1

1. What is meant by senior debt?

   debt owed to the federal government

   debt that has been around for the longest period of time

   debt that must be paid before junior debt is paid

   debt issued by the federal government as opposed to states or corporations

0.5 points

QUESTION 2

1. What happened to consumer prices as measured by the CPI between 1929 and 1933?

   declined by about 25%

   rose by more than 20%

   didn't change

   declined by about 80%

0.5 points

QUESTION 3

1. What was the purpose of the stress test administered by the Treasury in 2009?

   Gauge how well the largest financial firms would fare if the recession deepened.

   Evaluate potential losses of Fannie Mae and Freddie Mac.

   Assess the viability of AIG.

   Evaluate the solvency of the major investment banks.

0.5 points

QUESTION 4

1. Regulation Q was intended to

   maintain banks' profitability by limiting competition for funds.

   increase the reserves banks would hold against demand deposits.

   increase the reserves banks would hold against time deposits.

   eliminate the need for discount loans.

0.5 points

QUESTION 5

1. The fourth stage in the regulatory process is

   a crisis.

   regulatory response.

   response by the financial system.

   regulation.

0.5 points

QUESTION 6

1. When prices of new houses rise significantly faster than rent prices, this is evidence of a:

   financial crisis

   sovereign debt crisis

   bubble

   debt-deflation process

0.5 points

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