Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Under the Bretton Woods system, exchange rates were supposed to be adjusted
A) only when a country experienced fundamental disequilibrium.
B) daily.
C) weekly.
D) following each annual meeting of the board of governors of the International
Monetary Fund.
Answer:
The president of which Federal Reserve bank is always a voting member of the Federal
Open Market Committee?
A) Philadelphia
B) Boston
C) Chicago
D) New York
Answer:
Which function of money enhances the ability of households to accumulate wealth
A) medium of exchange
B) store of value
C) valuable relative to its weight
D) does not become worn out too quickly
Answer:
Since 1980, discount loans have been available
A) only to member banks of the Federal Reserve System.
B) only to national banks.
C) only to state banks.
D) to all depository institutions.
Answer:
Unlike the segmented markets theory, the expectations theory attributes the slope of the
yield curve to
A) tax considerations.
B) the fact that short-term bonds are not perfect substitutes for long-term bonds.
C) the market's view of future short-term interest rates.
D) the variance in the inflation rates over the business cycle.
Answer:
If there is a decrease in the expected future profitability of capital,
A) the aggregate demand curve will shift right.
B) the aggregate demand curve will shift left.
C) the aggregate demand curve will become steeper.
D) the aggregate demand curve will be unaffected.
Answer:
Which of the following would cause the nominal exchange rate to appreciate?
A) The real exchange rate depreciates.
B) The domestic inflation rate decreases.
C) The domestic inflation rate increases.
D) The government budget deficit decreases.
Answer:
If the Fed sells securities worth $10 million to a commercial bank, the Fed's balance
sheet will show
A) an increase in securities held of $10 million and an increase in bank reserves of $10
million.
B) an increase in securities held of $10 million and a decrease in bank reserves of $10
million.
C) a decrease in securities held of $10 million and an increase in bank reserves of $10
million.
D) a decrease in securities held of $10 million and a decrease in bank reserves of $10
million.
Answer:
In 2012, the European Central Bank bought the debt of which nation?
A) the United States
B) France
C) Spain
D) Germany
Answer:
Why are U.S. government securities referred to as a bank's secondary reserves?
A) Their current market value may count toward meeting a bank's legal reserve
requirements.
B) They are very liquid.
C) Banks are legally required to hold a certain minimum amount of these securities.
D) They are the same thing as vault cash.
Answer:
The yield to maturity is equal to
A) the interest rate at which the present value of an asset's returns is equal to its price
today.
B) the face value or par value of a coupon bond.
C) any payments received from an asset at the date the asset matures.
D) interest rate on the asset minus any taxes owed on the interest received.
Answer:
If there is a decrease in foreign demand for U.S. goods due to a recession in Europe
A) the U.S. aggregate demand will shift right.
B) the U.S. aggregate demand will shift left.
C) the U.S. aggregate demand will not be affected.
D) the U.S. aggregate demand will become steeper.
Answer:
If expected inflation declines by 2%, what should happen to nominal interest rates
according to the Fisher effect?
A) rise by 2%
B) fall by 2%
C) be cut in half
D) double in size
Answer:
What do many economists see finance companies as having an advantage in?
A) purchasing commercial paper
B) selling long-term securities
C) monitoring the value of collateral
D) charging consumers particularly low interest rates
Answer:
The Fed can implement open market operations
A) more rapidly than changes in reserve requirements, but less rapidly than changes in
the discount rate.
B) more rapidly than changes in the discount rate, but less rapidly than changes in
reserve requirements.
C) less rapidly than either changes in the discount rate or changes in reserve
requirements.
D) more rapidly than either changes in the discount rate or changes in reserve
requirements.
Answer:
The Fed uses operating targets as well as intermediate targets because
A) the Federal Reserve Act of 1913 requires it to do so.
B) the Fed controls intermediate targets only indirectly.
C) the public is much more unfamiliar with the variables used as operating targets, so
for policy to be effective intermediate targets must also be announced.
D) if one set of targets proves ineffective in attaining policy goals, the other set is
available.
Answer:
A checkable deposit that pays no interest is known as a
A) demand deposit.
B) certificate of deposit.
C) NOW account.
D) time deposit.
