1) Banks acquire the funds that they use to purchase income-earning assets from such
sources as
A) cash items in the process of collection
B) savings accounts
C) reserves
D) deposits at other banks
2) In the simple model of multiple deposit creation in which banks do not hold excess
reserves, the increase in checkable deposits equals the product of the change in reserves
and the
A) reciprocal of the excess reserve ratio
B) simple deposit expansion multiplier
C) reciprocal of the simple deposit multiplier
D) discount rate
3) Markets in which funds are transferred from those who have excess funds available
to those who have a shortage of available funds are called
A) commodity markets
B) fund-available markets
C) derivative exchange markets
D) financial markets
4) The short-run aggregate supply curve shifts to the right when
A) output gap is higher
B) output gap is lower
C) expected inflation is higher
D) expected inflation is lower
5) Conventional money demand functions tended to ________ money demand in the
middle and late 1970s, and ________ velocity beginning in 1982
A) overpredict; overpredict
B) overpredict; underpredict
C) underpredict; overpredict
D) underpredict; underpredict
6) Since it does not have to be converted into anything else to make purchases,
________ is the most liquid asset
A) money
B) stock
C) artwork
D) gold
7) A positive supply shock causes ________ to ________
A) aggregate demand; increase
B) aggregate demand; decrease
C) short-run aggregate supply; decrease
D) short-run aggregate supply; increase
8) Although the subprime mortgage market problem began in the United States, the first
indication of the seriousness of the crisis began in
A) Europe
B) Australia
C) China
D) South America
9) Which of the following is not a form of e-money?
A) a debit card
B) a credit card
C) a stored-value card
D) a smart card
10) If the price level increases, everything else held constant, the ________ curve shifts
to the ________
A) IS; right
B) IS; left
C) LM; left
D) LM; right
11) Everything else held constant, if interest rates are expected to fall in the future, the
demand for long-term bonds today ________ and the demand curve shifts to the
________
A) rises; right
B) rises; left
C) falls; right
D) falls; left
12) Banks that actively manage liabilities will most likely meet a reserve shortfall by
A) calling in loans
B) borrowing federal funds
C) selling municipal bonds
D) seeking new deposits
13) According to aggregate demand and supply analysis, the negative demand shock of
2000-2004 had the effect of
A) increasing aggregate output, lowering unemployment, and raising inflation
B) decreasing aggregate output, raising unemployment, and raising inflation
C) increasing aggregate output, lowering unemployment, and lowering inflation
D) decreasing aggregate output, raising unemployment, and lowering inflation
14) For simple loans, the simple interest rate is ________ the yield to maturity
A) greater than
B) less than
C) equal to
D) not comparable to
15) When the value of the British pound changes from $125 to $150, the pound has
________ and the US dollar has ________
A) appreciated; appreciated
B) depreciated; appreciated
C) appreciated; depreciated
D) depreciated; depreciated
16) If the Fed wants to temporarily inject reserves into the banking system, it will
engage in
A) a repurchase agreement
B) a matched sale-purchase transaction
C) a reverse repurchase agreement
D) an open market sale