Question 1

The U.S.banking system has the ability to alter the size of the money supply because of the use of:

Accepted Answer

A) a 100% reserve system 
B) a fractional reserve system 
C) the Federal Reserve System's excess reserves 
D) Federal Reserve notes issued by the U.S.Treasury 
A) a 100% reserve system 
B) a fractional reserve system 
C) the Federal Reserve System's excess reserves 
D) Federal Reserve notes issued by the U.S.Treasury B

Question 2

Traditionally, the federal government provides services that cannot be provided as efficiently by the private sector.

Accepted Answer

A) True 
 B)False  True

Question 3

Bank reserves are increased when the Treasury:

Accepted Answer

A) sells government bonds to individuals 
B) decreases its holding of cash 
C) increases its account at a Federal Reserve bank 
D) increases its holding of cash 
A) sells government bonds to individuals 
B) decreases its holding of cash 
C) increases its account at a Federal Reserve bank 
D) increases its holding of cash B

Question 4

The federal government pays for the services it provides primarily through:

Accepted Answer

A) service fees 
B) creating money 
C) borrowing 
D) selling assets owned by the government 
E) none of the above 
A) service fees 
B) creating money 
C) borrowing 
D) selling assets owned by the government 
E) none of the above

Question 5

Although the Treasury has vast power to affect the supply of money and credit, the Treasury largely limits its actions to taxing, borrowing, paying bills, and refunding maturing obligations.

Accepted Answer

A) True 
 B)False

Question 6

Primary groups of policy makers that are actively involved in achieving a nation's economic policy objectives include all of the following EXCEPT:

Accepted Answer

A) the Supreme Court 
B) the President 
C) Congress 
D) all of the above are primary policy makers 
A) the Supreme Court 
B) the President 
C) Congress 
D) all of the above are primary policy makers

Question 7

Assume that a banking system must keep reserves of 20% against deposits.The bank receives a primary deposit of $20,000.What would be the maximum amount of loan that could be made by the system?

Accepted Answer

A) $16,000 
B) $40,000 
C) $80,000 
D) $100,000 
A) $16,000 
B) $40,000 
C) $80,000 
D) $100,000

Question 8

During the 2007 - 2009 financial crisis, many major financial institutions and business corporations were on the verge of collapse or failure; however, some of the very largest corporations and financial institutions were deemed as being ________ because their failure would cause cascading negative repercussions throughout the U.S.and many foreign economies.

Accepted Answer

A) toxic firms 
B) boat rockers. 
C) too large to ignore 
D) too big to float 
E) none of the above 
A) toxic firms 
B) boat rockers. 
C) too large to ignore 
D) too big to float 
E) none of the above

Question 9

The Fed increases the money supply to help offset the demand for increased funds to finance the deficit.

Accepted Answer

A) True 
 B)False

Question 10

Which one of the following transactions or operations is entirely at the initiative of the Federal Reserve?

Accepted Answer

A) open market operations 
B) change in float 
C) change in bank borrowings 
D) change in Treasury cash holdings 
A) open market operations 
B) change in float 
C) change in bank borrowings 
D) change in Treasury cash holdings

Question 11

The U.S.Treasury is responsible for refinancing the outstanding debt of the government.

Accepted Answer

A) True 
 B)False

Question 12

The U.S.Treasury is primarily responsible for:

Accepted Answer

A) monetary policy 
B) debt management 
C) fiscal policy 
D) the money supply 
A) monetary policy 
B) debt management 
C) fiscal policy 
D) the money supply

Question 13

Transactions that affect bank reserves can be initiated by the:

Accepted Answer

A) nonbank public 
B) Federal Reserve System 
C) U.S.Treasury 
D) all the above 
A) nonbank public 
B) Federal Reserve System 
C) U.S.Treasury 
D) all the above

Question 14

Continuing federal programs that stabilize economic activity are called

Accepted Answer

A) transfer payments 
B) automatic stabilizers 
C) social insurance programs 
D) none of the above 
A) transfer payments 
B) automatic stabilizers 
C) social insurance programs 
D) none of the above

Question 15

Debt management includes all of the following except:

Accepted Answer

A) the types of securities to sell 
B) the interest rate patterns to use 
C) the types of refunding to carry out 
D) all of the above 
A) the types of securities to sell 
B) the interest rate patterns to use 
C) the types of refunding to carry out 
D) all of the above

Question 16

Commercial banks are one of the four policy making groups.

