Exam 14: The Financial Crisis and The Great Recession

Assuming that the reserve ratio is 10%,what amount of excess reserves are held by with the bank balance sheet listed below? Assets Liabilities & Net Worth Reserves $280,000 Checking deposits $2,800,000 Loans Outstanding $2,920,000 Total $3,200,000 Net Worth Stockholders' Equity $400,000 Total $3,200,000

In 2007,which U.S.firm showed the first indication of significant problems in the financial sector?

As a result of Lehman's collapse,real GDP first began to fall in

The Lehman Brothers bankruptcy triggered a financial panic that featured

What was the lowest federal funds rate target the Fed set in response to the financial crisis?

Both monetary policy and fiscal policy were used in response to the recession of 2007-2009.

The first signs of major financial problems associated with the financial sector and real estate investment appeared in 2009.

What is the leverage implied by the bank balance sheet listed below? Assets Liabilities & Net Worth Reserves $19,000,000 Checking deposits $20,000,000 Loans Outstanding $2,000,000 Total $21,000,000 Net Worth Stockholders' Equity $1,000,000 Total $21,000,000

In response to the economic downturn,the federal government enacted a fiscal stimulus bill with funding in excess of $700 billion.

If a 10-year Treasury bond pays 1.5% and a 10-year corporate bond pays 4.4%,then the spread on this particular corporate bond is 5.9%.

If the reserve ratio was 10% for the bank with the balance sheet listed below,then this bank is being Assets Liabilities & Net Worth Reserves $2,500,000 Checking deposits $5,000,000 Loans Outstanding $2,000,000 Total $5,500,000 Net Worth Stockholders' Equity $500,000 Total $5,500,000

The central idea behind the Troubled Asset Relief Program was for the Treasury to sell mortgage-backed securities to interested investors,wait for prices to increase,and then buy these securities back for a profit.

During the financial crisis associated with the Great Recession,the interest rate spread between Treasury bills and bank-to-bank lending increased substantially.

Which of the following was not a factor that contributed to the subprime mortgage crisis?

When the housing bubble burst,prices fell particularly severely in all of these states except:

The intended use of TARP funds was to

In computing GDP,new home construction adds to

As a result of the Great Recession,job growth did not resume until

The increased level of excess reserves that many banks held in 2008 made traditional monetary policy less effective.

Despite both monetary and fiscal policy actions,real GDP declined at an annualized rate of 6% during the last quarter of 2008 and the first quarter of 2009.