To equal M1 money supply, the monetary base:
a. is multiplied by the money multiplier
b. is added to by the money multiplier
c. is subtracted from the money multiplier
d. none of the above
One way a firm can reduce the amount of cash it needs in any one month is to
a. slow down the payment of receivables
b. delay the payment of wages
c. speed up the payment of taxes
d. speed up the payment of wages
e. none of the above
Assume that a bank receives a primary deposit of $1,000, and the reserve requirement is
15%. Which of the following would reflect the asset side of the balance sheet after a
maximum loan amount has just been made?
a. reserves of $1,000
b. deposits of $1,000
c. reserves of $1,000 and loans of $150
d. reserves of $1,000 and loans of $850
Which of the following bonds has the greatest interest rate risk?
a. a 5 year, 10% coupon bond
b. a 10 year, 10% coupon bond
c. a 5 year, 5% coupon bond
d. a 10 year, 5% coupon bond
In fall 2008, the U.S. Congress and President George W. Bush responded to the
financial crisis with the passage of the _____________ in early October of that year.
a. Economic Stimulus Act
b. Economic Recovery Act
c. Economic Stabilization Act
d. Economic Booster Act
e. none of the above
The operating break-even sales level is sensitive to all of the following variables except:
a. fixed operating costs
b. sales price per unit
c. variable operating cost per unit
d. sales commissions expense
e. it is sensitive to all of the above variables
The National Banking Acts of 1863 and 1864 were:
a. totally eliminated under the Federal Reserve Act of 1913
b. were modified to permit greater flexibility of operations under the Federal Reserve
Act of 1913
c. were unaffected by the Federal Reserve Act of 1913
d. none of the above
Financial institutions include:
a. banks
b. pension funds
c. insurance companies
d. all of the above
You put $2,000 in an IRA account at Northern Trust. This account pays a fixed interest
rate of 8% compounded quarterly. How much money do you have in five years?
a. $2,914
b. $2,938
c. $2,972
d. $2,999
A draft that is not accompanied by any special documents and generally used when the
exporter has confidence in the importer’s ability to meet the draft when presented is
known as:
a. an order bill of lading
b. a clean draft
c. a documentary sight draft
d. none of the above
The demand for loanable funds comes from all sectors of the economy.
The effective annual rate is determined by multiplying the interest rate charged per
period by the number of periods in a year.
Nations that continually operate with an international trade surplus will become
economically stronger.
The structure of the modern banking system includes commercial banks, savings and
loans, mutual savings banks, and credit unions.
A line of credit costs the firm only the normal interest for the period during which
money is actually borrowed.
The delivery or transmission float is the delay in transferring the means of payment
from the payor (customer) to the payee (the provider of goods or services).
Profits from a proprietorship are taxed at the corporate income tax rates.
The use of ‘continentals’ led to a long period of distrust of paper money.
Standard deviation is the square root of the variance.