Question 1

Spain's financial difficulties following the crisis of 2008 were due primarily to a housing bubble.

Accepted Answer

A) True 
 B)False  True

Question 2

Following a severe banking crisis, the average length of time that it takes the unemployment rate to begin to fall is _____ years.

Accepted Answer

A) 2 
B) 4.8 
C) 10.5 
D) 25 
A) 2 
B) 4.8 
C) 10.5 
D) 25 B

Question 3

Resolution authority means that:

Accepted Answer

A) the government has the power to seize control of financial institutions that need a bailout. 
B) a member of Congress has the power to propose resolutions on the floor of Congress. 
C) banks have the ability to transform short-term liabilities into long-term liabilities. 
D) Congress has given the Federal Reserve permission to act as a lender of last resort. 
A) the government has the power to seize control of financial institutions that need a bailout. 
B) a member of Congress has the power to propose resolutions on the floor of Congress. 
C) banks have the ability to transform short-term liabilities into long-term liabilities. 
D) Congress has given the Federal Reserve permission to act as a lender of last resort. A

Question 4

The Dodd-Frank bill addressed all of the following issues EXCEPT:

Accepted Answer

A) consumer protection. 
B) regulation of shadow banks. 
C) election of members of the Federal Reserve Board of Governors. 
D) regulation of derivatives. 
A) consumer protection. 
B) regulation of shadow banks. 
C) election of members of the Federal Reserve Board of Governors. 
D) regulation of derivatives.

Question 5

Which of the following is an explanation of banking crises?

Accepted Answer

A) Many banks make the same mistake: investing in an asset bubble. 
B) Banks engage in maturity transformation. 
C) The Federal Reserve, acting as a lender of last resort, introduces too much competition into the system. 
D) Banks are paying low interest rates on deposits and charging high interest rates on loans. 
A) Many banks make the same mistake: investing in an asset bubble. 
B) Banks engage in maturity transformation. 
C) The Federal Reserve, acting as a lender of last resort, introduces too much competition into the system. 
D) Banks are paying low interest rates on deposits and charging high interest rates on loans.

Question 6

Following the banking crisis that began in 2007, the unemployment rate in Ireland, which had been less than 5%, increased above 10%.

Accepted Answer

A) True 
 B)False

Question 7

One of the first forms of paper money emerged when:

Accepted Answer

A) the Federal Reserve was formed in the early 1900s. 
B) the government of Rome printed money to pay Roman soldiers. 
C) customers who had deposited gold and silver with medieval goldsmiths began to use their receipts to pay for purchases. 
D) Europe adopted the euro. 
A) the Federal Reserve was formed in the early 1900s. 
B) the government of Rome printed money to pay Roman soldiers. 
C) customers who had deposited gold and silver with medieval goldsmiths began to use their receipts to pay for purchases. 
D) Europe adopted the euro.

Question 8

Depository banks:

Accepted Answer

A) buy short-term securities from investors, change their maturity, and sell them as long-term securities to other investors. 
B) buy long-term securities from investors, change their maturity, and sell them as short-term securities to other investors. 
C) accept short-term deposits from depositors and use them to make long-term loans. 
D) accept long-term deposits from depositors and use them to make short-term loans. 
A) buy short-term securities from investors, change their maturity, and sell them as long-term securities to other investors. 
B) buy long-term securities from investors, change their maturity, and sell them as short-term securities to other investors. 
C) accept short-term deposits from depositors and use them to make long-term loans. 
D) accept long-term deposits from depositors and use them to make short-term loans.

