Question 1

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. B

Question 2

Ordinary (non-securitized)loans cannot be resold after they have been granted by a bank or another lender.Therefore,these loans are

Accepted Answer

A)  financial assets but not financial securities. 
B)  financial securities but not financial assets. 
C)  both financial assets and financial securities. 
D)  neither financial assets nor financial securities. 
A)  financial assets but not financial securities. 
B)  financial securities but not financial assets. 
C)  both financial assets and financial securities. 
D)  neither financial assets nor financial securities. A

Question 3

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. D

Question 4

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 5

The leading federal regulatory body for financial markets in the United States is the

Accepted Answer

A)  Federal Bureau of Investigation. 
B)  Securities and Exchange Commission. 
C)  Federal Financial Market Bureau. 
D)  Investors Protection Agency. 
A)  Federal Bureau of Investigation. 
B)  Securities and Exchange Commission. 
C)  Federal Financial Market Bureau. 
D)  Investors Protection Agency.

Question 6

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

Question 7

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

Question 8

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 9

The financial crisis of 2007-2009 worsened after the failure of which firm?

Accepted Answer

A)  General Motors 
B)  Lehman Brothers 
C)  Bear Stearns 
D)  American International Group (AIG) 
A)  General Motors 
B)  Lehman Brothers 
C)  Bear Stearns 
D)  American International Group (AIG)

Question 10

All of the following are true regarding securitized loans EXCEPT

Accepted Answer

A)  they provide risk sharing. 
B)  they provide information. 
C)  they provide liquidity. 
D)  they cannot be resold. 
A)  they provide risk sharing. 
B)  they provide information. 
C)  they provide liquidity. 
D)  they cannot be resold.

Question 11

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 12

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 13

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 14

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 15

Briefly explain the difference in how banks and peer-to-peer lenders make profits on loans.

Accepted Answer

Banks have traditionally earned profits

Question 16

A decline in bank lending has the most significant effect on

Accepted Answer

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

Question 17

What made the recession of 2007-2009 different than any other recession since the Great Depression?

Accepted Answer

A)  The government did not implement a fiscal stimulus. 
B)  The Fed failed to reduce interest rates. 
C)  It was accompanied by a financial crisis. 
D)  The impact was primarily limited to the financial sector. 
A)  The government did not implement a fiscal stimulus. 
B)  The Fed failed to reduce interest rates. 
C)  It was accompanied by a financial crisis. 
D)  The impact was primarily limited to the financial sector.

Question 18

How did securitization and the bursting of the housing bubble contribute to the Financial Crisis of 2007-2009?

Accepted Answer

Many investment banks and other investor

Question 19

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 20

The role of the financial system is to

Accepted Answer

A)  channel funds from households and other savers to businesses. 
B)  protect commercial banks from government regulation. 
C)  ensure that investment banks remain profitable. 
D)  provide loans from the Federal Reserve to households and businesses. 
A)  channel funds from households and other savers to businesses. 
B)  protect commercial banks from government regulation. 
C)  ensure that investment banks remain profitable. 
D)  provide loans from the Federal Reserve to households and businesses.

Financial markets

Ordinary (non-securitized)loans cannot be resold after they have been granted by a bank or another lender.Therefore,these loans are

The financial system provides risk sharing by allowing

Which of the following assets is the most liquid?

The leading federal regulatory body for financial markets in the United States is the

In the United States,the lender of last resort is

Which of the following assets is the least liquid?

Alt-A borrowers were those who

The financial crisis of 2007-2009 worsened after the failure of which firm?

All of the following are true regarding securitized loans EXCEPT

Economists define risk as

The Federal Reserve System

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

In the United States,monetary policy is carried out by

Briefly explain the difference in how banks and peer-to-peer lenders make profits on loans.

A decline in bank lending has the most significant effect on

What made the recession of 2007-2009 different than any other recession since the Great Depression?

How did securitization and the bursting of the housing bubble contribute to the Financial Crisis of 2007-2009?

The financial system performs the role of communicating information by

The role of the financial system is to

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

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

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

Financial markets

Ordinary (non-securitized)loans cannot be resold after they have been granted by a bank or another lender.Therefore,these loans are

The financial system provides risk sharing by allowing

Which of the following assets is the most liquid?

The leading federal regulatory body for financial markets in the United States is the

In the United States,the lender of last resort is

Which of the following assets is the least liquid?

Alt-A borrowers were those who

The financial crisis of 2007-2009 worsened after the failure of which firm?

All of the following are true regarding securitized loans EXCEPT

Economists define risk as

The Federal Reserve System

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

In the United States,monetary policy is carried out by

Briefly explain the difference in how banks and peer-to-peer lenders make profits on loans.

A decline in bank lending has the most significant effect on

What made the recession of 2007-2009 different than any other recession since the Great Depression?

How did securitization and the bursting of the housing bubble contribute to the Financial Crisis of 2007-2009?

The financial system performs the role of communicating information by

The role of the financial system is to

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

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

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