Question 1

When depositors rush to get their deposit out of a single bank,it is called a bank panic.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following financial institutions was taken over by the federal government?

Accepted Answer

A) Freddie Mac 
B) Bank of America 
C) Fannie Mae 
D) Merrill Lynch 
E) a and c 
A) Freddie Mac 
B) Bank of America 
C) Fannie Mae 
D) Merrill Lynch 
E) a and c E

Question 3

For the following questions use the information in the followingtable.  
-Given the information in Table 10.2,if the value of this bank's investments decrease by $1,000,what is the approximate leverage ratio of this bank?

Accepted Answer

A) 10.60 
B) 3.87 
C) 8.60 
D) 2.78 
E) not enough information 
A) 10.60 
B) 3.87 
C) 8.60 
D) 2.78 
E) not enough information A

Question 4

By August of 2007,almost 16 percent of all subprime loans were in default.

Accepted Answer

A) True 
 B)False

Question 5

The acronym "TARP" stands for:

Accepted Answer

A) Total Assistance for Retired Persons 
B) Tax And Revenue Program 
C) Troubled Asset Relief Program 
D) Treasury Asset Risk Persistence 
E) Total Asset Rate Possibility 
A) Total Assistance for Retired Persons 
B) Tax And Revenue Program 
C) Troubled Asset Relief Program 
D) Treasury Asset Risk Persistence 
E) Total Asset Rate Possibility

Question 6

When was the deepest recession since the end of World War II?

Accepted Answer

A) 1981-82 
B) 2007-09 
C) 1973-75 
D) 1948-49 
E) 1969-70 
A) 1981-82 
B) 2007-09 
C) 1973-75 
D) 1948-49 
E) 1969-70

Question 7

For the following questions use the information in Table 10.1,which shows real GDP and potential real GDP for the years 2001-2010.  
-According to the data in Table 10.1,what years did the Bush administration enjoy an expansionary gap?

Accepted Answer

A) 2005 and 2006 
B) 2007-2009 
C) 2001,2005,2006 
D) 2002,2003,2007 
E) 2001 
A) 2005 and 2006 
B) 2007-2009 
C) 2001,2005,2006 
D) 2002,2003,2007 
E) 2001

Question 8

For the following questions use the information in the followingtable.  
-Given the information in Table 10.2,the banks' assets are equal to __________ and liabilities are __________.

Accepted Answer

A) $9,600;$11,600 
B) -$2,000;$2,000 
C) $6,800;$7,500 
D) not enough information 
E) $11,600;$9,600 
A) $9,600;$11,600 
B) -$2,000;$2,000 
C) $6,800;$7,500 
D) not enough information 
E) $11,600;$9,600

Question 9

When the investment bank Bear Stearns collapsed,its leverage ratio was:

Accepted Answer

A) 2 to 1. 
B) 35 to 1. 
C) 8 to 1. 
D) 16 to 1. 
E) 1 to 12. 
A) 2 to 1. 
B) 35 to 1. 
C) 8 to 1. 
D) 16 to 1. 
E) 1 to 12.

Question 10

Use the following Figure 10.1,which shows the daily three-month treasury yield in September 2008.  
-Consider the data in Figure 10.1.What event precipitated the change in the yield in mid-September?

Accepted Answer

A) the expanded trade deficit with China 
B) the election of Barack Obama 
C) the bankruptcy of Lehman Brothers 
D) the Greek fiscal crisis 
E) the continuing Japanese recession 
A) the expanded trade deficit with China 
B) the election of Barack Obama 
C) the bankruptcy of Lehman Brothers 
D) the Greek fiscal crisis 
E) the continuing Japanese recession

Question 11

Subprime loans are loans made to households which do not necessarily meet "standard" lending restrictions.

Accepted Answer

A) True 
 B)False

Question 12

Between the middle of 2006 and April 2009,the national index for the U.S.housing market:

Accepted Answer

A) declined by about 10.1 percent. 
B) increased by about 2 percent. 
C) declined by about 33 percent. 
D) was flat. 
E) grew at the rate of inflation. 
A) declined by about 10.1 percent. 
B) increased by about 2 percent. 
C) declined by about 33 percent. 
D) was flat. 
E) grew at the rate of inflation.

