Week 3 – Chapters 1, 4 and 5 Quiz

  • Question 1

    2 out of 2 points

    Correct

    A basic requirement for an effective financial system is a monetary system that performs which of the following financial functions?

    Answers:

    formation and transferring of money

    storing gold and silver to back up money

    creating jobs

    transferring real assets

  • Question 2

    2 out of 2 points

    Correct

    Examples of automatic stabilizers are (choose one)

    Answers:

    open market operations.

    changes in the discount rate.

    unemployment insurance.

    issuance of currency.

  • Question 3

    2 out of 2 points

    Correct

    Before the Federal Reserve System was created, a large part of the reserves of commercial banks was

    Answers:

    in the form of state and federal government bonds.

    deposited with the United States Treasury.

    held as deposits with large city banks.

    held as cash in their vaults.

  • Question 4

    2 out of 2 points

    Correct

    Banking system reserves plus currency held by the nonbank public is referred to as the

    Answers:

    money supply.

    monetary base.

    monetary multiplier.

    monetary requirement.

  • Question 5

    2 out of 2 points

    Correct

    Functions of the monetary system include which of the following:

    Answers:

    creating money

    designing money

    storing money

    exchanging money for goods and services

  • Question 6

    2 out of 2 points

    Correct

    __________ are electronic markets in which banks and institutional traders buy and sell various currencies on behalf of businesses and other clients.

    Answers:

    Debt securities markets

    Bond markets

    Foreign exchange markets

    Equity Securities markets

    Derivative securities markets

  • Question 7

    2 out of 2 points

    Correct

    ______________ behavior refers to how an individual or organization treats others legally, fairly, and honestly.

    Answers:

    Principal-agent

    Stakeholder

    Responsible

    Ethical

    none of the above

  • Question 8

    2 out of 2 points

    Correct

    Continuing federal programs that stabilize economic activity are called

    Answers:

    transfer payments.

    automatic stabilizers.

    social insurance programs.

    safety net programs.

  • Question 9

    0 out of 2 points

    Incorrect

    Involves preparing financial statements for tax purposes.

    Answers:

    Cash management analyst

    Capital expenditures analyst

    Credit analyst

    Cost analyst

    Tax analyst

  • Question 10

    2 out of 2 points

    Correct

    The effect of an increase of required reserves by the Fed is

    Answers:

    a decrease in loanable funds of depository institutions.

    a decrease in interest rates.

    an increase of excess reserves.

    to stimulate activity in the home construction field.

  • Question 11

    2 out of 2 points

    Correct

    If the reserve requirement is 25% and $5,000 is injected into the banking system, the maximum expansion in the money supply would be

    Answers:

    $1,250.

    $20,000.

    $6,667.

    $4,000.

  • Question 12

    2 out of 2 points

    Correct

    Almost all Treasury disbursements are made by

    Answers:

    checks drawn directly on the U.S. Treasury.

    check drawn against deposits at commercial banks in large cities.

    drafts drawn on member banks.

    checks drawn against deposits at Federal Reserve Banks.

  • Question 13

    2 out of 2 points

    Correct

    Our country’s economic policy actions are directed toward all of the following goals except

    Answers:

    balance in the federal budget.

    high employment.

    price stability.

    economic growth.

  • Question 14

    2 out of 2 points

    Correct

    The National Banking Acts of 1863 and 1864 were

    Answers:

    totally eliminated under the Federal Reserve Act of 1913.

    were modified to permit greater flexibility of operations under the Federal Reserve Act of 1913.

    were unaffected by the Federal Reserve Act of 1913.

    found unconstitutional by the Supreme Court.

  • Question 15

    0 out of 2 points

    Incorrect

    Involves analyzing the investment potential of real property and securities for pension fund holdings.

    Answers:

    Insurance broker

    Research analyst

    Real estate broker

    Mortgage analyst

  • Question 16

    2 out of 2 points

    Correct

    The purpose of Regulation Z is to

    Answers:

    make consumers aware of the costs of alternative forms of credit.

    prohibit garnishment.

    encourage depository institutions to help meet the credit needs of their communities for housing and other purposes.

    regulate the overseas activities of member banks of the Federal Reserve System.

  • Question 17

    2 out of 2 points

    Correct

    Which of the following is not a part of the financial environment?

    Answers:

    Institutions and markets

    Investments

    Stocks

    Financial management

  • Question 18

    2 out of 2 points

    Correct

    The seven-member board of the Federal Reserve that sets monetary policy is called

    Answers:

    the Federal Reserve Open Market Committee.

    the Federal Reserve Board of Governors.

    the Federal Reserve Advisory Committee.

    the Federal Market Advisory Committee.

  • Question 19

    2 out of 2 points

    Correct

    Also known as the Fed.

    Answers:

    Government National Mortgage Association

    Federal National Mortgage Association

    Federal Home Loan Mortgage Corporation

    Federal Reserve System

  • Question 20

    2 out of 2 points

    Correct

    During the 2007 – 2009 financial crisis, ___________ and __________, who were major participants in the secondary mortgage markets, were on the verge of financial insolvency and possible collapse in mid-2008.

    Answers:

    Fannie Mae; Freddie Mac

    the Federal Treasury; the Federal Reserve

    Morgan Stanley; Smith Barney

    Washington Mutual; Lehman Brothers

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