Question 1

Which of the following is NOT a financial intermediary?

Accepted Answer

A)  mutual fund 
B)  bank 
C)  stock exchange 
D)  insurance company 
A)  mutual fund 
B)  bank 
C)  stock exchange 
D)  insurance company

Question 2

The distinguishing feature of a well-functioning financial market is the

Accepted Answer

A)  continual increase in the liquidity of most assets. 
B)  continual reduction in the riskiness of most assets. 
C)  increased ease of converting common stocks into bonds. 
D)  incorporation of available information into asset prices. 
A)  continual increase in the liquidity of most assets. 
B)  continual reduction in the riskiness of most assets. 
C)  increased ease of converting common stocks into bonds. 
D)  incorporation of available information into asset prices.

Question 3

All of the following took place during the economic crisis that began in 2007 EXCEPT

Accepted Answer

A)  the financial system was disrupted. 
B)  large portions of the U.S. economy were cut off from the funds they needed to thrive. 
C)  there was a devastating decline in the production of goods and services throughout the economy. 
D)  unlike households, most businesses still had easy access to funds. 
A)  the financial system was disrupted. 
B)  large portions of the U.S. economy were cut off from the funds they needed to thrive. 
C)  there was a devastating decline in the production of goods and services throughout the economy. 
D)  unlike households, most businesses still had easy access to funds.

Question 4

Which of the following best describes a "bubble"?

Accepted Answer

A)  when the price of an asset reaches a new high 
B)  an unsustainable increase in the price of a class of assets 
C)  rapid increases in inflation 
D)  when bond prices rise more quickly than stock prices 
A)  when the price of an asset reaches a new high 
B)  an unsustainable increase in the price of a class of assets 
C)  rapid increases in inflation 
D)  when bond prices rise more quickly than stock prices

Question 5

Borrowers who stated but did not document their incomes are referred to as

Accepted Answer

A)  subprime. 
B)  alt-A. 
C)  adjustable. 
D)  securitized. 
A)  subprime. 
B)  alt-A. 
C)  adjustable. 
D)  securitized.

Question 6

Which of the following is NOT a financial asset?

Accepted Answer

A)  a bond issued by Google 
B)  Wells Fargo Bank 
C)  a home mortgage loan 
D)  a certificate of deposit 
A)  a bond issued by Google 
B)  Wells Fargo Bank 
C)  a home mortgage loan 
D)  a certificate of deposit

Question 7

Which of the following is NOT a financial intermediary?

Accepted Answer

A)  NASDAQ 
B)  Allstate Insurance Company 
C)  Bank of America 
D)  Vanguard Total Stock Market Index Fund 
A)  NASDAQ 
B)  Allstate Insurance Company 
C)  Bank of America 
D)  Vanguard Total Stock Market Index Fund

Question 8

The interest rate on loans made by peer-to-peer lenders tends to be

Accepted Answer

A)  lower than the interest rate on bonds and lower than the interest rate on credit cards. 
B)  higher than the interest rate on bonds and higher than the interest rate on credit cards. 
C)  lower than the interest rate on bonds and higher than the interest rate on credit cards. 
D)  higher than the interest rate on bonds and lower than the interest rate on credit cards. 
A)  lower than the interest rate on bonds and lower than the interest rate on credit cards. 
B)  higher than the interest rate on bonds and higher than the interest rate on credit cards. 
C)  lower than the interest rate on bonds and higher than the interest rate on credit cards. 
D)  higher than the interest rate on bonds and lower than the interest rate on credit cards.

Question 9

The funds for loans from peer-to-peer lenders come from three key sources.Which of the following is NOT one of those key sources?

Accepted Answer

A)  individuals 
B)  government 
C)  financial firms 
D)  other businesses 
A)  individuals 
B)  government 
C)  financial firms 
D)  other businesses

Question 10

Which of the following forms the largest share of household holdings of financial assets?

Accepted Answer

A)  corporate stocks 
B)  bonds 
C)  pension fund reserves 
D)  equity in unincorporated businesses 
A)  corporate stocks 
B)  bonds 
C)  pension fund reserves 
D)  equity in unincorporated businesses

Question 11

If you buy a bond issued by Intel,the bond is a(n)

Accepted Answer

A)  liability to Intel and an asset to you. 
B)  liability to you and an asset to Intel. 
C)  liability to both you and Intel. 
D)  asset to both you and Intel. 
A)  liability to Intel and an asset to you. 
B)  liability to you and an asset to Intel. 
C)  liability to both you and Intel. 
D)  asset to both you and Intel.

Question 12

What was the intent behind the intervention of the Fed and Treasury in financial markets during the Financial Crisis of 2007-2009?

Accepted Answer

The actions by the Fed and Treasury were

Question 13

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 14

Which of the following does NOT describe the relationship between banks and small business during the 2000s (prior to the financial crisis)?