Question 13

In 1933 the __________ was set up to __________.

Accepted Answer

A) Troubled Asset Relief Fund;shore up insolvent commercial banks 
B) Federal Reserve System;centralize monetary policy 
C) Federal Deposit Insurance Corporation;help prevent bank runs 
D) Depository Institutions Deregulation and Monetary Control Act;repeal the Glass-Steagall Act 
E) U.S.Department of Treasury;monitor investment bank activity 
A) Troubled Asset Relief Fund;shore up insolvent commercial banks 
B) Federal Reserve System;centralize monetary policy 
C) Federal Deposit Insurance Corporation;help prevent bank runs 
D) Depository Institutions Deregulation and Monetary Control Act;repeal the Glass-Steagall Act 
E) U.S.Department of Treasury;monitor investment bank activity

Question 14

The basic principle of securitization is that bundling a variety of different types of loans into a new asset and selling pieces of that asset to many investors will diversify risk.

Accepted Answer

A) True 
 B)False

Question 15

The savings glut in the early and mid-2000s led to an increase in U.S.interest rates,which spurred a stock market bubble.

Accepted Answer

A) True 
 B)False

Question 16

What is the fed funds rate?

Accepted Answer

A) interest rate charged by banks to their best customers 
B) ideal inflation rate 
C) interest rate charged by banks for overnight loans 
D) interest rate suggested by the Taylor rule 
E) sustainable level of federal budget deficit 
A) interest rate charged by banks to their best customers 
B) ideal inflation rate 
C) interest rate charged by banks for overnight loans 
D) interest rate suggested by the Taylor rule 
E) sustainable level of federal budget deficit

Question 17

When was the deepest recession in the post-World War II period?

Accepted Answer

A) 2007-09 
B) 1981-82 
C) 2001 
D) 1973-75 
E) 1953-54 
A) 2007-09 
B) 1981-82 
C) 2001 
D) 1973-75 
E) 1953-54

Question 18

Use the following Figure 10.1,which shows the daily three-month treasury yield in September 2008.  
-Consider the data in Figure 10.1.What does the data for mid-September in this figure suggest?

Accepted Answer

A) Increasing investor confidence in the effectiveness of TARP led to smaller purchases of U.S.treasuries. 
B) There was a rapid movement of assets from treasuries to stocks. 
C) In the aftermath of the collapse of Lehman Brothers investors fled to the safety of short-term treasuries. 
D) Prices of gold declined in line with short-term treasury yields. 
E) GM and Chrysler declared bankruptcy. 
A) Increasing investor confidence in the effectiveness of TARP led to smaller purchases of U.S.treasuries. 
B) There was a rapid movement of assets from treasuries to stocks. 
C) In the aftermath of the collapse of Lehman Brothers investors fled to the safety of short-term treasuries. 
D) Prices of gold declined in line with short-term treasury yields. 
E) GM and Chrysler declared bankruptcy.

Question 19

In the middle of 2009 __________;by February 2010 __________.

Accepted Answer

A) over 8 million jobs were lost;short-run output bottomed out at over -6 percent 
B) short-run output bottomed out at over -6 percent;over 8 million jobs were lost 
C) inflation was 5 percent;the unemployment rate was 12 percent 
D) the federal funds rate was 5 percent;it had fallen to 1 percent 
E) unemployment fell to 8 percent;home sales were rising steadily 
A) over 8 million jobs were lost;short-run output bottomed out at over -6 percent 
B) short-run output bottomed out at over -6 percent;over 8 million jobs were lost 
C) inflation was 5 percent;the unemployment rate was 12 percent 
D) the federal funds rate was 5 percent;it had fallen to 1 percent 
E) unemployment fell to 8 percent;home sales were rising steadily

Question 20

During the Great Recession,inflation was relatively stable because energy and other commodity prices were stable.

