Question 1

An economic bubble is when

Accepted Answer

A) prices of assets and securities fall below their true or fundamental value. 
B) prices of assets and securities rise way above their true or fundamental value. 
C) prices of assets and securities are at their true or fundamental value. 
D) prices of assets and securities rise with inflation. 
A) prices of assets and securities fall below their true or fundamental value. 
B) prices of assets and securities rise way above their true or fundamental value. 
C) prices of assets and securities are at their true or fundamental value. 
D) prices of assets and securities rise with inflation.

Question 2

In balancing a budget, economic booms provide opportunities to

Accepted Answer

A) issue more bonds. 
B) buy back bonds. 
C) increase deficits. 
D) raise taxes. 
A) issue more bonds. 
B) buy back bonds. 
C) increase deficits. 
D) raise taxes.

Question 3

Sovereign debt refers to the bonds issued by national governments to

Accepted Answer

A) increase returns. 
B) finance expenditure. 
C) print money. 
D) reduce debt. 
A) increase returns. 
B) finance expenditure. 
C) print money. 
D) reduce debt.

Question 4

In a financial crisis, central banks will loosen monetary policy to prevent the crisis getting out of control.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is correct?

Accepted Answer

A) Deficits always require people to consume at the expense of their children. 
B) If the government uses funds to pay for investment programs, the debt need not burden future generations. 
C) If the government is in debt it must be running a deficit currently. 
D) The current government debt is a large share of lifetime income. 
A) Deficits always require people to consume at the expense of their children. 
B) If the government uses funds to pay for investment programs, the debt need not burden future generations. 
C) If the government is in debt it must be running a deficit currently. 
D) The current government debt is a large share of lifetime income.

Question 6

A cyclical deficit occurs where government income and expenditure

Accepted Answer

A) deviate from a trend path. 
B) occur normally over the economic cycle. 
C) move in coordinated ways. 
D) increase and decrease in a predictable manner over the economic cycle. 
E) is disrupted by the normal economic cycle. 
A) deviate from a trend path. 
B) occur normally over the economic cycle. 
C) move in coordinated ways. 
D) increase and decrease in a predictable manner over the economic cycle. 
E) is disrupted by the normal economic cycle.

Question 7

As opposed to the sub-prime market, the prime market is where

Accepted Answer

A) individuals are assessed as being a relatively low credit risk for mortgage lending. 
B) individuals are assessed as being a relatively high credit risk for mortgage lending. 
C) interest rates on mortgages were likely to be high. 
D) individuals have a poor credit rating. 
A) individuals are assessed as being a relatively low credit risk for mortgage lending. 
B) individuals are assessed as being a relatively high credit risk for mortgage lending. 
C) interest rates on mortgages were likely to be high. 
D) individuals have a poor credit rating.

Question 8

Deregulation refers to the rules placed on banks to reduce the risks involved in lending.

Accepted Answer

A) True 
 B)False

Question 9

A sign that the 2007-09 global economic crisis was affecting the real economy was

Accepted Answer

A) the collapse of the housing market. 
B) an increase in the availability of credit. 
C) consumer spending increased on goods with a high income elasticity of demand. 
D) increased borrowing. 
A) the collapse of the housing market. 
B) an increase in the availability of credit. 
C) consumer spending increased on goods with a high income elasticity of demand. 
D) increased borrowing.

Question 10

The response of central banks to the credit crunch was

Accepted Answer

A) to remove some regulatory limitations on banks. 
B) to impose new regulatory limitations on banks. 
C) to provide additional liquidity to the banking system. 
D) to restrict the availability of liquidity to the banking system. 
A) to remove some regulatory limitations on banks. 
B) to impose new regulatory limitations on banks. 
C) to provide additional liquidity to the banking system. 
D) to restrict the availability of liquidity to the banking system.

Question 11

Lending to governments used to be seen as relatively risk free, but in the wake of the ____________ it became clear that for some governments, this was not the case.

Accepted Answer

A) creation of the eurozone 
B) deregulation of the banking sector 
C) 2007-09 global economic crisis 
D) Brexit vote 
A) creation of the eurozone 
B) deregulation of the banking sector 
C) 2007-09 global economic crisis 
D) Brexit vote

Question 12

Explain the difference between cyclical deficits and structural deficits.

Accepted Answer

A structural deficit is a situation wher

Question 13

Markets looked to central banks to respond by

Accepted Answer

A) their speed of intervention. 
B) the degree of innovation shown. 
C) co-ordinated action. 
D) All of the above. 
A) their speed of intervention. 
B) the degree of innovation shown. 
C) co-ordinated action. 
D) All of the above.

Question 14

Prior to the start of global crisis in 2007, the previous 20 years had been a period of

Accepted Answer

A) fluctuating macroeconomic stability. 
B) macroeconomic stability with sustained growth. 
C) both boom and bust periods. 
D) consistently high inflation. 
A) fluctuating macroeconomic stability. 
B) macroeconomic stability with sustained growth. 
C) both boom and bust periods. 
D) consistently high inflation.

