Question 1

Subprime mortgage loans are so named because the rates charged are below the prime interest rate.

Accepted Answer

A) True 
 B)False

Question 2

Firms whose central business is providing individual account shares of a group of stocks,bonds,or both are known as:

Accepted Answer

A)  insurance companies. 
B)  thrifts. 
C)  commercial banks. 
D)  mutual funds companies. 
A)  insurance companies. 
B)  thrifts. 
C)  commercial banks. 
D)  mutual funds companies.

Question 3

What does it mean when economists say that home buyers are "underwater" on their mortgages?

Accepted Answer

A)  Buyers owe more on their mortgage than the properties are worth. 
B)  Buyers are financially incapable of repaying their mortgages and bankruptcy is inevitable. 
C)  Buyers are purchasing homes on flood plains and are highly susceptible to financial losses. 
D)  Buyers are paying interest rates substantially higher than current market interest rates,creating interest payments that create financial hardship. 
A)  Buyers owe more on their mortgage than the properties are worth. 
B)  Buyers are financially incapable of repaying their mortgages and bankruptcy is inevitable. 
C)  Buyers are purchasing homes on flood plains and are highly susceptible to financial losses. 
D)  Buyers are paying interest rates substantially higher than current market interest rates,creating interest payments that create financial hardship.

Question 4

Between September 2007 and September 2009:

Accepted Answer

A)  the Fed oversaw the conversion of all thrifts into commercial banks. 
B)  the FDIC closed more than 200 U.S.banks and shifted their deposits to other banks. 
C)  the Fed increased capital requirements for larger financial institutions in an effort to reduce moral hazard. 
D)  the FDIC paid out more than $500 billion to depositors who held money in failed banks. 
A)  the Fed oversaw the conversion of all thrifts into commercial banks. 
B)  the FDIC closed more than 200 U.S.banks and shifted their deposits to other banks. 
C)  the Fed increased capital requirements for larger financial institutions in an effort to reduce moral hazard. 
D)  the FDIC paid out more than $500 billion to depositors who held money in failed banks.

Question 5

Money functions as:

Accepted Answer

A)  a store of value. 
B)  a unit of account. 
C)  a medium of exchange. 
D)  all of these. 
A)  a store of value. 
B)  a unit of account. 
C)  a medium of exchange. 
D)  all of these.

Question 6

Which of the following programs provides loans of U.S.securities to primary dealers for one-month terms,in an effort to enhance liquidity in U.S.securities markets?

Accepted Answer

A)  Primary Dealer Credit Facility. 
B)  Commercial Paper Funding Facility. 
C)  Term Asset-Backed Securities Loan Facility. 
D)  Term Securities Lending Facility. 
A)  Primary Dealer Credit Facility. 
B)  Commercial Paper Funding Facility. 
C)  Term Asset-Backed Securities Loan Facility. 
D)  Term Securities Lending Facility.

Question 7

Laws passed in the late 1990s restricted the activities of financial firms to narrowly defined services they could provide,prompting the financial crisis of 2007 and 2008.

Accepted Answer

A) True 
 B)False

Question 8

Answer the question on the basis of the following list of assets: 1.Large-denominated ($100,000 and over)time deposits
2)Noncheckable savings deposits
3)Currency (coins and paper money)in circulation
4)Small-denominated (under $100,000)time deposits
5)Stock certificates
6)Checkable deposits
7)Money market deposit accounts
8)Money market mutual fund balances held by individuals
9)Money market mutual fund balances held by businesses
10)Currency held in bank vaults
Refer to the given list.The M2 definition of money comprises:

Accepted Answer

A)  Items 2,3,4,6,7,8,and 10. 
B)  Items 3,4,5,and 6. 
C)  Items 2,3,4,6,7,and 8. 
D)  All of the items listed. 
A)  Items 2,3,4,6,7,8,and 10. 
B)  Items 3,4,5,and 6. 
C)  Items 2,3,4,6,7,and 8. 
D)  All of the items listed.

Question 9

The programs enacted to bail out the financial system from crisis in 2007 and 2008 helped alleviate the moral hazard problem in the financial industry.

