QUESTION 1

An example of a securitized loan is a:

a. credit card

b. student loan

c. payday loan

d. mortgage

QUESTION 2

How are tariffs typically applied to restrict international trade?

a. Tariffs are taxes on imported goods and services.

b. Tariffs are limits on the the number of imported goods and services.

c. Tariffs are taxes on exported goods and services.

d. Tariffs are limits on the the number of exported goods and services.

QUESTION 3

If the Fed wants to increase the money supply, then which of the following policy tools can it employ?

a. raise the discount rate

b. lower the required reserve ratio

c. sell U.S. Treasury securities on the open market

QUESTION 4

In 2013, with which country did the United States run the largest trade deficit?

a. South Korea

b. China

c. United Kingdom

d. Japan

e. Mexico

QUESTION 5

Suppose that 1 dollar can purchase 0.80 euros. How many dollars can 1 euro purchase?

a. $8.00

b. $12.50

c. $1.25

d. $0.80

QUESTION 6

Suppose that last month, 1.00 U.S. dollar could purchase 0.75 euros, but this month it can purchase only 0.70 euros. What do we say is happening to the value of the U.S. dollar and the euro?

a. The dollar has depreciated relative to the euro, and the euro has depreciated relative to the dollar.

b. The dollar has depreciated relative to the euro, whereas the euro has appreciated relative to the dollar.

c. The dollar has appreciated relative to the euro, whereas the euro has depreciated relative to the dollar.

d. The dollar has appreciated relative to the euro, and the euro has appreciated relative to the dollar.

QUESTION 7

Suppose the price of a bond is initially $900 but increases to $950. What is happening to the interest rate on that bond?

a. We cannot tell without more information.

b. It remains constant.

c. It decreases.

d. It increases.

QUESTION 8

The United States trades most with which country?

a. Mexico

b. Germany

c. China

d. Canada

e. Japan

QUESTION 9

The main goal of monetary policy is to shift

a. short run aggregate supply.

b. long run aggregate supply.

c. aggregate demand.

d. both aggregate demand and long run aggregate supply.

e. both aggregate demand and short run aggregate supply.

QUESTION 10

To calculate how much interest should be paid on a monthly credit card bill, credit card companies use this equation:

a. interest paid = (amount owed) (daily interest rate) (days in the month)

b. interest paid = (amount owed) (daily interest rate)

c. interest paid = (amount owed) (annual interest rate)

d. interest paid = (amount owed) (annual interest rate) / (days in the month)

QUESTION 11

What does the "par value" of a bond represent?

a. the price of the bond at maturity

b. the "fair market" price for the bond

c. the price of the bond at the time of purchase

d. the price of the bond on the bond market

QUESTION 12

What is a trade deficit?

a. the amount by which a country's exports exceed its imports

b. the amount by which tax revenue exceeds government spending

c. the amount by which a country's imports exceed its exports

d. the amount by which government spending exceeds tax revenue

QUESTION 13

What is the name for an investment program that comprises multiple different stocks making up a portfolio that is diversified and managed by a professional in order to minimize risk?

a. income stocks

b. pension

c. mutual fund

d. growth stocks

QUESTION 14

What will increase the demand for the Mexican peso?

a. Increased crime in Cancn, Mexico, discourages potential U.S. vacationers from taking a vacation there.

b. Finance experts in the United States increasingly view Mexican companies as good investments.

c. Mexican consumers increasingly like to purchase cars from the United States.

d. All of these options will increase the demand for the Mexican peso.

e. None of these options will increase the demand for the Mexican peso.

QUESTION 15

Which of the following are common reasons for trade being restricted?

a. national defense

b. lobbying by special interest groups

c. retaliating for dumping of products on the market

d. protecting new industries

e. all of these options are correct.

QUESTION 16

Which of the following best defines an exchange rate?

a. price of a foreign currency

b. rate at which one country can exchange products with another country

c. rate at which a currency is rising or falling in value

d. price level of a country

QUESTION 17

Which of the following is likely to happen if the Fed buys Treasury securities from banks?

a. interest rate rises and investment falls

b. interest rate falls and investment rises

c. interest rate rises and investment rises

d. interest rate falls and investment falls

QUESTION 18

Which of the following is true regarding the effects of an expansionary monetary policy?

a. Printing more money will affect real GDP both in the short and long run because inflation is a natural occurrence of expansionary monetary policy.

b. Printing more money will ultimately raise the value of money in the long run because prices are fully flexible in the long run.

c. Printing more money will affect real GDP only in the short run because all prices do not adjust fully in the short run.

d. Printing more money will not lower the value of money in the short run because prices are fully flexible in the short run.

QUESTION 19

Which of the following represents a difference between stocks and bonds?

a. Stocks provide investors with a set interest rate, while earnings from a bond fluctuate more.

b. Those who buy stock in a company actually own a percentage of the company. Those who own bonds do not own part of the company.

c. From 1960 to the present, bonds have provided investors with higher returns than stocks.

d. If you own a stock, you face the risk that the stock could become worthless and you'll lose your initial investment. You don't face this risk with bonds.

QUESTION 20

Which student loan repayment option is described as a plan in which your monthly payment varies as your earnings increase, but is limited to no more than 10% of your discretionary income?

a. standard repayment plan

b. graduated repayment plan

c. pay-as-you-earn repayment plan

d. income-based repayment plan