University of California, Los Angeles, CA
ECON 2, Winter 2025
Final Exam - V1
Thursday, March 20, 2025
NAME:
INSTRUCTIONS:
• Write your name above and also shade in carefully on the scantron along with your
ID. Write the version number at the top of the scantron.
• Make sure your answer is shaded in pencil on your scantron. There’s only
ONE correct answer per question. Do your scratch work on this script. You
may also indicate your answer on this script as a failsafe.
1
,Post-Midterm 2 Material
Chapter 16: Money, Banking and the Federal Reserve
In 2012, the median sales price of new houses sold in the United States was approximately
$245,200. At that time, Bitcoin’s price ranged from $4 to $13.50. By 2024, the median
sales price of new houses had risen to approximately $419,200, while Bitcoin’s price had
surged to around $83,827.31.
1. This change in the number of Bitcoin required to purchase a house over time
illustrates Bitcoin’s role as a:
(a) Medium of exchange
(b) Unit of account
(c) Store of value
(d) Standard of deferred payment
(e) Measure of economic welfare
2. Many individuals and businesses are exploring cryptocurrencies like Bitcoin and
Ethereum as alternatives to traditional fiat money. Compared to physical cash, a
cryptocurrency would most likely enhance which characteristic of money?
(a) Durability
(b) Portability
(c) Limited supply
(d) Non-counterfeitability
(e) Divisibility
3. In March 2025, President Donald Trump signed an executive order to establish a
Strategic Bitcoin Reserve, using Bitcoin obtained through criminal and civil asset
forfeiture. Suppose this policy leads to increased public confidence in
cryptocurrencies. Based on economic principles, which of the following is the most
likely short-term macroeconomic effect?
(a) Increase in Bitcoin prices due to higher demand
(b) U.S. money supply increases, causing inflation
(c) U.S. dollar collapses as Bitcoin replaces it
(d) Stock market crashes as investors shift to Bitcoin
(e) Mass consumer spending surge due to Bitcoin gains
4. Say the Bruin Bank lends a UCLA student organization $150,000 to set up a new
franchise on campus. On their respective balance sheets, this loan is:
(a) an asset to the bank and a liability for the student org.
(b) an asset to the bank and an asset for the student org.
(c) a liability to the bank and a liability for the student org.
(d) a liability to the bank and an asset for the student org.
2
, 5. Which of the following is correct?
(i) According to economists, ”money” means the same thing as ”wealth”.
(ii) Fiat currency is an imperfect store of value
(iii) The money multiplier equals 1/(1-R) where R represents the reserve ratio.
(a) (i) True (ii) False (iii) True
(b) (i) True (ii) True (iii) False
(c) (i) False (ii) False (iii) False
(d) (i) False (ii) True (iii) True
(e) None of the given combinations are correct.
A bank has the following balance sheet:
Assets Liabilities
Reserves: $30M Deposits: $200M
Loans: $220M Debt: $50M
Securities $50M Shareholders’ Equity: ?
6. Based on the initial balance sheet, what is the bank’s shareholders’ equity?
(a) $30M
(b) $50M
(c) $80M
(d) $100M
(e) $120M
7. What was the bank’s leverage ratio using the Mankiw formula and what does it
mean?
(a) 4.4; total loans are 4.4 times its equity
(b) 6; total assets are six times shareholders’ equity.
(c) 6; its debt is 6 times its equity
(d) 8; bank’s total assets are eight times its equity, making it highly leveraged.
(e) None of the given answers are correct
8. In light of work from home policies, the bank suffers $60M in losses on its corporate
loan portfolio, while all other assets and liabilities remains unchanged. What is the
bank’s new financial status?
(a) Still solvent with positive equity
(b) At risk, but only if depositors withdraw funds
(c) Able to continue operations since losses do not impact liquidity
(d) Insolvent because liabilities now exceed assets
(e) We need more information to answer this question
3
ECON 2, Winter 2025
Final Exam - V1
Thursday, March 20, 2025
NAME:
INSTRUCTIONS:
• Write your name above and also shade in carefully on the scantron along with your
ID. Write the version number at the top of the scantron.
• Make sure your answer is shaded in pencil on your scantron. There’s only
ONE correct answer per question. Do your scratch work on this script. You
may also indicate your answer on this script as a failsafe.
1
,Post-Midterm 2 Material
Chapter 16: Money, Banking and the Federal Reserve
In 2012, the median sales price of new houses sold in the United States was approximately
$245,200. At that time, Bitcoin’s price ranged from $4 to $13.50. By 2024, the median
sales price of new houses had risen to approximately $419,200, while Bitcoin’s price had
surged to around $83,827.31.
1. This change in the number of Bitcoin required to purchase a house over time
illustrates Bitcoin’s role as a:
(a) Medium of exchange
(b) Unit of account
(c) Store of value
(d) Standard of deferred payment
(e) Measure of economic welfare
2. Many individuals and businesses are exploring cryptocurrencies like Bitcoin and
Ethereum as alternatives to traditional fiat money. Compared to physical cash, a
cryptocurrency would most likely enhance which characteristic of money?
(a) Durability
(b) Portability
(c) Limited supply
(d) Non-counterfeitability
(e) Divisibility
3. In March 2025, President Donald Trump signed an executive order to establish a
Strategic Bitcoin Reserve, using Bitcoin obtained through criminal and civil asset
forfeiture. Suppose this policy leads to increased public confidence in
cryptocurrencies. Based on economic principles, which of the following is the most
likely short-term macroeconomic effect?
(a) Increase in Bitcoin prices due to higher demand
(b) U.S. money supply increases, causing inflation
(c) U.S. dollar collapses as Bitcoin replaces it
(d) Stock market crashes as investors shift to Bitcoin
(e) Mass consumer spending surge due to Bitcoin gains
4. Say the Bruin Bank lends a UCLA student organization $150,000 to set up a new
franchise on campus. On their respective balance sheets, this loan is:
(a) an asset to the bank and a liability for the student org.
(b) an asset to the bank and an asset for the student org.
(c) a liability to the bank and a liability for the student org.
(d) a liability to the bank and an asset for the student org.
2
, 5. Which of the following is correct?
(i) According to economists, ”money” means the same thing as ”wealth”.
(ii) Fiat currency is an imperfect store of value
(iii) The money multiplier equals 1/(1-R) where R represents the reserve ratio.
(a) (i) True (ii) False (iii) True
(b) (i) True (ii) True (iii) False
(c) (i) False (ii) False (iii) False
(d) (i) False (ii) True (iii) True
(e) None of the given combinations are correct.
A bank has the following balance sheet:
Assets Liabilities
Reserves: $30M Deposits: $200M
Loans: $220M Debt: $50M
Securities $50M Shareholders’ Equity: ?
6. Based on the initial balance sheet, what is the bank’s shareholders’ equity?
(a) $30M
(b) $50M
(c) $80M
(d) $100M
(e) $120M
7. What was the bank’s leverage ratio using the Mankiw formula and what does it
mean?
(a) 4.4; total loans are 4.4 times its equity
(b) 6; total assets are six times shareholders’ equity.
(c) 6; its debt is 6 times its equity
(d) 8; bank’s total assets are eight times its equity, making it highly leveraged.
(e) None of the given answers are correct
8. In light of work from home policies, the bank suffers $60M in losses on its corporate
loan portfolio, while all other assets and liabilities remains unchanged. What is the
bank’s new financial status?
(a) Still solvent with positive equity
(b) At risk, but only if depositors withdraw funds
(c) Able to continue operations since losses do not impact liquidity
(d) Insolvent because liabilities now exceed assets
(e) We need more information to answer this question
3
