Question 10.2pts

True or false: The advantage in fixed exchange rates is that it creates currency value certainty in international trade.

Group of answer choices

True

False

Flag question: Question 2Question 20.2pts

True or false: The Bretton Woods International Trade System adhered to the idea of a gold standard.

Group of answer choices

True

False

Flag question: Question 3Question 30.2pts

What did Paul Volker, the chairman of the Federal Reserve do to eliminate inflation in the late 1970's?

Group of answer choices

lowered interest rates

increased the money supply

encourage Americans to spend less.

raised interest rates

Flag question: Question 4Question 40.2pts

The political leader that caused Nixon to close the gold "window" in 1971 was

Group of answer choices

Prime Minister Winston Churchill

None of the other answers.

President Charles De Gaulle of France.

Fidel Castro of Cuba

Flag question: Question 5Question 50.2pts

During the 1960's, President Johnson initiated the Great Society's war on poverty and also started the war in Vietnam by printing money. Those choices did the followingEXCEPT

Group of answer choices

strengthened the value of the dollar.

eventually caused inflation in the 1970's.

violated the gold standard.

exported dollars overseas.

Flag question: Question 6Question 60.2pts

What did Paul Volker, the chairman of the Federal Reserve do to eliminate inflation in the late 1970's.

Group of answer choices

increased the money supply

convincing people through a WIN (whip inflation now) campaign to decrease their consumption.

lowered interest rates

raised interest rates very high.

Flag question: Question 7Question 70.15pts

True or false: Inflation in the 1970's was caused by full employment and pressure for higher wages.

Group of answer choices

True

False

Flag question: Question 8Question 80.15pts

True or false: When President Nixon took the U.S. off the gold standard, we then went from floating exchange rates to fixed exchange rates.

Group of answer choices

True

False

Use Excel or Google Open Source Spreadsheet for this problem:

You own a 10 year bond that has a face value of $20,000 and pays 9% interest each year once a year at the end of the year. Three years after buying it, the interest rate decreases to 8%. You do not want to wait 7 more years to get your principle of $20,000 back because you really need the money now, so you decide to sell it on the open market.

1. How much can you sell it for?

2. Is it a capital loss or a capital gain? How much is the capital gain or loss?

Use Excel or Google Open Source Spreadsheet for this problem:

You own a 10 year bond that has a face value of $6,000 and pays 5% a year in interest, once a year, at the end of the year. Eight years after buying it, the interest rate increases to 6%. You do not want to wait 2 more years to get your principle of $6,000 back because you really need the money, so you decide to sell it on the open market.

1. How much can you sell it for?

2. Would it be a capital loss or gain and how much? How much is the capital gain or loss?

The Phillips Curve implies that the reason inflation exists is because

Group of answer choices

the velocity of money is too high.

aggregate demand is too high.

aggregate supply is too low.

real GDP is too low.

Flag question: Question 13Question 130.2 pts

True or false: The Federal Reserve provides loans to countries that were struggling economically.

Group of answer choices

True

False

Flag question: Question 14Question 140.2 pts

An increase in the money supply is likely to

Group of answer choices

lower interest rates.

decrease the quantity of money demanded.

raise interest rates.

Flag question: Question 15Question 150.2 pts

Which of the following will increase the monetary base?

Group of answer choices

The Fed buying government bonds and the commercial banks providing credit.

The sale of government bonds in the open market by the Federal Reserve Banks

commercial banks providing credit.

The purchase of government bonds in the open market by the Federal Reserve Banks.

Flag question: Question 16Question 160.2 pts

If the Fed sells Treasury bills then

Group of answer choices

neither the price nor the market rate of interest of Treasury bills will be affected.

both the price of Treasury bills will fall and the market rate of interest on Treasury bills will rise.

the price of Treasury bills will fall.

the market rate of interest on Treasury bills will rise.

Flag question: Question 17Question 170.2 pts

The Commodities Futures Modernization Act of 2000 did the following EXCEPT

Group of answer choices

allowed over the counter transactions

only allowed derivative transactions to be done in a market exchange

was not regulated by the Commodities Futures Trading Commission

was the seed that caused the 2009 Great Recession.

Flag question: Question 18Question 180.2 pts

The institution that provided more money to Wall Street to fund more mortgages was ______.

Group of answer choices

Congress.

Fannie Mae

the Federal Reserve

the Home Loan Association.

the FDIC.

Flag question: Question 19Question 190.2 pts

The problem with financial derivatives is

Group of answer choices

their leverage is just too low

they are not really owned by those that control them.

their notional value is too low compared to the premiums.

when exercised, they cannot be paid off

Flag question: Question 20Question 200.2 pts

Credit Default Swaps

Group of answer choices

increased in value when mortgage bond securities decreased in value.

increased in value when mortgage bond securities increased in value.

had low notional values and high premium costs.

increased in value when people defaulted on their credit cards

Flag question: Question 21Question 210.2 pts

Which financial asset is an example of a derivative?

Group of answer choices

All the answers are derivatives

a house mortgage

a share of Apple stock

Credit Default Swaps

Flag question: Question 22Question 220.15 pts

True or false: An over-the-counter financial derivative transaction is not seen by the public.

Group of answer choices

True

False

Flag question: Question 23Question 230.15 pts

True or false: When the Fed initiates Quantitative Tightening (QT), it is buying bonds.

Group of answer choices

True

False

Flag question: Question 24Question 240.15 pts

True or false: Leverage is when a person is able to get a great deal from a salesperson when buying a car.

Group of answer choices

True

False

Flag question: Question 25Question 250.15 pts

True or false: When the Fed initiates Quantitative Easing (QE), it is selling bonds.

Group of answer choices

True

False