Accepted Answer

A) True 
 B)False

Question 10

Assuming no other changes,if checkable deposits decrease by $40 billion and balances in money market mutual funds increase by $40 billion,the:

Accepted Answer

A)  M1 money supply will decline and the M2 money supply will remain unchanged. 
B)  M1 and M2 money supplies will not change. 
C)  M1 money supply will increase and the M2 money supply will remain unchanged. 
D)  M1 and M2 money supplies will both decline. 
A)  M1 money supply will decline and the M2 money supply will remain unchanged. 
B)  M1 and M2 money supplies will not change. 
C)  M1 money supply will increase and the M2 money supply will remain unchanged. 
D)  M1 and M2 money supplies will both decline.

Question 11

"Near-monies" are included in:

Accepted Answer

A)  both M1 and M2. 
B)  M2 only. 
C)  M1 only. 
D)  neither M1 nor M2. 
A)  both M1 and M2. 
B)  M2 only. 
C)  M1 only. 
D)  neither M1 nor M2.

Question 12

Checkable deposits held in saving and loan institutions,mutual savings banks,and credit unions are part of the M1 definition of the money supply.

Accepted Answer

A) True 
 B)False

Question 13

In defining money as M1,economists exclude time deposits because:

Accepted Answer

A)  the intrinsic value of time deposits is nil. 
B)  the purchasing power of time deposits is much less stable than that of checkable deposits and currency. 
C)  they are not directly or immediately a medium of exchange. 
D)  they are not recognized by the federal government as legal tender. 
A)  the intrinsic value of time deposits is nil. 
B)  the purchasing power of time deposits is much less stable than that of checkable deposits and currency. 
C)  they are not directly or immediately a medium of exchange. 
D)  they are not recognized by the federal government as legal tender.

Question 14

The M2 money supply is larger than the M1 money supply.

Accepted Answer

A) True 
 B)False

Subprime mortgage loans are so named because the rates charged are below the prime interest rate.

Firms whose central business is providing individual account shares of a group of stocks,bonds,or both are known as:

What does it mean when economists say that home buyers are "underwater" on their mortgages?

Between September 2007 and September 2009:

Money functions as:

Which of the following programs provides loans of U.S.securities to primary dealers for one-month terms,in an effort to enhance liquidity in U.S.securities markets?

Laws passed in the late 1990s restricted the activities of financial firms to narrowly defined services they could provide,prompting the financial crisis of 2007 and 2008.

The programs enacted to bail out the financial system from crisis in 2007 and 2008 helped alleviate the moral hazard problem in the financial industry.

Assuming no other changes,if checkable deposits decrease by $40 billion and balances in money market mutual funds increase by $40 billion,the:

"Near-monies" are included in:

Checkable deposits held in saving and loan institutions,mutual savings banks,and credit unions are part of the M1 definition of the money supply.

In defining money as M1,economists exclude time deposits because:

The M2 money supply is larger than the M1 money supply.

Income Inequality Poverty and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

The United States and the Global Economy

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Exam 33: Money, Banking, and Financial Institutions

Subprime mortgage loans are so named because the rates charged are below the prime interest rate.

Firms whose central business is providing individual account shares of a group of stocks,bonds,or both are known as:

What does it mean when economists say that home buyers are "underwater" on their mortgages?

Between September 2007 and September 2009:

Money functions as:

Which of the following programs provides loans of U.S.securities to primary dealers for one-month terms,in an effort to enhance liquidity in U.S.securities markets?

Laws passed in the late 1990s restricted the activities of financial firms to narrowly defined services they could provide,prompting the financial crisis of 2007 and 2008.

The programs enacted to bail out the financial system from crisis in 2007 and 2008 helped alleviate the moral hazard problem in the financial industry.

Assuming no other changes,if checkable deposits decrease by $40 billion and balances in money market mutual funds increase by $40 billion,the:

"Near-monies" are included in:

Checkable deposits held in saving and loan institutions,mutual savings banks,and credit unions are part of the M1 definition of the money supply.

In defining money as M1,economists exclude time deposits because:

The M2 money supply is larger than the M1 money supply.

Income Inequality Poverty and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

The United States and the Global Economy

Filters