1

1. The Fed took action to lower interest rates in late 2007 and 2008 due to
2. A.an unprecedented financial crisis that started in the housing market and spread to the broader economy.B.escalating inflation.C.a burgeoning government deficit.D.None of the above; the Fed increased interest rates through 2008.

2.5 points

QUESTION 2

1. Which market is often referred to as the long-term market?
2. A.the primary marketB.the capital marketC.the money marketD.the discount market

2.5 points

QUESTION 3

1. Bankers' acceptances are used in financing which of these?
2. A.interstate tradeB.domestic tradeC.international tradeD.All of the above are correct.

2.5 points

QUESTION 4

1. The Fed's main policy tool is
2. A.changing the discount rate.B.changing the required reserve ratio.C.altering its lender of last resort actions.D.engaging in open market operations.

2.5 points

QUESTION 5

1. The discount rate is
2. A.the interest rate the Fed charges to consumers that borrow from the Fed.B.the interest rate the Fed charges to large businesses that borrow from the Fed.C.the interest rate the Fed charges to depository institutions that borrow reserves from the Fed.D.None of the above

2.5 points

QUESTION 6

1. If a commercial bank has checkable deposit liabilities of $50,000 and the required reserve ratio is set at 12%, the commercial bank must hold how much in reserves assets?
2. A.None. It is not mandatory to hold reserves.B.$3,000C.$6,000D.$44,000

2.5 points

QUESTION 7

1. The __________ is the market for financial assets with an original maturity of one year or less.
2. A.money marketB.commercial paper marketC.capital marketD.Eurodollar market

2.5 points

QUESTION 8

1. Term to maturity refers to which of the following?
2. A.the length of time from the issuance of a financial security to its maturityB.net present value from the issuance of a securityC.the length of time for expected depreciation of the securityD.the time remaining on a Fed Governor's term

2.5 points

QUESTION 9

1. In general, if bond prices are rising, then interest rates are
2. A.rising.B.falling.C.unchanging.D.rising slightly, then stabilizing.

2.5 points

QUESTION 10

1. Of the following, which would be the most liquid financial asset?
2. A.One share of stock in DisneyB.A ten-carat diamondC.$1000 cashD.house

2.5 points

QUESTION 11

1. If the Fed wants to encourage bank lending, then it should ________ the required reserve ratio on checkable deposits.
2. A.lowerB.raiseC.maintain at a constantD.the Fed cannot change the required reserve ratio