Accepted Answer

A) True 
 B)False

Question 17

When the United States Treasury makes a payment to an individual or business, it usually takes the form of a:

Accepted Answer

A) check drawn on the Central Bank of China 
B) check drawn directly against the U.S.Treasury 
C) special Treasury voucher 
D) check drawn against a bank in which tax balances are held 
E) none of the above 
A) check drawn on the Central Bank of China 
B) check drawn directly against the U.S.Treasury 
C) special Treasury voucher 
D) check drawn against a bank in which tax balances are held 
E) none of the above

Question 18

The "perfect financial storm" that developed in 2008, which put the U.S.economy was on the verge of collapse was characterized by all of the following EXCEPT:

Accepted Answer

A) The housing price "bubble" burst in 2006 and began a sharp decline. 
B) Stock market prices began a rally in 2007 and began a sharp incline. 
C) Many of the mortgage-related debt securities originated and sold to others, or held, by banks became difficult to value during the perfect financial storm and quickly became known as "troubled" or "tonic" assets. 
D) Individuals and businesses were defaulting on loans and home mortgages in increasing numbers due to the weakening economy and falling home prices. 
E) All of the above were factors 
A) The housing price "bubble" burst in 2006 and began a sharp decline. 
B) Stock market prices began a rally in 2007 and began a sharp incline. 
C) Many of the mortgage-related debt securities originated and sold to others, or held, by banks became difficult to value during the perfect financial storm and quickly became known as "troubled" or "tonic" assets. 
D) Individuals and businesses were defaulting on loans and home mortgages in increasing numbers due to the weakening economy and falling home prices. 
E) All of the above were factors

Question 19

When a customer demands additional currency and cashes a check for $500, all of the following occur except:

Accepted Answer

A) the deposits of the bank are reduced $500 
B) required reserves are reduced 
C) Federal Reserves notes decrease 
D) additional reserves must be acquired if the bank has no excess reserves 
A) the deposits of the bank are reduced $500 
B) required reserves are reduced 
C) Federal Reserves notes decrease 
D) additional reserves must be acquired if the bank has no excess reserves

Question 20

Which one of the following sources provides the least backing (collateral) today for U.S.Federal Reserve notes?

Accepted Answer

A) gold certificates 
B) Special Drawing Rights 
C) eligible paper in the form of business notes and drafts Note sure any of these are correct! 
D) U.S.government and agency securities 
A) gold certificates 
B) Special Drawing Rights 
C) eligible paper in the form of business notes and drafts Note sure any of these are correct! 
D) U.S.government and agency securities

The U.S.banking system has the ability to alter the size of the money supply because of the use of:

Traditionally, the federal government provides services that cannot be provided as efficiently by the private sector.

Bank reserves are increased when the Treasury:

The federal government pays for the services it provides primarily through:

Although the Treasury has vast power to affect the supply of money and credit, the Treasury largely limits its actions to taxing, borrowing, paying bills, and refunding maturing obligations.

Primary groups of policy makers that are actively involved in achieving a nation's economic policy objectives include all of the following EXCEPT:

Assume that a banking system must keep reserves of 20% against deposits.The bank receives a primary deposit of $20,000.What would be the maximum amount of loan that could be made by the system?

The Fed increases the money supply to help offset the demand for increased funds to finance the deficit.

Which one of the following transactions or operations is entirely at the initiative of the Federal Reserve?

The U.S.Treasury is responsible for refinancing the outstanding debt of the government.

The U.S.Treasury is primarily responsible for:

Transactions that affect bank reserves can be initiated by the:

Continuing federal programs that stabilize economic activity are called

Debt management includes all of the following except:

Commercial banks are one of the four policy making groups.

When the United States Treasury makes a payment to an individual or business, it usually takes the form of a:

The "perfect financial storm" that developed in 2008, which put the U.S.economy was on the verge of collapse was characterized by all of the following EXCEPT:

When a customer demands additional currency and cashes a check for $500, all of the following occur except:

Which one of the following sources provides the least backing (collateral) today for U.S.Federal Reserve notes?

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 5: Policy Makers and the Money Supply

The U.S.banking system has the ability to alter the size of the money supply because of the use of:

Traditionally, the federal government provides services that cannot be provided as efficiently by the private sector.

Bank reserves are increased when the Treasury:

The federal government pays for the services it provides primarily through:

Although the Treasury has vast power to affect the supply of money and credit, the Treasury largely limits its actions to taxing, borrowing, paying bills, and refunding maturing obligations.

Primary groups of policy makers that are actively involved in achieving a nation's economic policy objectives include all of the following EXCEPT:

Assume that a banking system must keep reserves of 20% against deposits.The bank receives a primary deposit of $20,000.What would be the maximum amount of loan that could be made by the system?

The Fed increases the money supply to help offset the demand for increased funds to finance the deficit.

Which one of the following transactions or operations is entirely at the initiative of the Federal Reserve?

The U.S.Treasury is responsible for refinancing the outstanding debt of the government.

The U.S.Treasury is primarily responsible for:

Transactions that affect bank reserves can be initiated by the:

Continuing federal programs that stabilize economic activity are called

Debt management includes all of the following except:

Commercial banks are one of the four policy making groups.

When the United States Treasury makes a payment to an individual or business, it usually takes the form of a:

The "perfect financial storm" that developed in 2008, which put the U.S.economy was on the verge of collapse was characterized by all of the following EXCEPT:

When a customer demands additional currency and cashes a check for $500, all of the following occur except:

Which one of the following sources provides the least backing (collateral) today for U.S.Federal Reserve notes?

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters