Each regional Federal Reserve Bank is owned by
A) the member banks in its district.
B) the Federal Deposit Insurance Corporation.
C) those who purchase its stock on the open market.
D) the taxpayers in its district.
With respect to reserve requirements on bank deposits, the Board of Governors can set
them
A) at any level the Board desires.
B) at any level approved by the Federal Open Market Committee.
C) within the bounds of the specific limits imposed by Congress.
D) within the bounds of the specific limits set by the Secretary of the Treasury.
__________ trading volume promotes __________ bid-asked spreads.
A) Large; wide
B) Large; narrow
C) Small; narrow
D) None of the above.
A relatively steep aggregate demand curve indicates that
A) velocity is relatively constant.
B) the economy is near full employment.
C) inflation is relatively high.
D) spending is sensitive to changes in the price level.
Monetary policy is impotent when the LM curve is
A) vertical.
B) horizontal.
C) downward-sloping.
D) horizontal or downward-sloping.
Keynes argued that if the economy is in a severely depressed state then __________ is
constant.
A) real GDP
B) the price level
C) velocity
D) nominal GDP
The textbook defines any business with less than __________ in assets to be ‘small.”
A) $100,000,000
B) $10,000,000
C) $1,000,000
D) $500,000
The existence of multiple federal bank regulatory authorities has been permitted to
continue because
A) the regulators coordinate their activities well enough to avoid differences.
B) different types of banks require different kinds of regulation.
C) many regulatory authorities are necessary to insure the safety of depositor’s funds.
D) the legislative will to replace the current regulatory system has been lacking.
The rate of interest that equates saving and investment at full employment is called the
A) real rate.
B) nominal rate.
C) natural rate.
D) discount rate.
The full minutes of FOMC meetings are
A) released to the public immediately after the meeting.
B) released to the public only after the next meeting.
C) never released to the public.
D) always geared towards controlling inflation.
A call option has a strike price of $80. If the underlying stock is selling for $83 on the
expiration date, the intrinsic value of the call option is __________ per share.
A) $163
B) $83
C) $3
D) $0
Which of the following types of government bonds tend to be the most marketable?
A) “Off the run” bonds
B) “On the run” bonds
C) “Convertible” bonds
D) “Coupon” bonds
Marketable government securities consists of Treasury bills,
A) Treasury notes, and U.S. savings bonds.
B) Treasury notes, and Treasury bonds.
C) Treasury bonds, and federal funds.
D) U.S. saving bonds, and federal funds.
In dollar terms the most important of all forms of property and casualty insurance is
A) automobile liability insurance.
B) home owners insurance.
C) medical malpractice insurance.
D) fire insurance.
A gold sale by the U.S. Treasury
A) reduces bank reserves.
B) increases bank reserves.
C) increases Federal Reserve assets.
D) leaves bank reserves unaffected.
Which of the following is an equilibrium condition in the ISLM model?
A) Labor demand = labor supply
B) Desired investment = desired saving
C) Government spending = taxation
D) Money supply = income
As of the end of 1994, which of the countries in our survey had the closest match in size
between its stock and banking markets?
A) The United Kingdom
B) The United States
C) Japan
D) Germany
A 25-year floating rate mortgage has its rate adjusted twice a year. This gives it a
re-pricing maturity of
A) six months.
B) twenty-four years and six months.
C) twenty-five years.
D) fifty years.
Federal funds are
A) funds owned by the federal government.
B) funds owned by the Federal Reserve.
C) bank reserves that are lent overnight between banks.
D) bank reserves that are lent overnight by the Federal Reserve to banks.
The level of interest rates tends to __________ during periods of business cycle
expansion and __________ during periods of cyclical recession.
A) rise; rise
B) fall; rise
C) rise; fall
D) fall; fall
Commercial paper is mostly held by
A) corporations.
B) commercial banks.
C) bond mutual funds.
D) money market mutual funds.
The President of the United States appoints the
A) directors of the Federal Reserve regional banks.
B) presidents of the Federal Reserve regional banks.
C) Federal Advisory Council.
D) members of the Board of Governors of the Federal Reserve.
A severe storm that slows postal delivery will cause
A) a decrease in Federal Reserve float.
B) a decrease in Federal Reserve notes outstanding.
C) an increase in Federal Reserve float.
D) an increase in Federal Reserve notes outstanding.
At any point above the current IS curve, there is an
A) excess demand for goods.
B) excess supply of goods.
C) excess demand for money.
D) excess supply of money.