above 
E) Under the control of state governments

Question 16

The quantity theory of money emphasizes

Accepted Answer

A) Government taxation policies 
B) Government spending policies 
C) Labor productivity 
D) Changes in the money supply 
E) None of the above 
A) Government taxation policies 
B) Government spending policies 
C) Labor productivity 
D) Changes in the money supply 
E) None of the above

Question 17

The federal government,through the work of agencies like the Federal National Mortgage Association,has worked to increase the supply of funds available to mortgage lenders.

Accepted Answer

A) True 
 B)False

Question 18

A Credit Default Swap is one way that lenders can offset some of the risks associated with investing in subprime mortgages.

Accepted Answer

A) True 
 B)False

Question 19

A credit union,unlike a bank,is not a financial intermediary,since it is a cooperative banking venture.

Accepted Answer

A) True 
 B)False

Question 20

A homeowner whose house is worth $500,000 but who owes $600,000 on their mortgage is a good candidate for a home equity loan,so that the homeowner can build their equity.

Accepted Answer

A) True 
 B)False

According to the equation of exchange,

Banking regulation is intended to prevent

An increase in the supply of money will decrease interest rates.

Besides homeowners,who attempted to profit from increasing home prices during the housing bubble in the early part of the 2000s?

Collateralized debt obligations are a way that lenders can reduce the risk of individual mortgage lending.

If the reserve ratio is 20% and a new demand deposit of $10,000 is made,what is the maximum deposit creation possible?

The value of money varies

During most of the 1800s,the federal monetary authority was called

The quantity theory of money stresses the importance of the velocity of money.

The Federal Reserve can decrease the supply of money by

The growth in the residential real estate market is largely a product of

The money multiplier is derived from the legal reserve requirement.

The issue of the appropriate monetary policy target has been resolved to the satisfaction of all policy makers.

The federal government stepped in during 2008 to prevent several commercial banks and investment banks from failing based upon the idea that

Commercial banks operate

The quantity theory of money emphasizes

The federal government,through the work of agencies like the Federal National Mortgage Association,has worked to increase the supply of funds available to mortgage lenders.

A Credit Default Swap is one way that lenders can offset some of the risks associated with investing in subprime mortgages.

A credit union,unlike a bank,is not a financial intermediary,since it is a cooperative banking venture.

A homeowner whose house is worth $500,000 but who owes $600,000 on their mortgage is a good candidate for a home equity loan,so that the homeowner can build their equity.

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

According to the equation of exchange,

Banking regulation is intended to prevent

An increase in the supply of money will decrease interest rates.

Besides homeowners,who attempted to profit from increasing home prices during the housing bubble in the early part of the 2000s?

Collateralized debt obligations are a way that lenders can reduce the risk of individual mortgage lending.

If the reserve ratio is 20% and a new demand deposit of $10,000 is made,what is the maximum deposit creation possible?

The value of money varies

During most of the 1800s,the federal monetary authority was called

The quantity theory of money stresses the importance of the velocity of money.

The Federal Reserve can decrease the supply of money by

The growth in the residential real estate market is largely a product of

The money multiplier is derived from the legal reserve requirement.

The issue of the appropriate monetary policy target has been resolved to the satisfaction of all policy makers.

The federal government stepped in during 2008 to prevent several commercial banks and investment banks from failing based upon the idea that

Commercial banks operate

The quantity theory of money emphasizes

The federal government,through the work of agencies like the Federal National Mortgage Association,has worked to increase the supply of funds available to mortgage lenders.

A Credit Default Swap is one way that lenders can offset some of the risks associated with investing in subprime mortgages.

A credit union,unlike a bank,is not a financial intermediary,since it is a cooperative banking venture.

A homeowner whose house is worth $500,000 but who owes $600,000 on their mortgage is a good candidate for a home equity loan,so that the homeowner can build their equity.

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