Question 9

After a banking crisis, when the Federal Reserve buys government securities to increase the money supply and decrease interest rates:

Accepted Answer

A) consumers and businesses may not respond by increasing their spending because of debt overhang. 
B) consumers and businesses usually borrow too much and spend too much, causing inflation. 
C) banks may fear runs, so they hold on to excess reserves rather than lending them to consumers and businesses. 
D) consumers and businesses may not respond because the recession has increased the value of their assets so much that they don't need to borrow money to buy more. 
A) consumers and businesses may not respond by increasing their spending because of debt overhang. 
B) consumers and businesses usually borrow too much and spend too much, causing inflation. 
C) banks may fear runs, so they hold on to excess reserves rather than lending them to consumers and businesses. 
D) consumers and businesses may not respond because the recession has increased the value of their assets so much that they don't need to borrow money to buy more.

Question 10

In 2010, Congress passed the Dodd-Frank Act, which was designed to improve regulation of the financial sector and avoid another financial crisis like the one of 2008.

Accepted Answer

A) True 
 B)False

Question 11

The Dodd-Frank bill established the Consumer Financial Protection Bureau to help consumers understand the financial impact of Social Security.

Accepted Answer

A) True 
 B)False

Question 12

The purpose of the Consumer Financial Protection Bureau is to:

Accepted Answer

A) guarantee the safety of food and drugs purchased by consumers. 
B) educate consumers on how to save for retirement above and beyond their Social Security. 
C) police financial industry practices and protect borrowers. 
D) help consumers understand how to get the best health insurance. 
A) guarantee the safety of food and drugs purchased by consumers. 
B) educate consumers on how to save for retirement above and beyond their Social Security. 
C) police financial industry practices and protect borrowers. 
D) help consumers understand how to get the best health insurance.

Question 13

Explain the difference between fiscal stimulus and fiscal austerity in dealing with the recessions that occurred in many countries after the 2008 financial crisis.

Accepted Answer

Fiscal stimulus is expansionary fiscal p

Question 14

Before the 2008 financial crisis, Spain had _____ debt and a budget _____.

Accepted Answer

A) low; surplus 
B) low; deficit 
C) high; surplus 
D) high; deficit 
A) low; surplus 
B) low; deficit 
C) high; surplus 
D) high; deficit

Question 15

Proponents argued that fiscal stimulus was appropriate after the 2008 financial crisis because:

Accepted Answer

A) austerity would only increase inflation and unemployment. 
B) political instability in the Middle East was causing a depreciation of the euro and the dollar. 
C) the lag associated with automatic stabilizers was too long. 
D) the effectiveness of monetary policy was limited by the zero bound on interest rates. 
A) austerity would only increase inflation and unemployment. 
B) political instability in the Middle East was causing a depreciation of the euro and the dollar. 
C) the lag associated with automatic stabilizers was too long. 
D) the effectiveness of monetary policy was limited by the zero bound on interest rates.

Question 16

Debt overhang is the result of:

Accepted Answer

A) maturity transformation. 
B) a vicious cycle of deleveraging. 
C) falling unemployment. 
D) rising inflation. 
A) maturity transformation. 
B) a vicious cycle of deleveraging. 
C) falling unemployment. 
D) rising inflation.

Question 17

Which of the following is intended to prevent bank runs?

Accepted Answer

A) the Sherman Anti-Trust Act 
B) regulation Q, which prohibits banks from paying interest on demand deposits 
C) deposit insurance 
D) maturity transformation 
A) the Sherman Anti-Trust Act 
B) regulation Q, which prohibits banks from paying interest on demand deposits 
C) deposit insurance 
D) maturity transformation

Question 18

The panic of 1873 began when:

Accepted Answer

A) the Federal Reserve began to require banks to hold reserves and meet capital requirements. 
B) the Civil War started. 
C) Jay Cooke and Co., a financial firm that was heavily invested in the railroad industry, failed. 
D) Franklin Delano Roosevelt declared a bank holiday. 
A) the Federal Reserve began to require banks to hold reserves and meet capital requirements. 
B) the Civil War started. 
C) Jay Cooke and Co., a financial firm that was heavily invested in the railroad industry, failed. 
D) Franklin Delano Roosevelt declared a bank holiday.

