In the event that a firm goes bankrupt and is liquidated, who is paid off first, second,
and third between workers, debt holders, and stockholders?
a. (1) debt holders; (2) workers; (3) stockholders
b. (1) stockholders; (2) workers; (3) debt holders
c. (1) workers; (2) debt holders; (3) stockholders
d. (1) workers; (2) stockholders; (3) debt holders
Answer:
Which of the following illustrates a difference between the Federal Reserve and the
Federal Deposit Insurance
Corporation?
a. The Fed supervises most of the largest banks; whereas the Federal Deposit Insurance
Corporation has mostly
very small banks under its supervision.
b. The Fed supervises state banks that do are not the members of the Federal Reserve
System; whereas the
Federal Deposit Insurance Corporation supervises all financial holding companies.
c. The Fed supervises national banks that are not in Financial Holding Companies or
bank holding companies;
whereas the Federal Deposit Insurance Corporation supervises bank holding companies.
d. The Fed supervises credit unions; whereas the Federal Deposit Insurance Corporation
supervises thrift
institutions.
Answer:
In broad nominal terms, the dollar
a. depreciated against other currencies from 1988 to 2001 and from 2001 to 2008
b. depreciated against other currencies from 1988 to 2001 and appreciated against those
currencies from 2001 to 2008
c. appreciated against other currencies from 1988 to 2001 and from 2001 to 2008
d. appreciated against other currencies from 1988 to 2001 and depreciated against those
currencies from 2001 to 2008
Answer:
For every dollar’s worth of goods and services bought today, the amount of money it
will take in Nyears to buy the same amount of goods and services when the average
future inflation rate is pe is called the________.
a. realized inflation discount factor.
b. future inflation discount factor.
c. future-augmented inflation factor.
d. past-adjusted inflation factor.
Answer:
The believe that an economy will adjust on its own without any government policy
interventions.
a. Keynesians
b. classical economists
c. monetarists
d. institutional economists
Answer:
If the growth rate of the money supply is 4 percent, the growth rate of velocity of
money is 1 percent, and real output growth is 2 percent, what is the inflation rate?
a. −3 percent
b. −1 percent
c. +1 percent
d. +3 percent
Answer:
Which of the following statements is true?
a. The annual income from securities far exceeds the annual expenditures of the Federal
Reserve Bank.
b. The Federal Reserve Bank’s president is elected for a fourteen year renewable term.
c. All banking services provided by the Federal Reserve Bank are free of charge.
d. The Federal reserve Bank delegates its open market operations to smaller commercial
banks.
Answer:
U.S. currency is currently
a. representative money.
b. full-bodied money.
c. inside money.
d. fiat money.
Answer:
Monetary policy can affect the level of output
a. only in the short run.
b. only in the long run.
c. in both the short run and long run.
d. in neither the short run nor the long run.
Answer:
Which of the following is an example of a solvent bank?
a. A bank that is out of funds to meet the demand of customers
b. A bank with negative equity capital
c. A bank that has high default risk on debt issue
d. A bank with positive equity capital
Answer:
If the M2 multiplier is currently 8 and people decide to increase the ratio of currency
they hold relative to the amount of transactions accounts they hold, the M2 multiplier
will
a. not change.
b. increase substantially.
c. decrease.
d. increase slightly.
Answer:
Consider the following production function
Y= A×Ka×L1−a.
If a = 0.4, and over the past year output grew 4 percent, total factor productivity (TFP)
grew 2.6 percent, and labor grew 1 percent, what was the growth rate of capital?
a. 4 percent
b. 3 percent
c. 2 percent
d. 1 percent
Answer:
After amortizing the principal, a debt security that makes the same dollar payment
every year is referred to as a
a. coupon bond.
b. fixed-payment security.
c. discount bond.
d. perpetuity.
Answer:
The owner of a financial security is known as
a. an investor.
b. a debtor.
c. a broker.
d. a securitor.
Answer:
Americans should not worry about all the dollars held by foreigners because
a. most of the currency is reinvested into America.
b. taxes are lower as a result.
c. interest rates are lower as a result.
d. stock prices are higher as a result.
Answer:
The government provides deposit insurance through the
a. FDIC.
b. FHC.
c. FSLIC.
d. IDC.
