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1) The Federal Home Loan Bank Board and the FSLIC, both of which failed in their
regulatory tasks, were abolished by the
A) Competitive Equality Banking Act of 1987
B) Financial Institutions Reform, Recovery and Enforcement Act of 1989
C) Office of Thrift Supervision
D) Office of the Comptroller of the Currency
2) An expansionary monetary policy increases net exports by ________ interest rates
and ________ the value of the dollar
A) lowering nominal; decreasing
B) lowering real; decreasing
C) raising nominal; increasing
D) raising real; increasing
3) Under the Bretton Woods system, a country running a balance of payments deficit
________ international reserves, and had to implement ________ monetary policy to
strengthen its currency
A) lost; expansionary
B) lost; contractionary
C) gained; expansionary
D) gained; contractionary
4) Of money's three functions, the one that distinguishes money from other assets is its
function as a
A) store of value
B) unit of account
C) standard of deferred payment
D) medium of exchange
5) When rare coin prices become volatile, the ________ curve for bonds shifts to the
________, everything else held constant
A) demand; right
B) demand; left
C) supply; right
D) supply; left
6) An increase in the monetary base that goes into ________ is not multiplied, while an
increase that goes into ________ is multiplied
A) deposits; currency
B) excess reserves; currency
C) currency; excess reserves
D) currency; deposits
7) The Federal Reserve Bank of ________ plays a special role in the Federal Reserve
System because it houses the open market desk
A) Boston
B) New York
C) Chicago
D) San Francisco
8) The amount of checkable deposits that banks are required by regulation to hold are
the
A) excess reserves
B) required reserves
C) vault cash
D) total reserves
9) Because prices are sticky in the short-run, when the Federal Reserve raises the
federal funds rate,
A) nominal interest rates fall
B) real interest rates rise
C) inflation falls
D) real interest rates fall
10) The belief that bank failures were regularly caused by fraud or the lack of sufficient
bank capital explains, in part, the passage of
A) the National Bank Charter Amendments of 1918
B) the Garn-St Germain Act of 1982
C) the National Bank Act of 1863
D) Federal Reserve Act of 1913
11) A disadvantage of virtual banks (clicks) is that
A) their hours are more limited than physical banks
B) they are less convenient than physical banks
C) they are more costly to operate than physical banks
D) customers worry about the security of on-line transactions
12) A contractionary monetary policy raises the real interest rate, causing the domestic
currency to ________, thereby ________ net exports
A) appreciate; raising
B) appreciate; lowering
C) depreciate; raising
D) depreciate; lowering
13) Who has regulatory responsibility when a bank operates branches in many
countries?
A) It is not always clear
B) The WTO
C) The US Federal Reserve System
D) The first country to submit an application
14) If you default on your auto loan, your car will be repossessed because it has been
pledged as ________ for the loan
A) interest
B) collateral
C) dividend
D) commodity