Question 19

Which of the following is an action of central banks and governments to lessen the severity of a banking crisis?

Accepted Answer

A) maturity transformation 
B) relaxing bank capital requirements 
C) acting as a lender of last resort 
D) opening a liquidity trap 
A) maturity transformation 
B) relaxing bank capital requirements 
C) acting as a lender of last resort 
D) opening a liquidity trap

Question 20

Since the early 1980s, shadow banks have increased because they:

Accepted Answer

A) are not subject to capital requirements and reserve requirements. 
B) offer online bill payment to their depositors. 
C) pay lower interest rates on their deposits than commercial banks. 
D) offer lower interest rates on their commercial loans than commercial banks. 
A) are not subject to capital requirements and reserve requirements. 
B) offer online bill payment to their depositors. 
C) pay lower interest rates on their deposits than commercial banks. 
D) offer lower interest rates on their commercial loans than commercial banks.

Spain's financial difficulties following the crisis of 2008 were due primarily to a housing bubble.

Following a severe banking crisis, the average length of time that it takes the unemployment rate to begin to fall is _____ years.

Resolution authority means that:

The Dodd-Frank bill addressed all of the following issues EXCEPT:

Which of the following is an explanation of banking crises?

Following the banking crisis that began in 2007, the unemployment rate in Ireland, which had been less than 5%, increased above 10%.

One of the first forms of paper money emerged when:

Depository banks:

After a banking crisis, when the Federal Reserve buys government securities to increase the money supply and decrease interest rates:

In 2010, Congress passed the Dodd-Frank Act, which was designed to improve regulation of the financial sector and avoid another financial crisis like the one of 2008.

The Dodd-Frank bill established the Consumer Financial Protection Bureau to help consumers understand the financial impact of Social Security.

The purpose of the Consumer Financial Protection Bureau is to:

Explain the difference between fiscal stimulus and fiscal austerity in dealing with the recessions that occurred in many countries after the 2008 financial crisis.

Before the 2008 financial crisis, Spain had _ debt and a budget _.

Proponents argued that fiscal stimulus was appropriate after the 2008 financial crisis because:

Debt overhang is the result of:

Which of the following is intended to prevent bank runs?

The panic of 1873 began when:

Which of the following is an action of central banks and governments to lessen the severity of a banking crisis?

Since the early 1980s, shadow banks have increased because they:

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Exam 17: Crises and Consequences

Spain's financial difficulties following the crisis of 2008 were due primarily to a housing bubble.

Following a severe banking crisis, the average length of time that it takes the unemployment rate to begin to fall is _____ years.

Resolution authority means that:

The Dodd-Frank bill addressed all of the following issues EXCEPT:

Which of the following is an explanation of banking crises?

Following the banking crisis that began in 2007, the unemployment rate in Ireland, which had been less than 5%, increased above 10%.

One of the first forms of paper money emerged when:

Depository banks:

After a banking crisis, when the Federal Reserve buys government securities to increase the money supply and decrease interest rates:

In 2010, Congress passed the Dodd-Frank Act, which was designed to improve regulation of the financial sector and avoid another financial crisis like the one of 2008.

The Dodd-Frank bill established the Consumer Financial Protection Bureau to help consumers understand the financial impact of Social Security.

The purpose of the Consumer Financial Protection Bureau is to:

Explain the difference between fiscal stimulus and fiscal austerity in dealing with the recessions that occurred in many countries after the 2008 financial crisis.

Before the 2008 financial crisis, Spain had _____ debt and a budget _____.

Proponents argued that fiscal stimulus was appropriate after the 2008 financial crisis because:

Debt overhang is the result of:

Which of the following is intended to prevent bank runs?

The panic of 1873 began when:

Which of the following is an action of central banks and governments to lessen the severity of a banking crisis?

Since the early 1980s, shadow banks have increased because they:

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Before the 2008 financial crisis, Spain had _ debt and a budget _.