Answer:
Bank supervisors around the world use a common measurement standard for capital
adequacy, based on agreement known as the .
a. Bank Holding Record
b. balance sheet
c. Redlining
d. Basel Accord
Answer:
Everything else remaining unchanged, a decrease in the supply of security A and an
increase in the demand for security B will cause the price of security A to_____ and the
price of security B to_____ .
a. fall; fall
b. fall; rise
c. rise; fall
d. rise; rise
Answer:
In the Asian crisis, which began in 1997,
a. investors began to pull their financial investments out of Asia with urgency.
b. large banks from Asia began purchasing large American banks, threatening the health
of the U.S. financial system.
c. mutual funds in Asia began to fail in large numbers.
d. savings-and-loan institutions in Asia began to fail in large numbers.
Answer:
Which of the following is a criticism leveled against VAR models?
a. VAR models are based on classical rather than Keynesian economic theory.
b. Var models are not based on data.
c. VAR models are unable to isolate the effects of policy variables because those
variables are not exogenous.
d. VAR models isolate the effects of policy variables because those variables are
exogenous variables.
Answer:
In addition to paying interest on reserves starting in October 2008, the Fed also
provided
a. lending against a variety of collateral, such as commercial paper and
mortgage-backed securities.
b. advice on how to conduct contemporaneous reserve accounting.
c. the power for banks to print and distribute their own currency.
d. staff people to help banks make real-estate decisions regarding the locations of their
branch offices.
Answer:
At the starting point of a dynamic model,
a. all variables measure zero.
b. key variables of a model are growing at a decreasing rate.
c. key variables of a model are growing at an increasing rate.
d. key variables in the model are constant or growing at a constant rate.
Answer:
Another name for the monetary base is
a. commodity money.
b. fiat money.
c. high-powered money.
d. bank reserves.
Answer:
A Federal Reserve policymaker voting for option A is most likely doing so because of a
need to
a. tighten monetary policy.
b. maintain monetary policy at an unchanged level.
c. ease monetary policy.
d. give the chairman discretion to change monetary policy.
Answer:
Which of the following statements is true of commodity money?
a. The manufacturing cost is cheaper than that of fiat money.
b. Large quantities of commodity money may not be portable.
c. The most common example of commodity money is paper currency.
d. Commodity money has value because it is decreed by the government.
Answer:
A company that transfers funds from savers to borrowers by receiving funds from
savers and investing in securities issued by borrowers is known as a(n)
a. broker.
b. financial intermediary.
c. stock exchange.
d. venture capitalist.
Answer:
A model that is based on the decisions of economic agents is known as
a. a rational-expectations model.
b. a decision-theoretic model.
c. a model with microeconomic foundations.
d. a fully compatible real business cycle model.
Answer:
Most commonly, companies issue a(n)____ dividend.
a. quarterly
b. semiannual
c. annual
d. monthly
Answer:
In the two-period model, suppose a household’s income in the first period is $40,000,
income in the second period is $50,000, and the real interest rate is 25 percent. The
government proposes to give the household a tax rebate of $5,000 in the first period, but
will tax the household an additional $5,000 × 25 = $6,250 in the second period. The
household is____ under the government’s tax rebate plan compared with before.
a. better off
b. worse off
c. equally well off
d. possibly better off and possibly worse off
Answer:
Which of the following options would you choose to have if the rate of discount is 20
percent?
a. $300 in one year
b. $350 in two years
c. $420 in three years
d. $1500 in ten years
Answer:
The Beigebook is
a. a report on recent international economic conditions and forecasts for the next two
years.
b. a discussion of alternative policy choices and the implications of those choices.
c. a report on local economic conditions.
d. a report on Federal revenue and expenditure.
Answer:
Which act set a limit to prevent a bank from merging with other if it would increase its
liabilities to more than 10 percent of national bank liabilities?
a. The Gramm-Leach-Bliley Act
b. The Community Reinvestment Act
c. The Dodd-Frank Act
d. The Interstate Banking and Branching Efficiency Act
Answer:
If the Open-Market Desk at the Fed sells securities, the most likely effect is that the
a. federal funds rate decreases.
b. primary credit discount rate decreases.
c. primary credit discount rate increases.
d. federal funds rate increases.
Answer:
If a stock’s price is $20 at the beginning of a year and $17 at the end of the year, and it
pays a dividend of $2 during the year, then the stock’s return is____ percent.
a. −15
b. −5
c. 5
d. 10
Answer: