Question 1

The Taylor rule is a recommendation of how

Accepted Answer

A) banks should determine worthy loan recipients. 
B) the Fed should set the required reserve ratio. 
C) the Fed should set the federal funds rate target. 
D) banks should securitize their debt. 
A) banks should determine worthy loan recipients. 
B) the Fed should set the required reserve ratio. 
C) the Fed should set the federal funds rate target. 
D) banks should securitize their debt.

Question 2

A bank initially has $620 million in assets and $580 million in liabilities.The banks net worth (capital)is _____________ million.If the bank's assets decline by 5% and its liabilities do not change,its capital decreases by ____________ .

Accepted Answer

A) $40;5% 
B) $70;141.4% 
C) $40;77.5% 
D) $600;5% 
A) $40;5% 
B) $70;141.4% 
C) $40;77.5% 
D) $600;5%

Question 3

One of the contributing factors to the financial crisis of 2007-2009 was that mortgage lending practices were ____________ strict in the late 1990s and early 2000s,compared to earlier periods such as the 1970s and 1980s,which led to a(n)_______________ in subprime and other nontraditional mortgage loans.

Accepted Answer

A) less;increase 
B) more;increase 
C) less;decline 
D) more;decline 
A) less;increase 
B) more;increase 
C) less;decline 
D) more;decline

Question 4

During the Great Recession,the growth rate of Real GDP _________________ and the inflation rate ___________________.

Accepted Answer

A) increased;declined 
B) declined;increased 
C) declined;also declined 
D) increased;also increased 
A) increased;declined 
B) declined;increased 
C) declined;also declined 
D) increased;also increased

Question 5

Collateralized debt obligations are

Accepted Answer

A) like mortgage-backed securities except that the slices are equal. 
B) like mortgage-backed securities except that the slices are unequal. 
C) an asset for persons who buy them. 
D) b and c 
E) a and c 
A) like mortgage-backed securities except that the slices are equal. 
B) like mortgage-backed securities except that the slices are unequal. 
C) an asset for persons who buy them. 
D) b and c 
E) a and c

Question 6

All other things being equal among the banks below,which bank is the least likely to become insolvent?

Accepted Answer

A) Bank A with assets of $100 million and liabilities of $80 million. 
B) Bank B with assets of $100 million and liabilities of $70 million. 
C) Bank C with assets of $200 million and liabilities of $120 million. 
D) Bank D with assets of $400 million and liabilities of $310 million. 
E) Bank E with assets of $100 million and liabilities of $60 million. 
A) Bank A with assets of $100 million and liabilities of $80 million. 
B) Bank B with assets of $100 million and liabilities of $70 million. 
C) Bank C with assets of $200 million and liabilities of $120 million. 
D) Bank D with assets of $400 million and liabilities of $310 million. 
E) Bank E with assets of $100 million and liabilities of $60 million.

Question 7

When housing prices rise,homeowners gain equity in their homes.

Accepted Answer

A) True 
 B)False

Question 8

A bank has $200 million in assets and $150 million in liabilities.The banks net worth is _____________ million and its leverage ratio is __________________.

Accepted Answer

A) $350;0.56 to 1 
B) $175;1.14 to 1 
C) $50;4 to 1 
D) $25;8 to 1 
A) $350;0.56 to 1 
B) $175;1.14 to 1 
C) $50;4 to 1 
D) $25;8 to 1

Question 9

A subprime mortgage loan is a loan granted to persons who

Accepted Answer

A) have unusually good credit ratings and who represent a very low risk of default on the debt repayment. 
B) are borrowing funds to purchase a business,rather than a home. 
C) might have low credit ratings or some other factors that lead lenders to believe that they could default on the debt repayment. 
D) work for the government,rather than those who work in the private sector. 
A) have unusually good credit ratings and who represent a very low risk of default on the debt repayment. 
B) are borrowing funds to purchase a business,rather than a home. 
C) might have low credit ratings or some other factors that lead lenders to believe that they could default on the debt repayment. 
D) work for the government,rather than those who work in the private sector.