Question 15

Discuss some of the arguments for more austerity in the eurozone.

Accepted Answer

European member states must take steps t

Question 16

A feature of the sovereign debt crisis has been for a number of eurozone countries to

Accepted Answer

A) put all their debts together. 
B) agree to have different interest rates. 
C) spend their way out of debt. 
D) agree to austerity measures. 
A) put all their debts together. 
B) agree to have different interest rates. 
C) spend their way out of debt. 
D) agree to austerity measures.

Question 17

The size of the output gap depends on which of the following?

Accepted Answer

A) The ease with which the unemployed can find work. 
B) The difference between consumption spending and total output. 
C) How far businesses have built up inventories during an economic slowdown. 
D) How far an economic downturn has destroyed economic capacity in a country. 
A) The ease with which the unemployed can find work. 
B) The difference between consumption spending and total output. 
C) How far businesses have built up inventories during an economic slowdown. 
D) How far an economic downturn has destroyed economic capacity in a country.

Question 18

Which of the following help explains the growth in the sub-prime market?

Accepted Answer

A) The demand by shareholders for better returns. 
B) The existence of a bonus culture which could provide some individuals with millions each year. 
C) The desire by individuals to get on the property ladder. 
D) The lack of rigour in regulation and oversight by the central banks. 
E) All of the above. 
A) The demand by shareholders for better returns. 
B) The existence of a bonus culture which could provide some individuals with millions each year. 
C) The desire by individuals to get on the property ladder. 
D) The lack of rigour in regulation and oversight by the central banks. 
E) All of the above.

Question 19

When a government fails to balance its _______, it has to borrow money by issuing ______ in order to make up the shortfall.

Accepted Answer

A) bonds, budget 
B) budget, bonds 
C) sheet, stocks 
D) act, paper 
A) bonds, budget 
B) budget, bonds 
C) sheet, stocks 
D) act, paper

Question 20

Which of the following reduces the potential burden of an increase in debt on future generations?

Accepted Answer

A) The growth rate of output is high. 
B) In response to increased debt, parents save more to leave their children larger bequests. 
C) Some of the current spending benefits future taxpayers. 
D) All of the above are correct. 
A) The growth rate of output is high. 
B) In response to increased debt, parents save more to leave their children larger bequests. 
C) Some of the current spending benefits future taxpayers. 
D) All of the above are correct.

An economic bubble is when

In balancing a budget, economic booms provide opportunities to

Sovereign debt refers to the bonds issued by national governments to

In a financial crisis, central banks will loosen monetary policy to prevent the crisis getting out of control.

Which of the following is correct?

A cyclical deficit occurs where government income and expenditure

As opposed to the sub-prime market, the prime market is where

Deregulation refers to the rules placed on banks to reduce the risks involved in lending.

A sign that the 2007-09 global economic crisis was affecting the real economy was

The response of central banks to the credit crunch was

Lending to governments used to be seen as relatively risk free, but in the wake of the ____________ it became clear that for some governments, this was not the case.

Explain the difference between cyclical deficits and structural deficits.

Markets looked to central banks to respond by

Prior to the start of global crisis in 2007, the previous 20 years had been a period of

Discuss some of the arguments for more austerity in the eurozone.

A feature of the sovereign debt crisis has been for a number of eurozone countries to

The size of the output gap depends on which of the following?

Which of the following help explains the growth in the sub-prime market?

When a government fails to balance its _, it has to borrow money by issuing in order to make up the shortfall.

Which of the following reduces the potential burden of an increase in debt on future generations?

What Is Economics

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

Common Currency Areas and European Monetary Union

Filters

Exam 19: The Financial Crisis and Sovereign Debt

An economic bubble is when

In balancing a budget, economic booms provide opportunities to

Sovereign debt refers to the bonds issued by national governments to

In a financial crisis, central banks will loosen monetary policy to prevent the crisis getting out of control.

Which of the following is correct?

A cyclical deficit occurs where government income and expenditure

As opposed to the sub-prime market, the prime market is where

Deregulation refers to the rules placed on banks to reduce the risks involved in lending.

A sign that the 2007-09 global economic crisis was affecting the real economy was

The response of central banks to the credit crunch was

Lending to governments used to be seen as relatively risk free, but in the wake of the ____________ it became clear that for some governments, this was not the case.

Explain the difference between cyclical deficits and structural deficits.

Markets looked to central banks to respond by

Prior to the start of global crisis in 2007, the previous 20 years had been a period of

Discuss some of the arguments for more austerity in the eurozone.

A feature of the sovereign debt crisis has been for a number of eurozone countries to

The size of the output gap depends on which of the following?

Which of the following help explains the growth in the sub-prime market?

When a government fails to balance its _______, it has to borrow money by issuing ______ in order to make up the shortfall.

Which of the following reduces the potential burden of an increase in debt on future generations?

What Is Economics

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

Common Currency Areas and European Monetary Union

Filters

When a government fails to balance its _, it has to borrow money by issuing in order to make up the shortfall.