14. Insufficient capital to offset a sudden decline in the value of assets versus liabilities is referred to as a. sovereign b. liquidity c. insolvencyd. credit 15. Without any changes in the flow of funds or the level of funds at the banks, a risk. decrease in the reserve requirement will: a. increase required reserves c. increase excess reserves b. decrease excess reserves d. decrease total reserves. Part Two: These questions refer to general information discussed in class, read in various sources, or perhaps heard or read in the media; 10 questions, 3 points each 130 points total] The $600 billion plan offered through the Federal Reserve to aid in the great recession by bailing out failing institutions and stimulating the economy is referred to as the: 1. a. QE2, Quiditch Experiment b. QE2, Quantitative Easing c. TARP, Troubled Asset Relief Program d. Stimulus, American Recovery and Reinvestment Any reference in any article or media that the central bank will directly finance the government's deficit is referred to as: 2. a. familiarizing the debt b. monetarizing the debt C. universe expansion d. Keynesian contractionism In the news, the FED's intention to "buy the equivalent of most of the new Treasury debt issued" is referred to as 3. monetary policy a. defensive (action to maintain achievement of current goals) b. offensive (action to change the direction of monetary policy) c. reactionary (action taken without clear policy intentions stated) d. precautionary (action in response to market action to prevent inflation)