Question 10

Some economists argue that the Fed set its federal funds rate target "too _________" in the early 2000s,which was one of the contributing factors which led to ____________ mortgage interest rates and a(n)___________ housing prices.

Accepted Answer

A) low;low;increase 
B) low;low;decline 
C) high;high;decline 
D) high;high;increase 
A) low;low;increase 
B) low;low;decline 
C) high;high;decline 
D) high;high;increase

Question 11

Suppose that a bank has $30 million in asset X,$10 million in asset Y,and $20 million in asset Z.Each asset has a different risk weight.The risk weight for asset X is 30%,the risk weight for asset Y is 60%,and the risk weight for asset Z is 10%.The amount of risk-weighted assets for this bank is ____________ million.Assuming that the bank has to hold capital equal to 8% of its risk-weighted assets,the bank must hold _____________ million in capital.

Accepted Answer

A) $17;$13,6 
B) $60;$4.8 
C) $17;$1.36 
D) $66;$5.28 
A) $17;$13,6 
B) $60;$4.8 
C) $17;$1.36 
D) $66;$5.28

The Taylor rule is a recommendation of how

A bank initially has $620 million in assets and $580 million in liabilities.The banks net worth (capital)is _ million.If the bank's assets decline by 5% and its liabilities do not change,its capital decreases by .

One of the contributing factors to the financial crisis of 2007-2009 was that mortgage lending practices were strict in the late 1990s and early 2000s,compared to earlier periods such as the 1970s and 1980s,which led to a(n)___ in subprime and other nontraditional mortgage loans.

During the Great Recession,the growth rate of Real GDP _ and the inflation rate ___.

Collateralized debt obligations are

All other things being equal among the banks below,which bank is the least likely to become insolvent?

When housing prices rise,homeowners gain equity in their homes.

A bank has $200 million in assets and $150 million in liabilities.The banks net worth is _ million and its leverage ratio is ______.

A subprime mortgage loan is a loan granted to persons who

Some economists argue that the Fed set its federal funds rate target "too _" in the early 2000s,which was one of the contributing factors which led to mortgage interest rates and a(n)___ housing prices.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, part I: Prices and Unemployment

Macroeconomic Measurements, part II: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self-Regulating Economy

Keynesian Macroeconomics and Economic Instability: a Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money,banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, technology, ideas, and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case for and Against Government: Five Topics Considered

Stocks, bonds, futures, and Options

Filters

Exam 18: The Financial Crisis of 2007-2009

The Taylor rule is a recommendation of how

A bank initially has $620 million in assets and $580 million in liabilities.The banks net worth (capital)is _____________ million.If the bank's assets decline by 5% and its liabilities do not change,its capital decreases by ____________ .

During the Great Recession,the growth rate of Real GDP _________________ and the inflation rate ___________________.

Collateralized debt obligations are

All other things being equal among the banks below,which bank is the least likely to become insolvent?

When housing prices rise,homeowners gain equity in their homes.

A bank has $200 million in assets and $150 million in liabilities.The banks net worth is _____________ million and its leverage ratio is __________________.

A subprime mortgage loan is a loan granted to persons who

Some economists argue that the Fed set its federal funds rate target "too _________" in the early 2000s,which was one of the contributing factors which led to ____________ mortgage interest rates and a(n)___________ housing prices.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, part I: Prices and Unemployment

Macroeconomic Measurements, part II: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self-Regulating Economy

Keynesian Macroeconomics and Economic Instability: a Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money,banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, technology, ideas, and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case for and Against Government: Five Topics Considered

Stocks, bonds, futures, and Options

Filters

A bank initially has $620 million in assets and $580 million in liabilities.The banks net worth (capital)is _ million.If the bank's assets decline by 5% and its liabilities do not change,its capital decreases by .

During the Great Recession,the growth rate of Real GDP _ and the inflation rate ___.

A bank has $200 million in assets and $150 million in liabilities.The banks net worth is _ million and its leverage ratio is ______.

Some economists argue that the Fed set its federal funds rate target "too _" in the early 2000s,which was one of the contributing factors which led to mortgage interest rates and a(n)___ housing prices.