Question 1

A primary Treasury objective is to maintain satisfactory conditions in the government securities market through maintaining investor confidence.

Accepted Answer

A) True 
 B)False

Question 2

Bank reserves are not affected by:

Accepted Answer

A) currency in circulation 
B) changes in reserve requirements 
C) open market operation 
D) changes in the level of deposits of foreign banks at the Federal Reserve banks 
A) currency in circulation 
B) changes in reserve requirements 
C) open market operation 
D) changes in the level of deposits of foreign banks at the Federal Reserve banks

Question 3

Open market operations differ from discounting operations in that they are:

Accepted Answer

A) initiated by member depository institutions 
B) designed to be of significance only to large city banks 
C) initiated by the President 
D) initiated by Congress 
E) none of the above 
A) initiated by member depository institutions 
B) designed to be of significance only to large city banks 
C) initiated by the President 
D) initiated by Congress 
E) none of the above

Question 4

Which of the following statements is false?

Accepted Answer

A) The difference between total reserves and the monetary base is currency held by the nonbank public. 
B) The ability to alter the money supply and credit is based on the fact that our banking system does not utilize a fractional reserve system. 
C) The ability to predict M1 velocity, in addition to money supply changes, is important in achieving successful monetary policy making. 
D) A derivative deposit arising out of a loan from Bank A is transferred by check to Bank B, where reserve requirement are again imposed. 
A) The difference between total reserves and the monetary base is currency held by the nonbank public. 
B) The ability to alter the money supply and credit is based on the fact that our banking system does not utilize a fractional reserve system. 
C) The ability to predict M1 velocity, in addition to money supply changes, is important in achieving successful monetary policy making. 
D) A derivative deposit arising out of a loan from Bank A is transferred by check to Bank B, where reserve requirement are again imposed.

Question 5

If a customer makes new deposits of $10,000 to a bank and the reserve requirement is 15%, then excess reserves will be:

Accepted Answer

A) $1,500 
B) $8,500 
C) $10,000 
D) none of the above 
A) $1,500 
B) $8,500 
C) $10,000 
D) none of the above

Question 6

The Federal Reserve System cannot directly control:

Accepted Answer

A) Treasury security purchases by the public 
B) monetary base 
C) the size of the money supply 
D) all the above 
A) Treasury security purchases by the public 
B) monetary base 
C) the size of the money supply 
D) all the above

Question 7

Continuing federal programs that stabilize economic activity are called

Accepted Answer

A) transfer payments 
B) leveling programs 
C) social insurance programs 
D) socialist spending 
E) none of the above 
A) transfer payments 
B) leveling programs 
C) social insurance programs 
D) socialist spending 
E) none of the above

Question 8

Debt management by the federal government includes:

Accepted Answer

A) 	determining which types of refunding to implement 
B) 	determining the types of securities to sell 
C) 	deciding which interest rate patterns to use 
D) 	two of the above 
E)  	answers a, b and c are correct 
A) 	determining which types of refunding to implement 
B) 	determining the types of securities to sell 
C) 	deciding which interest rate patterns to use 
D) 	two of the above 
E)  	answers a, b and c are correct

Question 9

Aggregate demand refers to total spending in the economy.

Accepted Answer

A) True 
 B)False

Question 10

The larger the budget deficit, the more total spending there will be.

Accepted Answer

A) True 
 B)False

Question 11

In September, 2008 ____________ was acquired by Bank of America and _____________ declared bankruptcy when no viable financial alternatives surfaced.

Accepted Answer

A) Bank of America, Washington Mutual 
B) Lehman Brothers, Merrill Lynch 
C) Citicorp, Smith Barney 
D) Morgan Stanley, Chase 
E) none of the above 
A) Bank of America, Washington Mutual 
B) Lehman Brothers, Merrill Lynch 
C) Citicorp, Smith Barney 
D) Morgan Stanley, Chase 
E) none of the above

Question 12

Primary deposits are deposits that add new reserves to a bank while obtuse secondary deposits are deposits that were borrowed from the reserves of primary deposits.

