ECON 2035- Final Exam Review
Questions and All Actual Answers.
Which of the following assets is the least liquid?
a savings account
a house
a U.S. Treasury bond
a share of publicly traded stock - Answer : a house
If a bank has $1 million in deposits and $400,000 in total reserves, with $200,000 in excess
reserves, the required reserve ratio must be
20%.
5%.
30%.
10%. - Answer Answer: 20%
Reserve Ratio = (Cash Reserve Ratio Reserve Requirement/Bank Deposits) x 100
Which of the following is NOT a form of a short-term loan in the shadow banking system?
bank deposits
commercial paper
repurchase agreements
money market mutual fund shares - Answer Answer: bank deposits
The original intention of the Fed's role as lender of last resort was to make loans to banks that
were
insolvent, but not illiquid.
both illiquid and insolvent.
illiquid, but not insolvent.
not illiquid nor insolvent. - Answer Answer: illiquid, but not insolvent
The era of bank panics in the United States was effectively ended by
, abandoning the gold standard.
establishing the Fed as lender of last resort.
implementing the gold standard.
introducing deposit insurance. - Answer Answer: introducing deposit insurance
The Federal Reserve district banks
do not engage in monetary policy
engage in monetary policy directly through discount lending
engage in monetary policy directly through open market operations
engage in monetary policy directly through their membership on the Federal Reserve
committees - Answer Answer: engage in monetary policy directly through discount lending
Which of the following is the most common goal for central banks of industrialized countries?
high economic growth
low inflation
low interest rates
high employment - Answer Answer: low inflation
Which of the following would cause the realistic money multiplier to increase?
A decrease in the discount rate.
An increase in the currency-to-deposit ratio.
An increase in the required reserve ratio.
A decrease in excess reserves relative to deposits. - Answer Answer: a decrease in excess
reserves relative to deposits
All of the following are associated with rising inflation EXCEPT
firms hesitating to enter into long-term contracts with suppliers.
families having trouble deciding how much to save for retirement.
income redistribution.
a steady decrease in interest rates. - Answer Answer: a steady decrease in interest rates
Questions and All Actual Answers.
Which of the following assets is the least liquid?
a savings account
a house
a U.S. Treasury bond
a share of publicly traded stock - Answer : a house
If a bank has $1 million in deposits and $400,000 in total reserves, with $200,000 in excess
reserves, the required reserve ratio must be
20%.
5%.
30%.
10%. - Answer Answer: 20%
Reserve Ratio = (Cash Reserve Ratio Reserve Requirement/Bank Deposits) x 100
Which of the following is NOT a form of a short-term loan in the shadow banking system?
bank deposits
commercial paper
repurchase agreements
money market mutual fund shares - Answer Answer: bank deposits
The original intention of the Fed's role as lender of last resort was to make loans to banks that
were
insolvent, but not illiquid.
both illiquid and insolvent.
illiquid, but not insolvent.
not illiquid nor insolvent. - Answer Answer: illiquid, but not insolvent
The era of bank panics in the United States was effectively ended by
, abandoning the gold standard.
establishing the Fed as lender of last resort.
implementing the gold standard.
introducing deposit insurance. - Answer Answer: introducing deposit insurance
The Federal Reserve district banks
do not engage in monetary policy
engage in monetary policy directly through discount lending
engage in monetary policy directly through open market operations
engage in monetary policy directly through their membership on the Federal Reserve
committees - Answer Answer: engage in monetary policy directly through discount lending
Which of the following is the most common goal for central banks of industrialized countries?
high economic growth
low inflation
low interest rates
high employment - Answer Answer: low inflation
Which of the following would cause the realistic money multiplier to increase?
A decrease in the discount rate.
An increase in the currency-to-deposit ratio.
An increase in the required reserve ratio.
A decrease in excess reserves relative to deposits. - Answer Answer: a decrease in excess
reserves relative to deposits
All of the following are associated with rising inflation EXCEPT
firms hesitating to enter into long-term contracts with suppliers.
families having trouble deciding how much to save for retirement.
income redistribution.
a steady decrease in interest rates. - Answer Answer: a steady decrease in interest rates
