1.With the deficit so high why was the government spending money on QE?

a. The Fed used its increased powers to borrow from the banks

b. All of the Answers

c. The Fed had received permission to spend the TARP money and so used it to buy bad loans

d. The Fed believed that their additional borrowing would help more than hurt the economy

e. None of the Answers

2.According to Reinhart and Rogoff which country(s)were part of the five Big Crises after WWII?

a. All of the answers

b. None of the answers

c. UK

d. Cuba

e. Canada

3.What is the difference between liquidity and solvency risk?

a. All the Answers

b. Solvency risk means that a bank has or is close to negative equity

c. Solvency risk can be more serious than liquidity risk

d. None of the Answers

e. Liquidity risk means that a bank has a problem funding itself

4.Under which of the following circumstances would it be financially beneficial to borrow money to buy something now and repay it with future income?

a. It is always more beneficial to borrow money to buy something now and repay it with future income

b. When something goes on sale

c. When buying something on credit allows someone to get a much better paying job

d. When the interest on the loan is greater than the interest obtained from a savings account

5. According to the article Getting up to Speed on the Financial Crisis did shadow banks help or hurt the 2008 crisis?

a. shadow banking was the source of key vulnerabilities

b. None of the answers

c. shadow banking was of little importance

d. shadow banking was not a factor

6. What is the FDIC in the USA and what role do they play?

a. All of the Answers

b. None of the Answers

c. The Federal Deposit Insurance Corporation insures bank deposits

d. The Federal Default Issuance Corporation allows banks to issue deposits

e. The Federal Default Insurance Company provides insurance - credit default swaps (CDS)

7.What is the biggest difference between a commercial bank and an investment bank in the US?

a. None of the answers

b. Commercial banks can borrow from the Fed

c. Commercial banks have deposit insurance

d. Commercial banks have retail deposits

e. All of the answers

8. Inflation can cause difficulty in many ways which group would have the greatest problem during periods of high inflation that lasts several years?

a. Young working couples with children

b. Older, working couples saving for retirement

c. Older people living on fixed retirement income

d. Young working couples with no children

9. According to the article Getting up to Speed on the Financial Crisis what was the estimated size of the repo market?

a. It was estimated at 20 to 30 percent of the US GDP

b. None of the answers

c. The size was too small to be counted

d. All of the answers

e. The number cannot be estimated due to lack of data

10. What does short term funding mean for banks and what role did it have in the USA crisis of 2008?

a. Banks bought CDS to protect against rising rates

b. None of the Answers

c. All of the Answers

d. Short term funding means that the banks were shorting or selling the bonds

e. Banks borrowing for a short period, e.g. 90 days

11. According to Reinhart and Rogoff which country(s)were part of the five Big Crises after WWII?

a. All of the answers

b. None of the answers

c. Canada

d. Cuba

e. Finland

12. What are mortgage-backed securities?

a. Mortgage loans package together and sold

b. Mortgage Debt of the central banks

c. Loans made to home buyers

d. Loans made by the Federal Reserve to investment banks

e. None of the answers

13. What does it mean when an investor is made whole?

a. The investor receives all of their principal back

b. The investor receives all of the money back

c. All of the answers

d. None of the answers

e. They are not taking a haircut

14. What rate of inflation has the Fed defined as price stability?

a. None of the Answers

b. All of the Answers

c. The target is 2% inflation

d. The Fed does not have a target

e. The target varies with the employment number

15. What role did short term funding by banks have in the USA crisis of 2008?

a. All of the Answers

b. Banks got their funding from institutional depositors who worry about safety

c. There was a term mismatch between long dated assets and short dated debt

d. Short term funding lead to liquidity problems

e. None of the Answers

16. What is the best way to get out of debt for a country?

a. Increase taxes

b. Reduce spending

c. Increase inflation

d. None of the Answers

e. All of the Answers

f. Increase productivity and immigration

17. Lindsay has saved $12,000 for her university expenses by working part-time with a plan is to start university next year and she needs all of the money she saved which of the following is the safest place for her university money?

a. Corporate bonds

b. Mutual Funds

c. Stocks

d. A bank savings account

e. Locked in a safe at home

18. Are deposits with credit unions protected by the CDIC?

a. No vast majority of credit unions are not members of CDIC

b. Yes deposits are protected by the CDIC

19. What is the prime rate in Canada?

a. none of the answers

b. 7%

c. 2.45%

d. 3.95%

e. 2.5%

20. What is Moral Hazard?

a. People taking on risks believing they will be bailed out

b. The risk of losing value in housing

c. None of the answers

d. Banks imposing losses on depositors

e. Government imposing losses on banks

21. What is commercial paper?

a. None of the Answers

b. Short term borrowing by banks and non-banks

c. Debt issued by home buyers

d. All of the Answers

e. Long term borrowing by the Fed

22. According to Reinhart and Rogoff, what countries were part of the five big crises after WWII?

a. None of the answers

b. Norway

c. All of the answers

d. Sweden

e. Spain

23. Right now Canadians have record amount debt, why is this a problem?

a. All of the answers

b. If there is a loss of employment from layoffs or health reasons makes payments more difficult potentially leading to debt spiral

c. If rates continue to rise it will be harder to service the debt

d. Having lots of debt reduces your financial flexibility

24. What does amortization period mean?

a. The decision to pay for mortgage insurance

b. The time it takes find and buy a house

c. The period of time to remodel an existing home

d. None of the answers

e. The time it takes to pay off a mortgage in full

25. Describe what a mortgage amortization schedule is.

a. None of the answers

b. All of the answers

c. An amortization schedule means that the mortgage has to be renewed

d. An amortization schedule means that the interest is being reduced

e. An amortization schedule means that the principal is being paid down or reduced with each installment or payment

26. How can banks improve their debt to equity ratio?

a. Sell assets

b. None of the answers

c. Issues shares

d. All the answers

e. Decrease their dividend