1) Mutual savings banks are owned by
A) shareholders
B) partners
C) depositors
D) foreign investors
2) If a bank has excess reserves of $7,000 and demand deposit liabilities of $100,000,
and if the reserve requirement is 10 percent, then the bank has actual reserves of
A) $14,000
B) $17,000
C) $22,000
D) $27,000
3) Aggregate demand in an economy with no government or foreign trade is
A) consumer expenditure plus actual investment
B) consumer expenditure plus planned investment
C) consumer expenditure plus inventory investment
D) consumer expenditure plus fixed investment
4) The expected return on dollar deposits in terms of foreign currency can be written as
the ________ of the interest rate on dollar deposits and the expected appreciation of the
dollar
A) product
B) ratio
C) sum
D) difference
5) The management of money and interest rates is called ________ policy and is
conducted by a nation’s ________ bank
A) monetary; superior
B) fiscal; superior
C) fiscal; central
D) monetary; central
6) Everything else held constant, when the inflation rate is expected to rise, interest
rates will ________; this result has been termed the ________
A) fall; Keynes effect
B) fall; Fisher effect
C) rise; Keynes effect
D) rise; Fisher effect
7) The declining cost of computer technology has made ________ a reality
A) brick and mortar banking
B) commercial banking
C) virtual banking
D) investment banking
8) Economists believe that countries recently suffering hyperinflation have experienced
A) reduced growth
B) increased growth
C) reduced prices
D) lower interest rates
9) According to aggregate demand and supply analysis, the negative supply shocks of
1973-1975 and 1978-1980 had the effect of
A) increasing aggregate output, lowering unemployment, and raising the inflation
B) decreasing aggregate output, raising unemployment, and raising the inflation
C) increasing aggregate output, raising unemployment, and raising the inflation
D) decreasing aggregate output, raising unemployment, and lowering the inflation
10) Assume a bank has $200 million of assets with a duration of 25, and $190 million
of liabilities with a duration of 105 The duration gap for this bank is
A) 05 year
B) 1 year
C) 15 years
D) 2 years
11) If net exports decrease by 250 and the mpc is 075, equilibrium aggregate output
A) increases by 1000
B) increases by 750
C) decreases by 750
D) decreases by 1000
12) Tobin’s q is defined as the market value of firms ________ the replacement cost of
capital
A) times
B) minus
C) plus
D) divided by
13) When tax revenues are greater than government expenditures, the government has a
budget
A) crisis
B) deficit
C) surplus
D) revision
14) An ECU was
A) a paper substitute for gold issued by the IMF
B) a loan by European countries to the IMF
C) a paper currency issued by the European Common Market
D) a monetary unit created by the European Monetary System
15) Which of the following is NOT an argument for the Federal Reserve paying interest
on excess reserve holdings?
A) Paying interest reduces the effective tax on deposits
B) Paying interest will help in the implementation of monetary policy
C) Paying interest will help the Federal Reserve have more control of the amount of
discount loans
D) Paying interest increases the capacity of the Fed’s balance sheet which will make it
easier to address financial crises
16) The equation that shows the amount of the monetary base needed to support
existing levels of checkable deposits, excess reserves, and currency is
A) MB = (rr D) + ER + C
B) MB = (rr + D) + ER + C
C) MB = + ER + C
D) MB = (rr D) – ER – C