Accepted Answer

A) True 
 B)False

Question 13

One factor that decreases the volume of bank reserves is a decrease in:

Accepted Answer

A) 	bank holdings of loans and securities 
B) 	time and savings deposits 
C) 	life insurance company reserves 
D) 	Federal Reserve float 
A) 	bank holdings of loans and securities 
B) 	time and savings deposits 
C) 	life insurance company reserves 
D) 	Federal Reserve float

Question 14

The relationship between the money supply and demand affects the level of prices and economic activity in our market economy.

Accepted Answer

A) True 
 B)False

Question 15

Which one of the following transactions or operations is entirely at the initiative of the Federal Reserve?

Accepted Answer

A) using public statements to manipulate the economy 
B) change in float 
C) change in bank borrowings 
D) change in Treasury cash holdings 
E) none of the above 
A) using public statements to manipulate the economy 
B) change in float 
C) change in bank borrowings 
D) change in Treasury cash holdings 
E) none of the above

Question 16

Currently, the backing for Federal Reserves notes is primarily in the form of:

Accepted Answer

A) gold certificates 
B) gold bullion 
C) eligible paper (business notes and drafts) 
D) all of the above 
E) none of the above 
A) gold certificates 
B) gold bullion 
C) eligible paper (business notes and drafts) 
D) all of the above 
E) none of the above

Question 17

A budget deficit stimulates economic activity.
Keynesian; questionable in reality

Accepted Answer

A) True 
 B)False

Question 18

The percentage of deposits that must be held as reserves is called

Accepted Answer

A) excess reserves 
B) required reserves 
C) required reserve ratio 
D) none of the above 
A) excess reserves 
B) required reserves 
C) required reserve ratio 
D) none of the above

Question 19

Nations that continually operate with an international trade surplus will become economically stronger.

Accepted Answer

A) True 
 B)False

A primary Treasury objective is to maintain satisfactory conditions in the government securities market through maintaining investor confidence.

Bank reserves are not affected by:

Open market operations differ from discounting operations in that they are:

Which of the following statements is false?

If a customer makes new deposits of $10,000 to a bank and the reserve requirement is 15%, then excess reserves will be:

The Federal Reserve System cannot directly control:

Continuing federal programs that stabilize economic activity are called

Debt management by the federal government includes:

Aggregate demand refers to total spending in the economy.

The larger the budget deficit, the more total spending there will be.

In September, 2008 was acquired by Bank of America and _ declared bankruptcy when no viable financial alternatives surfaced.

Primary deposits are deposits that add new reserves to a bank while obtuse secondary deposits are deposits that were borrowed from the reserves of primary deposits.

One factor that decreases the volume of bank reserves is a decrease in:

The relationship between the money supply and demand affects the level of prices and economic activity in our market economy.

Which one of the following transactions or operations is entirely at the initiative of the Federal Reserve?

Currently, the backing for Federal Reserves notes is primarily in the form of:

A budget deficit stimulates economic activity. Keynesian; questionable in reality

The percentage of deposits that must be held as reserves is called

Nations that continually operate with an international trade surplus will become economically stronger.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 5: Policy Makers and the Money Supply

A primary Treasury objective is to maintain satisfactory conditions in the government securities market through maintaining investor confidence.

Bank reserves are not affected by:

Open market operations differ from discounting operations in that they are:

Which of the following statements is false?

If a customer makes new deposits of $10,000 to a bank and the reserve requirement is 15%, then excess reserves will be:

The Federal Reserve System cannot directly control:

Continuing federal programs that stabilize economic activity are called

Debt management by the federal government includes:

Aggregate demand refers to total spending in the economy.

The larger the budget deficit, the more total spending there will be.

In September, 2008 ____________ was acquired by Bank of America and _____________ declared bankruptcy when no viable financial alternatives surfaced.

Primary deposits are deposits that add new reserves to a bank while obtuse secondary deposits are deposits that were borrowed from the reserves of primary deposits.

One factor that decreases the volume of bank reserves is a decrease in:

The relationship between the money supply and demand affects the level of prices and economic activity in our market economy.

Which one of the following transactions or operations is entirely at the initiative of the Federal Reserve?

Currently, the backing for Federal Reserves notes is primarily in the form of:

A budget deficit stimulates economic activity. Keynesian; questionable in reality

The percentage of deposits that must be held as reserves is called

Nations that continually operate with an international trade surplus will become economically stronger.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

In September, 2008 was acquired by Bank of America and _ declared bankruptcy when no viable financial alternatives surfaced.