Answer:
In January 2010, President Obama appointed which of the following to be chair of the
Federal Reserve?
A) Greenspan
B) Bernanke
C) Geithner
D) Trichet
Answer:
Which of the following is NOT true of a fixed payment loan?
A) The borrower is required to make regular periodic payments to the lender.
B) The payments made by the borrower include both interest and principal.
C) The borrower is left with a substantial unpaid principal at the maturity of the loan.
D) A home mortgage is an example of fixed payment loan.
Answer:
A one-year discount bond with a par value of $1000 sold today, at issuance, for $943
has a yield to maturity of
A) 4.30%.
B) 5.70%.
C) 6.04%.
D) 9.43%.
Answer:
If a bank grants you a mortgage, the mortgage is
A) an asset to you as well as an asset to the bank.
B) an asset to you, but a liability to the bank.
C) a liability to you, but an asset to the bank.
D) a liability to you as well as a liability to the bank.
Answer:
All of the following are examples of borrowings by a bank EXCEPT
A) federal funds.
B) repurchase agreements.
C) discount loans.
D) commercial loans.
Answer:
Which president failed to renew the charter of the Second Bank of the United States?
A) George Washington
B) Andrew Jackson
C) Franklin Roosevelt
D) Lyndon Johnson
Answer:
If the Japanese yen appreciates against the U.S. dollar,
A) Japanese businesses gain by a decrease in the dollar price of exports to the United
States.
B) Japanese consumers gain by a decrease in the yen price of U.S. exports to Japan.
C) Japanese consumers lose by an increase in the yen price of U.S. exports to Japan.
D) U.S. consumers gain by an decrease in the dollar price of Japanese exports to the
United States.
Answer:
What is the maximum amount a bank can lend?
A) its total reserves
B) its excess reserves
C) its excess reserves divided by the required reserve ratio
D) the value of its checkable deposits times the required reserve ratio
Answer:
The formula for the yield to maturity, i, on a discount bond is
A) i = (Face value - Discount price)/Discount price.
B) i = (Discount price - Face value)/Discount price.
C) i = (Face value - Discount price)/Face value.
D) i = (Discount price - Face value)/Face value.
Answer:
In the long run, one-time increases or decreases in the nominal money supply affect
A) real output, but not the price level.
B) the price level, but not real output.
C) both real output and the price level.
D) neither real output nor the price level.
Answer:
Given the behavior of the stock market in recent years:
A) most economists still think the efficient markets hypothesis is an accurate
description of the daily behavior of the stock market
B) most economists think the efficient markets hypothesis provides little insight into the
behavior of the stock market
C) most economists think the rational investor can outperform the stock market in the
long run
D) many economists still believe that it is unlikely that investors can hope to earn
above-average returns in the stock market by following traditional strategies
Answer:
How does the Fed reach its target for the federal funds rate?
A) by changing the discount rate
B) by changing reserve requirements
C) by adjusting the level of reserves
D) by directly setting the federal funds rate
Answer:
A speculator who believes strongly that interest rates will fall would be likely to
A) buy futures contracts on Treasury bills.
B) sell futures contracts on Treasury bills.
C) sell Treasury bonds in the spot market.
D) decrease now the amount of money which he lends.
Answer:
Regulation Q
A) prohibited interstate banking.
B) placed ceilings on allowable interest rates on time and savings deposits.
C) required all banks to hold reserves against demand deposits.
D) broadened the basis on which the Fed could make discount loans.
Answer:
Which of the following is NOT a role of Federal Reserve Banks?
A) conduct discount lending
B) serve on the FOMC
C) set the interest rate on reserves
D) manage check clearing in the banking system
Answer:
Given that most banks have positive gap and negative durations, banks prefer
A) lower market interest rates.
B) higher market interest rates.
C) higher market fixed rates but lower market floating rates.
D) either higher or lower market interest rates since interest rates have little effect on
bank profits.
Answer:
All of the following are problems associated with commodity money EXCEPT
A) it is a cumbersome form of payments system.
B) commodities tend to have little value in and of themselves.
C) its value is dependent on its purity.
D) costs are incurred in certifying the purity and weight of commodity money.
Answer:
