1) Although the National Bank Act of 1863 was designed to eliminate state-chartered
banks by imposing a prohibitive tax on banknotes, these banks have been able to stay in
business by
A) issuing credit cards
B) ignoring the regulations
C) acquiring funds through deposits
D) branching into other states
2) In the Keynesian cross diagram, an increase in autonomous consumer expenditure
causes the aggregate demand function to shift ________ and the equilibrium level of
aggregate output to ________, everything else held constant
A) up; rise
B) up; fall
C) down; rise
D) down; fall
3) Because of the abuses by state banks and the clear need for a central bank to help the
federal government raise funds during the War of 1812, Congress created the
A) Bank of United States in 1812
B) Bank of North America in 1814
C) Second Bank of the United States in 1816
D) Second Bank of North America in 1815
4) A capital ________ can promote financial instability in an emerging-market country
because it can lead to a lending boom and excessive risk-taking on the part of banks,
which helps trigger a ________
A) inflow; financial crisis
B) inflow; currency devaluation
C) outflow; financial crisis
D) outflow; currency devaluation
5) A higher ________ means that an asset’s return is more sensitive to changes in the
value of the market portfolio
A) alpha
B) beta
C) CAPM
D) APT
6) A firm issuing credit cards earns income from
A) loans it makes to credit card holders
B) subsidies from the local governments
C) payments made to it by manufacturers of the products sold in stores on credit card
purchases
D) sales of the card in foreign countries
7) According to PPP, the real exchange rate between two countries will always equal
A) 00
B) 05
C) 10
D) 15
8) Which of the following criteria need not be satisfied for choosing a policy
instrument?
A) The variable must be measurable
B) The variable must be controllable
C) The variable must be predictable
D) The variable must be transportable
9) When the federal funds rate equals the discount rate
A) the supply curve of reserves is vertical
B) the supply curve of reserves is horizontal
C) the demand curve for reserves is vertical
D) the demand curve for reserves is horizontal
10) Like the dual banking system for commercial banks, thrifts can have either
________ or ________ charters
A) state; federal
B) state; local
C) local; federal
D) municipal; federal
11) The argument that econometric policy evaluation is likely to be misleading if
policymakers assume stable economic relationships is known as
A) the monetarist revolution
B) the Lucas critique
C) public choice theory
D) new Keynesian theory
12) FDICIA ________ incentives for banks to hold capital and ________ incentives to
take on excessive risk
A) increased; decreased
B) increased; increased
C) decreased; decreased
D) decreased; increased
13) Everything else held constant, if a central bank makes a sterilized purchase of
foreign assets, then the domestic currency will
A) appreciate
B) depreciate
C) either appreciate, depreciate, or remain constant
D) not be affected
14) Net profit after taxes per dollar of assets is a basic measure of bank profitability
called
A) return on assets
B) return on capital
C) return on equity
D) return on investment
15) Of the sources of external funds for nonfinancial businesses in the United States,
corporate bonds and commercial paper account for approximately ________ of the total
A) 5%
B) 10%
C) 32%
D) 50%