If nominal GDP is $8 trillion, and the money supply is $2 trillion, velocity is
A) 0.25.
B) 4.
C) 8.
D) 16.
By taking the short position on a futures contract of $100,000 at a price of 96 you are
agreeing to ________ a ________ face value security for ________.
A) sell; $100,000; $96,000.
B) sell; $96,000; $100,000.
C) buy; $100,000; $96,000.
D) buy; $96,000; $100,000.
If the required reserve ratio is 10 percent, the simple deposit multiplier is
A) 5.0.
B) 2.5.
C) 100.0.
D) 10.0
Which of the following did not contribute to the failing of Freddie Mac and Freddie
Mae?
A) Problems with adverse selection.
B) Problems with moral hazard.
C) Weak regulatory oversight.
D) Unethical accounting practices.
A swap that involves the exchange of one set of interest payments for another set of
interest payments is called
A) an interest rate swap.
B) a currency swap.
C) a swaption.
D) an international swap.
Suppose that Wells Fargo Home Mortgage sells $10 million worth of mortgage
payments to GMAC in exchange for $10 million in auto loan payments. This type of
transaction is called a
A) credit option.
B) credit swap.
C) credit-linked note.
D) credit default swap.
Which of the following policy measures required the SEC to prevent issuers of
asset-backed securities from choosing the credit-rating agencies that will give them the
highest rating and supported earlier initiatives by the SEC?
A) the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
B) Sarbanes-Oxley Act of 2002
C) Global Legal Settlement of 2002
D) Gramm-Leach-Bliley Act of 1999
E) Riegle-Neal Act of 1994
Mutual savings banks are primarily regulated by
A) the states in which they are located.
B) the Federal Reserve.
C) the FDIC.
D) the National Credit Union Administration.
During the years 1979 to 1982, the Federal Reserve’s announced policy was monetary
targeting. During this time period the Federal Reserve
A) hit all of their monetary targets.
B) did not hit any of their monetary targets because it is believed that controlling the
money supply was not the intent of the Federal Reserve.
C) did not hit any of their monetary targets because they were unrealistic.
D) hit about half of their monetary targets.
Monetarists’ preference for reduced-form models is based on their belief that
A) reverse causation is a problem.
B) structural models may understate money’s effect on economic activity.
C) money supply changes are always endogenous.
D) monetary policy affects only investment spending.
An autonomous monetary policy easing temporarily ________ real interest rates and
________ aggregate output in the short run, but in the long run real interest rates and
aggregate output return to the equilibrium levels.
A) reduces; raises
B) reduces; lowers
C) increases; lowers
D) increases; raises
An increase in the liquidity of corporate bonds, other things being equal, shifts the
demand curve for corporate bonds to the ________ and the demand curve for Treasury
bonds shifts to the ________.
A) right; right
B) right; left
C) left; left
D) left; right
Over the next three years, the expected path of 1-year interest rates is 4, 1, and 1
percent. The expectations theory of the term structure predicts that the current interest
rate on 3-year bond is
A) 1 percent.
B) 2 percent.
C) 3 percent.
D) 4 percent.