Question 1

Which of the following is NOT a financial intermediary?

Accepted Answer

A)  mutual fund 
B)  bank 
C)  stock exchange 
D)  insurance company 
A)  mutual fund 
B)  bank 
C)  stock exchange 
D)  insurance company C

Question 2

Liquidity

Accepted Answer

A)  is the best available measure of the riskiness of an asset. 
B)  is a characteristic of money, and of no other asset. 
C)  is the ease with which an asset can be exchanged for money. 
D)  was declining for many financial assets during the 1990s. 
A)  is the best available measure of the riskiness of an asset. 
B)  is a characteristic of money, and of no other asset. 
C)  is the ease with which an asset can be exchanged for money. 
D)  was declining for many financial assets during the 1990s. C

Question 3

Which firm did the Treasury allow to fail during the financial crisis?

Accepted Answer

A)  J.P. Morgan 
B)  Bear Stears 
C)  Lehman Brothers 
D)  American International Group (AIG) 
A)  J.P. Morgan 
B)  Bear Stears 
C)  Lehman Brothers 
D)  American International Group (AIG) C

Question 4

Economists define liquidity as

Accepted Answer

A)  the difference between the return on the asset and the return on a long-term U.S. Treasury bond. 
B)  the fraction the asset makes up of an investor's portfolio. 
C)  the ease with which an asset can be exchanged for money. 
D)  the difference between the total demand for an asset and the total supply of the asset. 
A)  the difference between the return on the asset and the return on a long-term U.S. Treasury bond. 
B)  the fraction the asset makes up of an investor's portfolio. 
C)  the ease with which an asset can be exchanged for money. 
D)  the difference between the total demand for an asset and the total supply of the asset.

Question 5

How is the high unemployment rate that resulted from the Financial Crisis of 2007-2009 likely to affect those who graduated from college during the recession?

Accepted Answer

Graduates had a very difficult time find

Question 6

How are interest payments on mortgages distributed to investors who own mortgage-backed securities?

Accepted Answer

The banks that grants,or originates,the

Question 7

Economists define money as

Accepted Answer

A)  cash in circulation. 
B)  deposits in commercial banks. 
C)  anything that people are willing to accept in payment for goods and services or to pay off debts. 
D)  bonds issued by large corporations. 
A)  cash in circulation. 
B)  deposits in commercial banks. 
C)  anything that people are willing to accept in payment for goods and services or to pay off debts. 
D)  bonds issued by large corporations.

Question 8

The distinguishing feature of a well-functioning financial market is the

Accepted Answer

A)  continual increase in the liquidity of most assets. 
B)  continual reduction in the riskiness of most assets. 
C)  increased ease of converting common stocks into bonds. 
D)  incorporation of available information into asset prices. 
A)  continual increase in the liquidity of most assets. 
B)  continual reduction in the riskiness of most assets. 
C)  increased ease of converting common stocks into bonds. 
D)  incorporation of available information into asset prices.

Question 9

The financial system performs the role of communicating information by

Accepted Answer

A)  constantly increasing the liquidity of most assets. 
B)  constantly reducing the riskiness of most assets. 
C)  incorporating all available information into the prices of financial assets. 
D)  providing to investors for a nominal charge all government reports available about a particular company. 
A)  constantly increasing the liquidity of most assets. 
B)  constantly reducing the riskiness of most assets. 
C)  incorporating all available information into the prices of financial assets. 
D)  providing to investors for a nominal charge all government reports available about a particular company.

Question 10

At the beginning of the financial crisis,banks were hurt by all of the following EXCEPT

Accepted Answer

A)  declines in the value of mortgage-backed securities. 
B)  defaults on mortgages by those with subprime mortgages. 
C)  holding too many Treasury bonds. 
D)  not being repaid on loans to real estate developers. 
A)  declines in the value of mortgage-backed securities. 
B)  defaults on mortgages by those with subprime mortgages. 
C)  holding too many Treasury bonds. 
D)  not being repaid on loans to real estate developers.

Question 11

Which type of borrowers were least likely to default in their mortgage at the beginning of the financial crisis?

Accepted Answer

A)  those with fixed-rate mortgages who made large down payments 
B)  those with alt-A loans 
C)  subprime borrowers 
D)  those with adjustable-rate mortgages 
A)  those with fixed-rate mortgages who made large down payments 
B)  those with alt-A loans 
C)  subprime borrowers 
D)  those with adjustable-rate mortgages

Question 12

Diversification refers to the

Accepted Answer

A)  splitting of wealth into many assets. 
B)  difference between the liquidity of an asset and its risk. 
C)  difficulty of converting investments in common stocks into investments in bonds. 
D)  difficulty of selling common stocks in a weak market. 
A)  splitting of wealth into many assets. 
B)  difference between the liquidity of an asset and its risk. 
C)  difficulty of converting investments in common stocks into investments in bonds. 
D)  difficulty of selling common stocks in a weak market.

Question 13

Fannie Mae and Freddie Mac both

Accepted Answer

A)  sell bonds to investors and use the funds to purchase mortgages. 
B)  help regulate the banking system. 
C)  directly lend funds to people seeking mortgages. 
D)  reduce access to funds for mortgages by purchasing existing mortgages. 
A)  sell bonds to investors and use the funds to purchase mortgages. 
B)  help regulate the banking system. 
C)  directly lend funds to people seeking mortgages. 
D)  reduce access to funds for mortgages by purchasing existing mortgages.

