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2. True or False 1. The Quantity Theory of Money states that if the output and price leave are held constant, the high the velocity of money, the less the quantity of money that needs to be supplied. 2.A commercial bank should possess adequate capital in case of a bank run and panics affecting the normal operations of a bank. a 3.Based on the description of the 2007-2009 financial crisis, at the beginning the fall of the prices in housing market caused a large number of defaults on loans and housing mortgages, made the commercial banks and other big financial institutions in stressed financial status, and finally led to a global financial crisis. 4.Foreign exchange market is a global financial market where investors, traders, corporations and individuals exchange currencies at some exchange rates. It is just exactly like a stock exchange with standard currency exchange contracts. 2. True or False 9. The CEO of a commercial bank would prefer to make short-term loans if he believes interest rates are going to rise in the near future. 10.Unsecured loans usually have no collaterals to back them. 11. The Fed of the USA directly bought debts and asset-backed securities of banks and other financial institutions since late 2008 during the financial crisis. Such a policy should be classified as nonconventional. 12. The International Monetary Fund (IMF) is the international financial organization responsible for making The Basel Accord, a well-accepted international standard and guidance for bank capital adequacy. 2. True or False 5.The T-account is adopted to analyze the balance sheet of a commercial bank. 6. During the sovereign debt crisis of Europe, countries like Greece spent much more money than it can earn from its fiscal revenues, resulting a failure in paying back the principal and interests on the bonds. 7.Financial crises start in advanced countries like the United States in two ways: credit booms and busts, or a general increase in uncertainty when major financial institutions fail, based on the research from ecnonomists. 8.Foreign exchange market is a global financial market where investors, traders, corporations and individuals exchange currencies at some exchange rates. It is just exactly like a stock exchange with standard curren a