Accepted Answer

A) True 
 B)False

When depositors rush to get their deposit out of a single bank,it is called a bank panic.

Which of the following financial institutions was taken over by the federal government?

For the following questions use the information in the followingtable. -Given the information in Table 10.2,if the value of this bank's investments decrease by $1,000,what is the approximate leverage ratio of this bank?

By August of 2007,almost 16 percent of all subprime loans were in default.

The acronym "TARP" stands for:

When was the deepest recession since the end of World War II?

For the following questions use the information in Table 10.1,which shows real GDP and potential real GDP for the years 2001-2010. -According to the data in Table 10.1,what years did the Bush administration enjoy an expansionary gap?

For the following questions use the information in the followingtable. -Given the information in Table 10.2,the banks' assets are equal to and liabilities are .

When the investment bank Bear Stearns collapsed,its leverage ratio was:

Use the following Figure 10.1,which shows the daily three-month treasury yield in September 2008. -Consider the data in Figure 10.1.What event precipitated the change in the yield in mid-September?

Subprime loans are loans made to households which do not necessarily meet "standard" lending restrictions.

Between the middle of 2006 and April 2009,the national index for the U.S.housing market:

In 1933 the was set up to .

The basic principle of securitization is that bundling a variety of different types of loans into a new asset and selling pieces of that asset to many investors will diversify risk.

The savings glut in the early and mid-2000s led to an increase in U.S.interest rates,which spurred a stock market bubble.

What is the fed funds rate?

When was the deepest recession in the post-World War II period?

Use the following Figure 10.1,which shows the daily three-month treasury yield in September 2008. -Consider the data in Figure 10.1.What does the data for mid-September in this figure suggest?

In the middle of 2009 ;by February 2010 .

During the Great Recession,inflation was relatively stable because energy and other commodity prices were stable.

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long- Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market,wages,and Unemployment

Inflation

An Introduction to the Short Run

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

Exam 10: The Great Recession: a First Look

When depositors rush to get their deposit out of a single bank,it is called a bank panic.

Which of the following financial institutions was taken over by the federal government?

For the following questions use the information in the followingtable. -Given the information in Table 10.2,if the value of this bank's investments decrease by $1,000,what is the approximate leverage ratio of this bank?

By August of 2007,almost 16 percent of all subprime loans were in default.

The acronym "TARP" stands for:

When was the deepest recession since the end of World War II?

For the following questions use the information in Table 10.1,which shows real GDP and potential real GDP for the years 2001-2010. -According to the data in Table 10.1,what years did the Bush administration enjoy an expansionary gap?

For the following questions use the information in the followingtable. -Given the information in Table 10.2,the banks' assets are equal to __________ and liabilities are __________.

When the investment bank Bear Stearns collapsed,its leverage ratio was:

Use the following Figure 10.1,which shows the daily three-month treasury yield in September 2008. -Consider the data in Figure 10.1.What event precipitated the change in the yield in mid-September?

Subprime loans are loans made to households which do not necessarily meet "standard" lending restrictions.

Between the middle of 2006 and April 2009,the national index for the U.S.housing market:

In 1933 the __________ was set up to __________.

The basic principle of securitization is that bundling a variety of different types of loans into a new asset and selling pieces of that asset to many investors will diversify risk.

The savings glut in the early and mid-2000s led to an increase in U.S.interest rates,which spurred a stock market bubble.

What is the fed funds rate?

When was the deepest recession in the post-World War II period?

Use the following Figure 10.1,which shows the daily three-month treasury yield in September 2008. -Consider the data in Figure 10.1.What does the data for mid-September in this figure suggest?

In the middle of 2009 __________;by February 2010 __________.

During the Great Recession,inflation was relatively stable because energy and other commodity prices were stable.

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long- Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market,wages,and Unemployment

Inflation

An Introduction to the Short Run

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

For the following questions use the information in the followingtable. -Given the information in Table 10.2,the banks' assets are equal to and liabilities are .

In 1933 the was set up to .

In the middle of 2009 ;by February 2010 .