Question 1

A decline in bank lending has the most significant effect on

Accepted Answer

A)  small businesses. 
B)  large businesses. 
C)  state governments. 
D)  federal government. 
A)  small businesses. 
B)  large businesses. 
C)  state governments. 
D)  federal government.

Question 2

The main role of financial intermediaries is to

Accepted Answer

A)  provide funds to the federal government to cover the budget deficit. 
B)  borrow funds from savers and lend them to borrowers. 
C)  provide advice to consumers on how they should handle their finances. 
D)  help ensure that there is enough money in circulation. 
A)  provide funds to the federal government to cover the budget deficit. 
B)  borrow funds from savers and lend them to borrowers. 
C)  provide advice to consumers on how they should handle their finances. 
D)  help ensure that there is enough money in circulation.

Question 3

Which of the following assets is the most liquid?

Accepted Answer

A)  money market mutual fund 
B)  computer 
C)  washing machine 
D)  U.S. Treasury bond 
A)  money market mutual fund 
B)  computer 
C)  washing machine 
D)  U.S. Treasury bond

Question 4

Financial markets

Accepted Answer

A)  channel funds indirectly between borrowers and lenders. 
B)  channel funds directly from lenders to borrowers. 
C)  act as go-betweens by holding a portfolio of assets and issuing claims based on that portfolio to savers. 
D)  generally provide lenders with lower returns than do financial intermediaries. 
A)  channel funds indirectly between borrowers and lenders. 
B)  channel funds directly from lenders to borrowers. 
C)  act as go-betweens by holding a portfolio of assets and issuing claims based on that portfolio to savers. 
D)  generally provide lenders with lower returns than do financial intermediaries.

Question 5

Securitization is the process of

Accepted Answer

A)  issuing stocks to finance capital spending. 
B)  issuing bonds to finance purchases of equipment and structures. 
C)  reducing risk by decreasing corporate debt loads. 
D)  converting loans into securities. 
A)  issuing stocks to finance capital spending. 
B)  issuing bonds to finance purchases of equipment and structures. 
C)  reducing risk by decreasing corporate debt loads. 
D)  converting loans into securities.

Question 6

A bank lending depositors' money to a local business and a pension fund investing contributions in shares of a company are similar financial activities in that

Accepted Answer

A)  both involve the use of financial markets. 
B)  both involve funds being channeled from savers to borrowers through financial intermediaries. 
C)  both involve a reduction in the overall level of liquidity in the financial system. 
D)  both involve in an increase in the overall level of risk in the financial system. 
A)  both involve the use of financial markets. 
B)  both involve funds being channeled from savers to borrowers through financial intermediaries. 
C)  both involve a reduction in the overall level of liquidity in the financial system. 
D)  both involve in an increase in the overall level of risk in the financial system.

Question 7

Why did some economists and policymakers criticize the Fed and Treasury for arranging the sale of Bear Stearns to JP Morgan Chase in 2008?

Accepted Answer

The main concern was with the moral haza

Question 8

In the United States,the lender of last resort is

Accepted Answer

A)  Fannie Mae. 
B)  the Federal Reserve. 
C)  the Federal Deposit Insurance Corporation. 
D)  Securities and Exchange Commission. 
A)  Fannie Mae. 
B)  the Federal Reserve. 
C)  the Federal Deposit Insurance Corporation. 
D)  Securities and Exchange Commission.

Question 9

The financial system provides risk sharing by allowing

Accepted Answer

A)  borrowers to obtain funds either directly or indirectly. 
B)  savers to earn interest tax-free. 
C)  borrowers to convert liabilities into assets. 
D)  savers to hold many assets. 
A)  borrowers to obtain funds either directly or indirectly. 
B)  savers to earn interest tax-free. 
C)  borrowers to convert liabilities into assets. 
D)  savers to hold many assets.

Question 10

Alt-A borrowers were those who

Accepted Answer

A)  used mortgages to purchase apartments. 
B)  chose adjustable-rate mortgages instead of fixed-rate mortgages. 
C)  borrowed using "interest-only" mortgages. 
D)  did not provide documentation of their income when applying for a mortgage. 
A)  used mortgages to purchase apartments. 
B)  chose adjustable-rate mortgages instead of fixed-rate mortgages. 
C)  borrowed using "interest-only" mortgages. 
D)  did not provide documentation of their income when applying for a mortgage.

Question 11

In the United States,monetary policy is carried out by

Accepted Answer

A)  the Federal Reserve System. 
B)  Congress. 
C)  the President. 
D)  Congress and the President acting together. 
A)  the Federal Reserve System. 
B)  Congress. 
C)  the President. 
D)  Congress and the President acting together.

Question 12

Economists define risk as

Accepted Answer

A)  the difference between the interest rate borrowers pay and the interest rate lenders receive. 
B)  the chance that the value of financial assets will change from what you expect. 
C)  the ease with which an asset can be exchanged for other assets or for goods and services. 
D)  the difference between the return on common stock and the return on corporate bonds. 
A)  the difference between the interest rate borrowers pay and the interest rate lenders receive. 
B)  the chance that the value of financial assets will change from what you expect. 
C)  the ease with which an asset can be exchanged for other assets or for goods and services. 
D)  the difference between the return on common stock and the return on corporate bonds.

Question 13

The financial system is primarily a means by which

Accepted Answer

A)  borrowers can use savers' funds until the savers themselves need the funds. 
B)  money is put into circulation. 
C)  the government puts into operation its plans for the economy. 
D)  business firms distribute their goods. 
A)  borrowers can use savers' funds until the savers themselves need the funds. 
B)  money is put into circulation. 
C)  the government puts into operation its plans for the economy. 
D)  business firms distribute their goods.

Question 14

Which of the following assets is the least liquid?

Accepted Answer

A)  money market mutual fund 
B)  stock 
C)  treasury bond 
D)  house 
A)  money market mutual fund 
B)  stock 
C)  treasury bond 
D)  house

A decline in bank lending has the most significant effect on

The main role of financial intermediaries is to

Which of the following assets is the most liquid?

Financial markets

Securitization is the process of

A bank lending depositors' money to a local business and a pension fund investing contributions in shares of a company are similar financial activities in that

Why did some economists and policymakers criticize the Fed and Treasury for arranging the sale of Bear Stearns to JP Morgan Chase in 2008?

In the United States,the lender of last resort is

The financial system provides risk sharing by allowing

Alt-A borrowers were those who

In the United States,monetary policy is carried out by

Economists define risk as

The financial system is primarily a means by which

Which of the following assets is the least liquid?

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

A decline in bank lending has the most significant effect on

The main role of financial intermediaries is to

Which of the following assets is the most liquid?

Financial markets

Securitization is the process of

A bank lending depositors' money to a local business and a pension fund investing contributions in shares of a company are similar financial activities in that

Why did some economists and policymakers criticize the Fed and Treasury for arranging the sale of Bear Stearns to JP Morgan Chase in 2008?

In the United States,the lender of last resort is

The financial system provides risk sharing by allowing

Alt-A borrowers were those who

In the United States,monetary policy is carried out by

Economists define risk as

The financial system is primarily a means by which

Which of the following assets is the least liquid?

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