Which policy measure bans spinning?
A) Sarbanes-Oxley Act of 2002
B) Global Legal Settlement of 2002
C) Gramm-Leach-Bliley Act of 1999
D) Riegle-Neal Act of 1994
An option that can be exercised at any time up to maturity is called
A) a swap.
B) a stock option.
C) an European option.
D) an American option.
Which of the following is a disadvantage to monetary targeting?
A) It relies on a stable money-inflation relationship.
B) There is a delayed signal about the achievement of a target.
C) It implies larger output fluctuations.
D) It implies a lack of transparency.
If investors expect interest rates to fall significantly in the future, the yield curve will be
inverted. This means that the yield curve has a ________ slope.
A) steep upward
B) slight upward
C) flat
D) downward
In the basic closed-economy ISLM model, as the interest sensitivity of money demand
increases, fiscal policy has ________ effect on output and monetary policy has
________ effect on output.
A) less; less
B) more; more
C) more; less
D) less; more
Conflicts of interest arising from management advisory services brought down
________ in 2002.
A) Enron
B) WorldComm
C) Arthur Andersen
D) Global Crossing
Assume a closed economy. Suppose that autonomous consumption equals $400,
planned investment equals $500, government expenditure equals $200, net taxes equals
$50, and the mpc equals 0.9.
Using the information in situation 20-2, if government increases their spending by $50
and increases net taxes by 50, then equilibrium aggregate output will change by
A) -$100.
B) -$50.
C) $50.
D) $100.
The regulatory agency responsible for regulating the activities of life insurance
companies is
A) the FDIC.
B) the Fed.
C) the FHLBS.
D) the appropriate state agency where the company is operating.
Which policy measure makes it unlawful for a registered public accounting firm to
provide any nonaudit service to a client contemporaneously with an impermissible
audit?
A) Sarbanes-Oxley Act of 2002
B) Global Legal Settlement of 2002
C) Gramm-Leach-Bliley Act of 1999
D) Riegle-Neal Act of 1994
An increase in the liquidity of corporate bonds will ________ the price of corporate
bonds and ________ the yield of Treasury bonds, everything else held constant.
A) increase; increase
B) reduce; reduce
C) increase; reduce
D) reduce; increase
Modern liability management has resulted in
A) increased sales of negotiable CDs to raise funds.
B) increase importance of deposits as a source of funds.
C) reduced borrowing by banks in the overnight loan market.
D) failure by banks to coordinate management of assets and liabilities.
If the relationship between the monetary aggregate and the goal variable is weak, then
A) monetary aggregate targeting is superior to exchange-rate targeting.
B) monetary aggregate targeting is superior to inflation targeting.
C) inflation targeting is superior to exchange-rate targeting.
D) monetary aggregate targeting will not work.
Positive spending shocks lead to ________ output ________.
A) higher; in both the short and long runs
B) higher; in the short run but not in the long run
C) lower; in both the short and long runs
D) lower; in the short run but not in the long run
To hedge the interest rate risk on $4 million of Treasury bonds with $100,000 futures
contracts, you would need to purchase
A) 4 contracts.
B) 20 contracts.
C) 25 contracts.
D) 40 contracts.
When we describe stock prices as following a random walk, we mean that future
changes in stock prices are
A) unpredictable.
B) increasing.
C) decreasing.
D) constant.