Question 14

Which of the following is NOT a financial intermediary?

Accepted Answer

A)  NASDAQ 
B)  Allstate Insurance Company 
C)  Bank of America 
D)  Vanguard Total Stock Market Index Fund 
A)  NASDAQ 
B)  Allstate Insurance Company 
C)  Bank of America 
D)  Vanguard Total Stock Market Index Fund

Question 15

All of the following were significant changes in the mortgage market in the 2000s EXCEPT

Accepted Answer

A)  investment banks became significant participants in the secondary mortgage market. 
B)  lenders loosened lending standards. 
C)  mortgage-backed securities became more popular with investors. 
D)  borrowers tended to increase the amount of their down payments. 
A)  investment banks became significant participants in the secondary mortgage market. 
B)  lenders loosened lending standards. 
C)  mortgage-backed securities became more popular with investors. 
D)  borrowers tended to increase the amount of their down payments.

Question 16

Monetary policy refers to the government's

Accepted Answer

A)  decisions on how much money to spend. 
B)  decisions on how much money to collect in taxes. 
C)  plans for retiring the national debt. 
D)  management of the money supply and interest rates to achieve macroeconomic objectives. 
A)  decisions on how much money to spend. 
B)  decisions on how much money to collect in taxes. 
C)  plans for retiring the national debt. 
D)  management of the money supply and interest rates to achieve macroeconomic objectives.

Question 17

The Federal Reserve System

Accepted Answer

A)  is in charge of managing the New York Stock Exchange. 
B)  is headed by the Secretary of the Treasury. 
C)  is the central bank of the United States. 
D)  is responsible for conducting fiscal policy for the United States. 
A)  is in charge of managing the New York Stock Exchange. 
B)  is headed by the Secretary of the Treasury. 
C)  is the central bank of the United States. 
D)  is responsible for conducting fiscal policy for the United States.

Question 18

Financial securities that represent partial ownership of a corporation are known as

Accepted Answer

A)  bonds. 
B)  stocks. 
C)  coupons. 
D)  dividends. 
A)  bonds. 
B)  stocks. 
C)  coupons. 
D)  dividends.

Question 19

Funds flow from lenders to borrowers

Accepted Answer

A)  indirectly through financial markets. 
B)  directly through financial intermediaries. 
C)  indirectly through financial intermediaries. 
D)  primarily through government agencies. 
A)  indirectly through financial markets. 
B)  directly through financial intermediaries. 
C)  indirectly through financial intermediaries. 
D)  primarily through government agencies.

Question 20

If a bank grants you a mortgage,the mortgage is

Accepted Answer

A)  an asset to you as well as an asset to the bank. 
B)  an asset to you, but a liability to the bank. 
C)  a liability to you, but an asset to the bank. 
D)  a liability to you as well as a liability to the bank. 
A)  an asset to you as well as an asset to the bank. 
B)  an asset to you, but a liability to the bank. 
C)  a liability to you, but an asset to the bank. 
D)  a liability to you as well as a liability to the bank.

Which of the following is NOT a financial intermediary?

Liquidity

Which firm did the Treasury allow to fail during the financial crisis?

Economists define liquidity as

How is the high unemployment rate that resulted from the Financial Crisis of 2007-2009 likely to affect those who graduated from college during the recession?

How are interest payments on mortgages distributed to investors who own mortgage-backed securities?

Economists define money as

The distinguishing feature of a well-functioning financial market is the

The financial system performs the role of communicating information by

At the beginning of the financial crisis,banks were hurt by all of the following EXCEPT

Which type of borrowers were least likely to default in their mortgage at the beginning of the financial crisis?

Diversification refers to the

Fannie Mae and Freddie Mac both

Which of the following is NOT a financial intermediary?

All of the following were significant changes in the mortgage market in the 2000s EXCEPT

Monetary policy refers to the government's

The Federal Reserve System

Financial securities that represent partial ownership of a corporation are known as

Funds flow from lenders to borrowers

If a bank grants you a mortgage,the mortgage is

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

Financial Crises and Financial Regulation

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 1: Introducing Money and the Financial System

Which of the following is NOT a financial intermediary?

Liquidity

Which firm did the Treasury allow to fail during the financial crisis?

Economists define liquidity as

How is the high unemployment rate that resulted from the Financial Crisis of 2007-2009 likely to affect those who graduated from college during the recession?

How are interest payments on mortgages distributed to investors who own mortgage-backed securities?

Economists define money as

The distinguishing feature of a well-functioning financial market is the

The financial system performs the role of communicating information by

At the beginning of the financial crisis,banks were hurt by all of the following EXCEPT

Which type of borrowers were least likely to default in their mortgage at the beginning of the financial crisis?

Diversification refers to the

Fannie Mae and Freddie Mac both

Which of the following is NOT a financial intermediary?

All of the following were significant changes in the mortgage market in the 2000s EXCEPT

Monetary policy refers to the government's

The Federal Reserve System

Financial securities that represent partial ownership of a corporation are known as

Funds flow from lenders to borrowers

If a bank grants you a mortgage,the mortgage is

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

Financial Crises and Financial Regulation

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