FININST 4265 MT review
If GDP is $20 trillion and the money supply is $4 trillion, what is the velocity of money?
5 (20T/4T=5T)
Which of these would cause a decrease in aggregate demand?
An increase in imports
Which of these categories is the largest asset on the Federal Reserve's balance sheet - by far?
Securities
Initially, the US Federal Reserve was created by Congress for what primary function?
Serve as a lender of last resort
What do we refer to when we talk about time preference?
The rate at which we prefer to consume today instead of in the future
In 1968, Congress passed a key piece of legislation to protect consumers called the __________ Act.
Truth in Lending
Inflation is a benefit in the short run to
borrowers
Financial Markets brings together _____ and ______.
borrowers; lenders
Following the Great Depression, the power of the Fed shifted to the
Federal Open Markets Committee
Which entities, by definition, issue the legal contracts known as bonds?
Government Corporations Government agencies
Keynes suggested that what kind of spending would be necessary to move the economy out of the Depression?
Government spending of some kind
Which of the following qualies as a liability to a bank?
demand deposits
In a barter economy, the number of prices necessary will
depend on the number of goods exchanged in the economy
Commonly accepted and widely used money that has no intrinsic value is known as
flat money
Business trusts are __________ integrated ownership structures.
horizontally
The rise of Savings & Loans following World War II played a key role in the post-war __________ boom.
housing
The advantage of municipal bonds over corporate bonds increases as the federal marginal tax rate
increases
The coupon rate of a bond refers to the
interest rate to be paid to the holder of the bond
The relationship between the economy-wide price level & level of real GDP illustrated by the aggregate demand curve is
inverse
Which of these most accurately defines the possible effects of fluctuating interest rates in financial markets?
prices and levels of employment
A nancially healthy bank borrowing overnight from the Federal Reserve is known as
primary credit
The purchase of direct debt and mortgage-backed securities by the Federal Reserve in November 2008 is referred to as
quantitative easing
Currently, the power of the Federal Reserve rests with
the chair of the Federal Reserve and a board of six governors.
A major advantage that municipal bonds have over corporate bonds for investors is that
the income earned on muni bonds are not subject to federal income tax
Aggregate Demand
C + I + G + (X-M)
Financial assets include which of the following?
Money Bonds Stocks
Which of these is the most often used and the most flexible monetary tool used by the Federal Reserve?
Open market operations
The result of asymmetric information in a market is __________ selection.
adverse
The loan application process that banks require potential borrowers to go through is an attempt to deal with
adverse selection
If the market interest rate is the same as the coupon rate on a newly issued bond, then the bond will sell
at par