Accepted Answer

A)  Banks typically applied fixed guidelines for granting loans, leaving little room for personal judgment. 
B)  Fewer small businesses received loans as banks shifted their focus to mortgages. 
C)  Many small businesses were receiving loans from regional and national banks. 
D)  More banks became convinced that it would be profitable to loosen their loan guidelines to make more borrowers eligible to receive credit. 
A)  Banks typically applied fixed guidelines for granting loans, leaving little room for personal judgment. 
B)  Fewer small businesses received loans as banks shifted their focus to mortgages. 
C)  Many small businesses were receiving loans from regional and national banks. 
D)  More banks became convinced that it would be profitable to loosen their loan guidelines to make more borrowers eligible to receive credit.

Question 15

Financial intermediaries

Accepted Answer

A)  include banks and other depository institutions. 
B)  include the New York and American Stock exchanges. 
C)  directly issue claims on individual borrowers to savers. 
D)  are owned and operated by the federal government. 
A)  include banks and other depository institutions. 
B)  include the New York and American Stock exchanges. 
C)  directly issue claims on individual borrowers to savers. 
D)  are owned and operated by the federal government.

Question 16

The Troubled Asset Relief Program (TARP)allowed

Accepted Answer

A)  the Treasury to inject funds into commercial banks in return for stock in the banks. 
B)  the Fed to provide funds to commercial banks in return for stock. 
C)  the Treasury to insure bank deposits at major U.S. banks. 
D)  the Fed to make loans to banks as the lender of last resort. 
A)  the Treasury to inject funds into commercial banks in return for stock in the banks. 
B)  the Fed to provide funds to commercial banks in return for stock. 
C)  the Treasury to insure bank deposits at major U.S. banks. 
D)  the Fed to make loans to banks as the lender of last resort.

Question 17

The financial system is primarily a means by which

Accepted Answer

A)  funds are transferred from savers to borrowers. 
B)  money is put into circulation. 
C)  the government puts into operation its plans for the economy. 
D)  business firms distribute their goods. 
A)  funds are transferred from savers to borrowers. 
B)  money is put into circulation. 
C)  the government puts into operation its plans for the economy. 
D)  business firms distribute their goods.

Question 18

Which president said,"Prosperity is just around the corner"?

Accepted Answer

A)  Herbert Hoover near the start of the Great Depression 
B)  Franklin Delano Roosevelt near the start of the Great Depression 
C)  George W. Bush near the start of the Great Recession 
D)  Barack Obama near the start of the Great Recession 
A)  Herbert Hoover near the start of the Great Depression 
B)  Franklin Delano Roosevelt near the start of the Great Depression 
C)  George W. Bush near the start of the Great Recession 
D)  Barack Obama near the start of the Great Recession

Question 19

If you purchase a Treasury bond,the Treasury bond is

Accepted Answer

A)  an asset to you as well as an asset to the U.S. government. 
B)  an asset to you, but a liability to the U.S. government. 
C)  a liability to you, but an asset to the U.S. government. 
D)  a liability to you as well as a liability to the U.S. government. 
A)  an asset to you as well as an asset to the U.S. government. 
B)  an asset to you, but a liability to the U.S. government. 
C)  a liability to you, but an asset to the U.S. government. 
D)  a liability to you as well as a liability to the U.S. government.

Question 20

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

Which of the following is NOT a financial intermediary?

The distinguishing feature of a well-functioning financial market is the

All of the following took place during the economic crisis that began in 2007 EXCEPT

Which of the following best describes a "bubble"?

Borrowers who stated but did not document their incomes are referred to as

Which of the following is NOT a financial asset?

Which of the following is NOT a financial intermediary?

The interest rate on loans made by peer-to-peer lenders tends to be

The funds for loans from peer-to-peer lenders come from three key sources.Which of the following is NOT one of those key sources?

Which of the following forms the largest share of household holdings of financial assets?

If you buy a bond issued by Intel,the bond is a(n)

What was the intent behind the intervention of the Fed and Treasury in financial markets during the Financial Crisis of 2007-2009?

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

Which of the following does NOT describe the relationship between banks and small business during the 2000s (prior to the financial crisis)?

Financial intermediaries

The Troubled Asset Relief Program (TARP)allowed

The financial system is primarily a means by which

Which president said,"Prosperity is just around the corner"?

If you purchase a Treasury bond,the Treasury bond is

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

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

Which of the following is NOT a financial intermediary?

The distinguishing feature of a well-functioning financial market is the

All of the following took place during the economic crisis that began in 2007 EXCEPT

Which of the following best describes a "bubble"?

Borrowers who stated but did not document their incomes are referred to as

Which of the following is NOT a financial asset?

Which of the following is NOT a financial intermediary?

The interest rate on loans made by peer-to-peer lenders tends to be

The funds for loans from peer-to-peer lenders come from three key sources.Which of the following is NOT one of those key sources?

Which of the following forms the largest share of household holdings of financial assets?

If you buy a bond issued by Intel,the bond is a(n)

What was the intent behind the intervention of the Fed and Treasury in financial markets during the Financial Crisis of 2007-2009?

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

Which of the following does NOT describe the relationship between banks and small business during the 2000s (prior to the financial crisis)?

Financial intermediaries

The Troubled Asset Relief Program (TARP)allowed

The financial system is primarily a means by which

Which president said,"Prosperity is just around the corner"?

If you purchase a Treasury bond,the Treasury bond is

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

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